Question 1

Thomas,Inc.has the following information:
 
What is the Price/Earnings ratio?

Accepted Answer

A)  2.2 
B)  4.0 
C)  6.7 
D)  20.0 
A)  2.2 
B)  4.0 
C)  6.7 
D)  20.0

Question 2

An increase in the gross profit percentage indicates that:

Accepted Answer

A)  cost of goods sold as a percentage of sales has decreased. 
B)  cost of goods sold as a percentage of sales has increased. 
C)  operating expenses as a percentage of sales have increased. 
D)  operating expenses as a percentage of sales have decreased. 
A)  cost of goods sold as a percentage of sales has decreased. 
B)  cost of goods sold as a percentage of sales has increased. 
C)  operating expenses as a percentage of sales have increased. 
D)  operating expenses as a percentage of sales have decreased.

Question 3

Which of the following statements about the Price/Earnings ratio is not correct?

Accepted Answer

A)  The Price/Earnings ratio indicates how much investors are willing to pay for a share of a company's stock as a multiple of current earnings. 
B)  A high Price/Earnings ratio may mean that investors have pushed the price of the stock up in anticipation of higher future net income. 
C)  If EPS decreases and there is no change in the market price of the stock, the Price/Earnings ratio will decrease. 
D)  If the market price of the stock increases and there is no change in EPS, the Price/Earnings ratio will increase. 
A)  The Price/Earnings ratio indicates how much investors are willing to pay for a share of a company's stock as a multiple of current earnings. 
B)  A high Price/Earnings ratio may mean that investors have pushed the price of the stock up in anticipation of higher future net income. 
C)  If EPS decreases and there is no change in the market price of the stock, the Price/Earnings ratio will decrease. 
D)  If the market price of the stock increases and there is no change in EPS, the Price/Earnings ratio will increase.

Question 4

Company X has net sales revenue of $1,250,000,cost of goods sold of $760,000,and all other expenses of $290,000.The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000.The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000.
Required:
Compute the return on equity (ROE)ratio.

Accepted Answer

@#IMG-DLM& 
Average stockholders' equity = (Beginn

Question 5

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The gross profit percentage is closest to:

Accepted Answer

A)  32%. 
B)  56%. 
C)  86%. 
D)  14%. 
A)  32%. 
B)  56%. 
C)  86%. 
D)  14%.

Question 6

The higher the times interest earned ratio,the greater the risk of nonpayment of interest.

Accepted Answer

A) True 
 B)False

Question 7

Choose the appropriate letter match each financial performance ratios with the appropriate category.
Ratio
1.___ Debt-to-assets ratio
2.___ Receivables turnover ratio
3.___ Fixed asset turnover ratio
4.___ Current ratio
5.___ Return on equity
6.___ Price earnings ratio
7.___ Times interest earned ratio
8.___ Quick ratio
9.___ Inventory turnover ratio
10.___ Earnings per share
Category
P - Profitability
L - Liquidity
S - Solvency

Accepted Answer

1.S
2.L
3.

Question 8

Which of the following would improve a current ratio that is now 1.2?

Accepted Answer

A)  Selling long-term assets for cash 
B)  Purchasing land for cash 
C)  Buying equipment in exchange for a two-year note 
D)  Purchasing inventory on account 
A)  Selling long-term assets for cash 
B)  Purchasing land for cash 
C)  Buying equipment in exchange for a two-year note 
D)  Purchasing inventory on account

Question 9

The comparative financial statements of B.Darin include the following data:
  
-Use the information above to answer the following question.The gross profit percentage for the current year is closest to:

Accepted Answer

A)  42%. 
B)  13.5%. 
C)  57.7%. 
D)  21.15%. 
A)  42%. 
B)  13.5%. 
C)  57.7%. 
D)  21.15%.

Question 10

The following information is taken from the financial statements of a company for the current year:
  
-Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to:

Accepted Answer

A)  24%. 
B)  76%. 
C)  60%. 
D)  31%. 
A)  24%. 
B)  76%. 
C)  60%. 
D)  31%.

Question 11

If earnings per share (EPS)decreases,it must mean that the company's net income has fallen.

Accepted Answer

A) True 
 B)False

Question 12

A decrease in receivables turnover ratio is indicative of:

Accepted Answer

A)  an increase in sales revenue. 
B)  slower-selling inventory. 
C)  an increase in accounts receivable. 
D)  a decline in cost of goods sold. 
A)  an increase in sales revenue. 
B)  slower-selling inventory. 
C)  an increase in accounts receivable. 
D)  a decline in cost of goods sold.

Question 13

Which of the following is a liquidity ratio?

Accepted Answer

A)  Inventory turnover 
B)  Price/Earnings ratio 
C)  Net profit margin 
D)  Times interest earned 
A)  Inventory turnover 
B)  Price/Earnings ratio 
C)  Net profit margin 
D)  Times interest earned

Question 14

To perform a vertical analysis of an income statement,you would divide each line item on the statement by:

Accepted Answer

A)  sales. 
B)  cost of goods sold. 
C)  operating expenses. 
D)  net income. 
A)  sales. 
B)  cost of goods sold. 
C)  operating expenses. 
D)  net income.

