Question 1

The DuPont method return on assets uses two component ratios.What are they?

Accepted Answer

A) Inventory turnover * gross profit margin 
B) Times interest earned * debt ratio 
C) Return on equity * dividend payout 
D) Net profit margin * total asset turnover 
E) Return on investment * total investment turnover 
A) Inventory turnover * gross profit margin 
B) Times interest earned * debt ratio 
C) Return on equity * dividend payout 
D) Net profit margin * total asset turnover 
E) Return on investment * total investment turnover D

Question 2

Segment data contain information about geographic markets,including foreign countries.

Accepted Answer

A) True 
 B)False  True

Question 3

Either a drop in net profit margin or a drop in total asset turnover,or both,can cause return on assets to fall.

Accepted Answer

A) True 
 B)False  True

Question 4

In order to compute gross profit margin,the income statement must be in single-step format.

Accepted Answer

A) True 
 B)False

Question 5

Match the ratio that goes with each formula.
-$\frac{\text { Gross Profit }}{\text { NetSales }}$

Accepted Answer

A) net profit margin 
B) total asset turnover 
C) return on assets 
D) DuPont return on assets 
E) operating income margin
F)operating asset turnover
G)return on operating assets
H)DuPont return on operating assets
I)sales to fixed assets
J)return on investment
K)return on total equity
L)return on common equity
M)gross profit margin 
A) net profit margin 
B) total asset turnover 
C) return on assets 
D) DuPont return on assets 
E) operating income margin
F)operating asset turnover
G)return on operating assets
H)DuPont return on operating assets
I)sales to fixed assets
J)return on investment
K)return on total equity
L)return on common equity
M)gross profit margin

Question 6

Match each term to its best description or definition.
-Vertical,common-size statement

Accepted Answer

A) Full or partial statements expressed in percentages of a given base. 
B) Requires full financial statements on a quarterly basis. 
C) All statement figures are expressed as a percentage of a base figure from that year's statement. 
D) A breakdown by major lines of business,only required in SEC reporting. 
E) A breakdown by major lines of business.
F)All statement figures are expressed as a percentage of base-year figures.
G)Requires estimation of some expense items.
H)A comparison of financial data over time.
I)Visual aids to understanding financial data. 
A) Full or partial statements expressed in percentages of a given base. 
B) Requires full financial statements on a quarterly basis. 
C) All statement figures are expressed as a percentage of a base figure from that year's statement. 
D) A breakdown by major lines of business,only required in SEC reporting. 
E) A breakdown by major lines of business.
F)All statement figures are expressed as a percentage of base-year figures.
G)Requires estimation of some expense items.
H)A comparison of financial data over time.
I)Visual aids to understanding financial data.

Question 7

Net profit margin is net profit before noncontrolling share of earnings and nonrecurring items to total assets.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a base against which profits are measured?

Accepted Answer

A) Owners' equity 
B) Owners' and creditors' funds provided 
C) Intangibles 
D) Revenues 
E) Productive assets 
A) Owners' equity 
B) Owners' and creditors' funds provided 
C) Intangibles 
D) Revenues 
E) Productive assets

Question 9

Changes in the cost of goods sold can have a substantial impact on gross profit margin.

Accepted Answer

A) True 
 B)False

Question 10

Match the ratio that goes with each formula.
-$\frac{\text { Operating Income }}{\text { Net Sales }}$

Accepted Answer

A) net profit margin 
B) total asset turnover 
C) return on assets 
D) DuPont return on assets 
E) operating income margin
F)operating asset turnover
G)return on operating assets
H)DuPont return on operating assets
I)sales to fixed assets
J)return on investment
K)return on total equity
L)return on common equity
M)gross profit margin 
A) net profit margin 
B) total asset turnover 
C) return on assets 
D) DuPont return on assets 
E) operating income margin
F)operating asset turnover
G)return on operating assets
H)DuPont return on operating assets
I)sales to fixed assets
J)return on investment
K)return on total equity
L)return on common equity
M)gross profit margin

Question 11

Interim reporting recognizes that timeliness of data offsets lack of detail and requires only minimum data.

Accepted Answer

A) True 
 B)False

Question 12

Noncontrolling interest share of earnings is:

Accepted Answer

A) the total earnings of unconsolidated subsidiaries. 
B) earnings based on the percent of holdings by parent company of unconsolidated subsidiaries. 
C) the total earnings of consolidated subsidiaries. 
D) earnings based on the percent of holdings by outside owners of consolidated subsidiaries. 
E) none of the answers are correct. 
A) the total earnings of unconsolidated subsidiaries. 
B) earnings based on the percent of holdings by parent company of unconsolidated subsidiaries. 
C) the total earnings of consolidated subsidiaries. 
D) earnings based on the percent of holdings by outside owners of consolidated subsidiaries. 
E) none of the answers are correct.

