The following balance sheet information is provided for Duke Company for Year 2: $\begin{array}{|l|r|} \hline \text { Cash } & \$\quad 5,400 \\ \hline \text { Accounts receivable } & 15,500 \\ \hline \text { Inventory } & 18,000 \\ \hline \text { Prepaid expenses } & 1,600 \\ \hline \text { Pant and equipment, net of depreciation } & 20,200 \\ \hline \text { Land } & \underline { 19950 }\\ \hline \text { Total assets } & \underline { \$ \quad 80,650 }\\ \hline\\ \hline \text { Liabilities and Stockholders' Equity }\\ \hline\text { Accounts payable } & \$ \quad 4,500 \\ \hline\text { Salaries payable } & 11,500 \\ \hline \text { Bonds payable (Due in 2020) } & 19,000 \\ \hline \text { Common stock, no par } & 30,000 \\ \hline \text { Retained earnings } & \underline { 15,650}\\ \hline \text { Total liabilities and stockholder' equity } & \underline { \$ \quad 80,650}\\ \hline \end{array}$ What is the company's current ratio (rounded to two decimal points)?

A) 1.16 B) 1.31 C) 2.53 D) 3.79 A) 1.16 B) 1.31 C) 2.53 D) 3.79

Alpha Company provided the following balance sheet for Year 2: $\begin{array}{|l|r|} \hline \text { Assets }\\ \hline \text { Cash } & \$ \quad 5,400 \\ \hline \text { Accounts receivable } & 15,500 \\ \hline \text { Inventory } & 18,000 \\ \hline \text { Prepaid expenses } & 1,600 \\ \hline \text { Plant and equipment, net of depreciation } & 25,000 \\ \hline \text { Land } & \underline { 19,950} \\ \hline \text { Total assets } & \underline { \$ \quad 85,450} \\ \hline\\ \hline \text { Liabilities and Stockholders' Equity }\\ \hline \text { Accounts payable } & \$ \quad4,500 \\ \hline \text { Salaries payable } & 11,500 \\ \hline \text { Bonds payable (Due in 2020) } & 10,000 \\ \hline \text { Common stock, no par } & 30,000 \\ \hline \text { Retained earnings } & \underline {29,450} \\ \hline \text { Total liabilities and stockholder' equity } & \underline {\$ \quad 85,450} \\ \hline \end{array}$ What is the company's plant assets to long-term liabilities ratio?

A) 2.5 B) 4.5 Note that I changed correct answer C) 1.7 D) None of these answers is correct. A) 2.5 B) 4.5 Note that I changed correct answer C) 1.7 D) None of these answers is correct.

Exam 13: Financial Statement Analysis

You are considering an investment in Apple stock and wish to assess the firm's short-term debt-paying ability.All of the following ratios are used to assess liquidity except:

(Multiple Choice)

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Question 81

Indicate whether each of the following statements about financial statement analysis is

(Essay)

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Question 82

Sable Company is seeking a short-term loan from its local bank.The banker needs assurance that the company will be able to repay the loan.Describe three financial ratios the banker should consider including in the loan approval process.What information does each of your selected ratios provide?

(Essay)

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Question 83

Benson Company declared and paid a cash dividend totaling $500,000 on its common stock.As a result of this transaction,the company's debt to assets ratio will:

(Multiple Choice)

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Question 84

The following balance sheet information is provided for Duke Company for Year 2: Cash quad5,400 Accounts receivable 15,500 Inventory 18,000 Prepaid expenses 1,600 Pant and equipment, net of depreciation 20,200 Land Total assets Liabilities and Stockholders' Equity Accounts payable \ 4,500 Salaries payable 11,500 Bonds payable (Due in 2020) 19,000 Common stock, no par 30,000 Retained earnings Total liabilities and stockholder' equity What is the company's current ratio (rounded to two decimal points)?

(Multiple Choice)

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Question 85

The current ratio is one of the most common measures of solvency.

(True/False)

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Question 86

As of December 31,Year 1,Gant Corporation had a current ratio of 1.29,quick ratio of 1.05,and working capital of $18,000.The company uses a perpetual inventory system and sells merchandise for more than it cost.On January 1,Year 2,Gant paid $250 for transportation in cost on merchandise it had received.Which of the following statements is incorrect?