Question 15

A condensed balance sheet for Liu Company is presented below:
   
Required:
Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent.
Part b.Interpret your analysis.Identify significant items.Comment on key relationships.

Accepted Answer

Part a
 @#IMG-DLM& 
Part b
Liu Company's most sign

Question 16

The full disclosure principle refers to:

Accepted Answer

A)  Financial reports should disclose only material transactions related to a company's business activities. 
B)  Financial reports should disclose every transaction related to a company's business activities. 
C)  Financial reports should present all information needed to properly interpret results of a company's business activities. 
D)  Financial reports should disclose all future transactions related to a company's business activities. 
A)  Financial reports should disclose only material transactions related to a company's business activities. 
B)  Financial reports should disclose every transaction related to a company's business activities. 
C)  Financial reports should present all information needed to properly interpret results of a company's business activities. 
D)  Financial reports should disclose all future transactions related to a company's business activities.

Question 17

Solvency ratio data are primarily concerned with the ability of a company to:

Accepted Answer

A)  produce profits. 
B)  maintain long-term survival and repay its debt. 
C)  manage its cash flow. 
D)  provide income for stockholders. 
A)  produce profits. 
B)  maintain long-term survival and repay its debt. 
C)  manage its cash flow. 
D)  provide income for stockholders.

Question 18

Which of the following ratios is a solvency ratio?

Accepted Answer

A)  Net profit margin ratio 
B)  Current ratio 
C)  Fixed asset turnover ratio 
D)  Debt-to-assets ratio 
A)  Net profit margin ratio 
B)  Current ratio 
C)  Fixed asset turnover ratio 
D)  Debt-to-assets ratio

Question 19

How competitors calculate depreciation is most likely to affect comparisons between competitors if property,plant and equipment:

Accepted Answer

A)  makes up a large percentage of assets and average useful lives are fairly different. 
B)  makes up a small percentage of assets and assets are financed in a different way. 
C)  makes up a small percentage of assets and average useful lives are fairly similar. 
D)  is primarily leased in the industry, not purchased. 
A)  makes up a large percentage of assets and average useful lives are fairly different. 
B)  makes up a small percentage of assets and assets are financed in a different way. 
C)  makes up a small percentage of assets and average useful lives are fairly similar. 
D)  is primarily leased in the industry, not purchased.

Question 20

The following information pertains to the CJ Company:
 
What would be reported next to Interest Expense on a common sized income statement?

Accepted Answer

A)  12.7% 
B)  1.7% 
C)  0.6% 
D)  0.9% 
A)  12.7% 
B)  1.7% 
C)  0.6% 
D)  0.9%

Thomas,Inc.has the following information: What is the Price/Earnings ratio?

An increase in the gross profit percentage indicates that:

Which of the following statements about the Price/Earnings ratio is not correct?

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The gross profit percentage is closest to:

The higher the times interest earned ratio,the greater the risk of nonpayment of interest.

Which of the following would improve a current ratio that is now 1.2?

The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.The gross profit percentage for the current year is closest to:

The following information is taken from the financial statements of a company for the current year: -Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to:

If earnings per share (EPS)decreases,it must mean that the company's net income has fallen.

A decrease in receivables turnover ratio is indicative of:

Which of the following is a liquidity ratio?

To perform a vertical analysis of an income statement,you would divide each line item on the statement by:

A condensed balance sheet for Liu Company is presented below: Required: Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent. Part b.Interpret your analysis.Identify significant items.Comment on key relationships.

The full disclosure principle refers to:

Solvency ratio data are primarily concerned with the ability of a company to:

Which of the following ratios is a solvency ratio?

How competitors calculate depreciation is most likely to affect comparisons between competitors if property,plant and equipment:

The following information pertains to the CJ Company: What would be reported next to Interest Expense on a common sized income statement?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

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Exam 13: Measuring and Evaluating Financial Performance

Thomas,Inc.has the following information: What is the Price/Earnings ratio?

An increase in the gross profit percentage indicates that:

Which of the following statements about the Price/Earnings ratio is not correct?

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The gross profit percentage is closest to:

The higher the times interest earned ratio,the greater the risk of nonpayment of interest.

Which of the following would improve a current ratio that is now 1.2?

The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.The gross profit percentage for the current year is closest to:

The following information is taken from the financial statements of a company for the current year: -Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to:

If earnings per share (EPS)decreases,it must mean that the company's net income has fallen.

A decrease in receivables turnover ratio is indicative of:

Which of the following is a liquidity ratio?

To perform a vertical analysis of an income statement,you would divide each line item on the statement by:

A condensed balance sheet for Liu Company is presented below: Required: Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent. Part b.Interpret your analysis.Identify significant items.Comment on key relationships.

The full disclosure principle refers to:

Solvency ratio data are primarily concerned with the ability of a company to:

Which of the following ratios is a solvency ratio?

How competitors calculate depreciation is most likely to affect comparisons between competitors if property,plant and equipment:

The following information pertains to the CJ Company: What would be reported next to Interest Expense on a common sized income statement?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Filters