Question 1

Selling used equipment at book value for cash will:

Accepted Answer

A)  increase working capital. 
B)  decrease working capital. 
C)  decrease the debt-to-equity ratio. 
D)  increase net income. 
A)  increase working capital. 
B)  decrease working capital. 
C)  decrease the debt-to-equity ratio. 
D)  increase net income.

Question 2

Accounts receivable turnover will normally decrease as a result of:

Accepted Answer

A)  the write-off of an uncollectible account against the allowance for bad debts. 
B)  a significant sales volume decrease near the end of the accounting period. 
C)  an increase in cash sales in proportion to credit sales. 
D)  a change in credit policy to lengthen the period for cash discounts. 
A)  the write-off of an uncollectible account against the allowance for bad debts. 
B)  a significant sales volume decrease near the end of the accounting period. 
C)  an increase in cash sales in proportion to credit sales. 
D)  a change in credit policy to lengthen the period for cash discounts.

Question 3

Lasch Corporation has provided the following financial data from its balance sheet and income statement:
    
-The company's debt-to-equity ratio at the end of Year 2 is closest to:

Accepted Answer

A)  0.30 
B)  0.36 
C)  0.41 
D)  0.60 
A)  0.30 
B)  0.36 
C)  0.41 
D)  0.60

Question 4

When computing the return on total assets,the interest expense is added back to net income to show what earnings would have been if the company had no debt.

Accepted Answer

A) True 
 B)False

Question 5

Fayer Corporation has provided the following financial data:
     Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at the end of Year 2 was $10.88 per share.
-The company's debt-to-equity ratio at the end of Year 2 is closest to:

Accepted Answer

A)  0.22 
B)  0.27 
C)  0.45 
D)  0.19 
A)  0.22 
B)  0.27 
C)  0.45 
D)  0.19

Question 6

Symons Corporation has provided the following financial data:
     Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share.
-The company's dividend yield ratio for Year 2 is closest to:

Accepted Answer

A)  1.0% 
B)  18.4% 
C)  26.3% 
D)  2.5% 
A)  1.0% 
B)  18.4% 
C)  26.3% 
D)  2.5%

Question 7

To increase total asset turnover,management must either increase sales or reduce total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 8

During the year just ended,the retailer James Corporation purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,then the inventory turnover for the year was:

Accepted Answer

A)  2.77 
B)  2.57 
C)  3.00 
D)  2.62 
A)  2.77 
B)  2.57 
C)  3.00 
D)  2.62

Question 9

Hyrkas Corporation's most recent balance sheet and income statement appear below:
     Dividends on common stock during Year 2 totaled $30 thousand.The market price of common stock at the end of Year 2 was $6.90 per share.
Required:
Compute the following for Year 2:
a.Gross margin percentage.
b.Earnings per share.
c.Price-earnings ratio.
d.Dividend payout ratio.
e.Dividend yield ratio.
f.Return on total assets.
g.Return on equity.
h.Book value per share.
i.Working capital.
j.Current ratio.
k.Acid-test (quick)ratio.
l.Accounts receivable turnover.
m.Average collection period.
n.Inventory turnover.
o.Average sale period.
p.Times interest earned ratio.
q.Debt-to-equity ratio.

Accepted Answer

a.Gross margin percentage = Gross margin

Question 10

A company whose inventory turnover ratio is much slower than the average for its industry may have too much inventory or the wrong sorts of inventory.

Accepted Answer

A) True 
 B)False

Question 11

The market price of Friden Company's common stock increased from $15 to $18.Earnings per share of common stock remained unchanged.The company's price-earnings ratio would:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  impossible to determine. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  impossible to determine.

Question 12

Lasch Corporation has provided the following financial data from its balance sheet and income statement:
    
-The company's equity multiplier at the end of Year 2 is closest to:

Accepted Answer

A)  1.60 
B)  1.68 
C)  0.63 
D)  0.60 
A)  1.60 
B)  1.68 
C)  0.63 
D)  0.60

Question 13

Which of the following is not a source of financial leverage?

Accepted Answer

A)  Bonds payable. 
B)  Accounts payable. 
C)  Taxes payable. 
D)  Prepaid rent. 
A)  Bonds payable. 
B)  Accounts payable. 
C)  Taxes payable. 
D)  Prepaid rent.

Question 14

Burdick Corporation has provided the following financial data from its balance sheet:
 $\begin{array}{lrr}&\text { Year 2 } & \text { Year 1 } \
\text { Accounts receivable, net}&\$ 266,000 & \$ 250,000 \
\text { Inventory  }&\$ 162,000 & \$ 190,000 \
\text {Total assets  }&\$ 1,415,000 & \$ 1,390,000 \
\text {Total stockholders' equity }&\$ 991,000 & \$ 970,000
\end{array}$ Sales (all on account) in Year 2 amounted to $1,410,000 and the cost of goods sold was $860,000.
-The company's total asset turnover for Year 2 is closest to:

Accepted Answer

A)  0.99 
B)  0.19 
C)  5.32 
D)  1.01 
A)  0.99 
B)  0.19 
C)  5.32 
D)  1.01

Question 15

Brill Corporation has provided the following financial data:
     Dividends on common stock during Year 2 totaled $2,100.The market price of common stock at the end of Year 2 was $2.32 per share.
Required:
a.What is the company's times interest earned ratio for Year 2?
b.What is the company's debt-to-equity ratio at the end of Year 2?
c.What is the company's equity multiplier at the end of Year 2?
d.What is the company's net profit margin percentage for Year 2?
e.What is the company's gross margin percentage for Year 2?
f.What is the company's return on total assets for Year 2?
g.What is the company's return on equity for Year 2?
h.What is the company's earnings per share for Year 2?
i.What is the company's price-earnings ratio for Year 2?
j.What is the company's dividend payout ratio for Year 2?
k.What is the company's dividend yield ratio for Year 2?
l.What is the company's book value per share at the end of Year 2?