(Multiple Choice)

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Question 87

Comparative income statements for Chicago Company are provided below: Chicago Company Comparative Income Statement Years Ended December 31, Sales Less cost of goods sold Gross margin Less operating expenses Income before taxes Income taxes Net income 2014 288,000 186,650 96,680 2013 302,190 186,790 87,020 Required: Perform a horizontal analysis of Chicago Company's income statement by computing horizontal percentages for each item.Round your answer to one decimal place (i.e.22.5%).

(Essay)

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Question 88

Alpha Company provided the following balance sheet for Year 2: Assets Cash \ 5,400 Accounts receivable 15,500 Inventory 18,000 Prepaid expenses 1,600 Plant and equipment, net of depreciation 25,000 Land Total assets Liabilities and Stockholders' Equity Accounts payable \ 4,500 Salaries payable 11,500 Bonds payable (Due in 2020) 10,000 Common stock, no par 30,000 Retained earnings Total liabilities and stockholder' equity What is the company's plant assets to long-term liabilities ratio?

(Multiple Choice)

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Question 89

Indicate whether each of the following statements about financial statement analysis is

(Essay)

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Question 90

You are considering an investment in Frontier Airlines stock and wish to assess the firm's earnings performance.All of the following ratios can be used to assess profitability except:

(Multiple Choice)

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Question 91

An analysis procedure that uses percentages to compare each of the parts of an individual statement to a key dollar amount from the financial statements is:

(Multiple Choice)

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Question 92

Financial analysis typically involves some form of comparison such as changes in the same item over a number of years.

(True/False)

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Question 93

Which ratio compares the earnings per share of a company to the market price for a share of the company's stock?

(Multiple Choice)

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Question 94

Lilly's Corporation has working capital of $620,000,and Harmon Corporation has working capital of $840,000.Which of the following statements is incorrect?

(Multiple Choice)

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Question 95

Describe the differences between the liquidity ratios,solvency ratios and profitability ratios.Identify examples of each type of ratio as well.

(Essay)

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Question 96

Grove Corporation had sales of $3,000,000,cost of sales of $2,250,000,and average inventory of $500,000.What was Grove's inventory turnover ratio for the period?

(Multiple Choice)

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Question 97

On December 31,Year 1,Allen Company's total current assets were $600,000 and its total current liabilities were $380,000.On January 1,Year 2,Allen paid $20,000 on accounts payable. Required: (a)Compute Allen's working capital before and after paying the account payable. (b)Compute Allen's current ratio before and after paying the account payable.Round your answer to two decimal places.

(Essay)

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Question 98

Net income divided by sales is the formula for which of these analytical measures?

(Multiple Choice)

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Question 99

Financial ratio analysis is a form of horizontal analysis in that comparisons are made between different accounts in the same set of financial statements.

(True/False)

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Question 100

You are considering an investment in Apple stock and wish to assess the firm's short-term debt-paying ability.All of the following ratios are used to assess liquidity except:

Indicate whether each of the following statements about financial statement analysis is

Sable Company is seeking a short-term loan from its local bank.The banker needs assurance that the company will be able to repay the loan.Describe three financial ratios the banker should consider including in the loan approval process.What information does each of your selected ratios provide?

Benson Company declared and paid a cash dividend totaling $500,000 on its common stock.As a result of this transaction,the company's debt to assets ratio will:

The current ratio is one of the most common measures of solvency.

Indicate whether each of the following statements about financial statement analysis is

You are considering an investment in Frontier Airlines stock and wish to assess the firm's earnings performance.All of the following ratios can be used to assess profitability except:

An analysis procedure that uses percentages to compare each of the parts of an individual statement to a key dollar amount from the financial statements is:

Financial analysis typically involves some form of comparison such as changes in the same item over a number of years.

Which ratio compares the earnings per share of a company to the market price for a share of the company's stock?

Lilly's Corporation has working capital of $620,000,and Harmon Corporation has working capital of $840,000.Which of the following statements is incorrect?

Describe the differences between the liquidity ratios,solvency ratios and profitability ratios.Identify examples of each type of ratio as well.

Grove Corporation had sales of $3,000,000,cost of sales of $2,250,000,and average inventory of $500,000.What was Grove's inventory turnover ratio for the period?

Net income divided by sales is the formula for which of these analytical measures?

Financial ratio analysis is a form of horizontal analysis in that comparisons are made between different accounts in the same set of financial statements.

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Statement of Cash Flows

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