Accepted Answer

a.Times interest earned = Earnings befor

Question 16

Babbitt Corporation has provided the following data from its most recent income statement:
   Required:
Compute the times interest earned ratio.Show your work!

Accepted Answer

Times interest earned = Earnin

Question 17

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement:
 $\begin{array}{lrr}&\text { Year 2 } & \text { Year 1 } \
\text { Cash}&\$ 74,000 & \$ 130,000 \
\text { Accounts receivable, net}&\$ 255,000 & \$ 240,000 \
\text {Inventory. }&\$ 173,000 & \$ 180,000 \
\text {Total current assets }&\$ 564,000 & \$ 610,000 \
\text {Total assets. }&\$ 1,350,000 & \$ 1,330,000 \
\text {Accounts payable }&\$ 170,000 & \$ 160,000 \
\text {Total liabilities }&\$ 633,000 & \$ 620,000 \
\text {Total stockholders' equity. }&\$ 717,000 & \$ 710,000 \
\text {Sales (all on account) }&\$ 1,290,000 & \
\text {Cost of goods sold }&\$ 700,000 &
\end{array}$
-The company's total asset turnover for Year 2 is closest to:

Accepted Answer

A)  5.29 
B)  0.19 
C)  1.04 
D)  0.96 
A)  5.29 
B)  0.19 
C)  1.04 
D)  0.96

Question 18

Acquiring land by taking out a long-term mortgage will not affect the current ratio.

Accepted Answer

A) True 
 B)False

Question 19

Excerpts from Colter Corporation's most recent balance sheet appear below:
   Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720.
-The inventory turnover for Year 2 is closest to:

Accepted Answer

A)  1.06 
B)  0.94 
C)  4.36 
D)  4.24 
A)  1.06 
B)  0.94 
C)  4.36 
D)  4.24

Question 20

Guttery Corporation has provided the following financial data from its balance sheet:
   Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.
-The company's average collection period for Year 2 is closest to:

Accepted Answer

A)  1.1 days 
B)  28.2 days 
C)  1.0 days 
D)  27.9 days 
A)  1.1 days 
B)  28.2 days 
C)  1.0 days 
D)  27.9 days

Exam 15: Financial Statement Analysis

Selling used equipment at book value for cash will:

Accounts receivable turnover will normally decrease as a result of:

Lasch Corporation has provided the following financial data from its balance sheet and income statement: -The company's debt-to-equity ratio at the end of Year 2 is closest to:

When computing the return on total assets,the interest expense is added back to net income to show what earnings would have been if the company had no debt.

Fayer Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at the end of Year 2 was $10.88 per share. -The company's debt-to-equity ratio at the end of Year 2 is closest to:

Symons Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share. -The company's dividend yield ratio for Year 2 is closest to:

To increase total asset turnover,management must either increase sales or reduce total stockholders' equity.

During the year just ended,the retailer James Corporation purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,then the inventory turnover for the year was:

A company whose inventory turnover ratio is much slower than the average for its industry may have too much inventory or the wrong sorts of inventory.

The market price of Friden Company's common stock increased from $15 to $18.Earnings per share of common stock remained unchanged.The company's price-earnings ratio would:

Lasch Corporation has provided the following financial data from its balance sheet and income statement: -The company's equity multiplier at the end of Year 2 is closest to:

Which of the following is not a source of financial leverage?

Babbitt Corporation has provided the following data from its most recent income statement: Required: Compute the times interest earned ratio.Show your work!

Acquiring land by taking out a long-term mortgage will not affect the current ratio.

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. -The inventory turnover for Year 2 is closest to:

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. -The company's average collection period for Year 2 is closest to:

Managerial Accounting and Cost Concepts

Job-Order Costing: Calculating Unit Production Costs

Job-Order Costing: Cost Flows and External Reporting

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Super-Variable Costing

Master Budgeting

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Cost of Quality

Activity-Based Absorption Costing

The Predetermined Overhead Rate and Capacity

Job-Order Costing: a Microsoft Excel-Based Approach

Fifo Method

Service Department Allocations

Analyzing Mixed Costs

Time-Driven Activity-Based Costing: a Microsoft Excel-Based Approach

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Standard Cost Systems: a Financial Reporting Perspective Using Microsoft Excel

Transfer Pricing

Service Department Charges

Pricing Decisions

The Concept of Present Value

Income Taxes and the Present Value Method

the Direct Method of Determining the Net Cash Provided by Operating Activities

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