Question 13

Total asset turnover measures the ability of a firm to:

Accepted Answer

A) generate profits on sales. 
B) generate sales through the use of assets. 
C) buy new assets. 
D) move inventory. 
E) cover long-term debt. 
A) generate profits on sales. 
B) generate sales through the use of assets. 
C) buy new assets. 
D) move inventory. 
E) cover long-term debt.

Question 14

Net earnings before deducting noncontrolling share of earnings is utilized in the following ratios,since noncontrolling interests are included in the base.Which ratio is an exception to this statement?

Accepted Answer

A) Net profit margin 
B) Return on assets 
C) Return on equity 
D) Return on investment 
E) None of the answers are correct. 
A) Net profit margin 
B) Return on assets 
C) Return on equity 
D) Return on investment 
E) None of the answers are correct.

Question 15

Which of the following is not a reporting requirement on interim reports?

Accepted Answer

A) Seasonal information 
B) Major changes in income tax provision 
C) Full balance sheet 
D) Earnings per share 
E) Significant changes in financial position 
A) Seasonal information 
B) Major changes in income tax provision 
C) Full balance sheet 
D) Earnings per share 
E) Significant changes in financial position

Question 16

Return on investment measures the return on long-term suppliers of funds.

Accepted Answer

A) True 
 B)False

Question 17

Ratios of profits to sales and to identifiable assets can help to analyze profitability by segment.

Accepted Answer

A) True 
 B)False

Question 18

Match each term to its best description or definition.
-Segment reporting

Accepted Answer

A) Full or partial statements expressed in percentages of a given base. 
B) Requires full financial statements on a quarterly basis. 
C) All statement figures are expressed as a percentage of a base figure from that year's statement. 
D) A breakdown by major lines of business,only required in SEC reporting. 
E) A breakdown by major lines of business.
F)All statement figures are expressed as a percentage of base-year figures.
G)Requires estimation of some expense items.
H)A comparison of financial data over time.
I)Visual aids to understanding financial data. 
A) Full or partial statements expressed in percentages of a given base. 
B) Requires full financial statements on a quarterly basis. 
C) All statement figures are expressed as a percentage of a base figure from that year's statement. 
D) A breakdown by major lines of business,only required in SEC reporting. 
E) A breakdown by major lines of business.
F)All statement figures are expressed as a percentage of base-year figures.
G)Requires estimation of some expense items.
H)A comparison of financial data over time.
I)Visual aids to understanding financial data.

Question 19

High fixed costs in a period of low activity can cause a low net profit margin.

Accepted Answer

A) True 
 B)False

Question 20

Equity earnings are usually lower than the cash generated from the investment as dividends.

Accepted Answer

A) True 
 B)False

The DuPont method return on assets uses two component ratios.What are they?

Segment data contain information about geographic markets,including foreign countries.

Either a drop in net profit margin or a drop in total asset turnover,or both,can cause return on assets to fall.

In order to compute gross profit margin,the income statement must be in single-step format.

Match the ratio that goes with each formula. - $\frac{\text { Gross Profit }}{\text { NetSales }}$

Match each term to its best description or definition. -Vertical,common-size statement

Net profit margin is net profit before noncontrolling share of earnings and nonrecurring items to total assets.

Which of the following is not a base against which profits are measured?

Changes in the cost of goods sold can have a substantial impact on gross profit margin.

Match the ratio that goes with each formula. - $\frac{\text { Operating Income }}{\text { Net Sales }}$

Interim reporting recognizes that timeliness of data offsets lack of detail and requires only minimum data.

Noncontrolling interest share of earnings is:

Total asset turnover measures the ability of a firm to:

Net earnings before deducting noncontrolling share of earnings is utilized in the following ratios,since noncontrolling interests are included in the base.Which ratio is an exception to this statement?

Which of the following is not a reporting requirement on interim reports?

Return on investment measures the return on long-term suppliers of funds.

Ratios of profits to sales and to identifiable assets can help to analyze profitability by segment.

Match each term to its best description or definition. -Segment reporting

High fixed costs in a period of low activity can cause a low net profit margin.

Equity earnings are usually lower than the cash generated from the investment as dividends.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 8: Profitability

The DuPont method return on assets uses two component ratios.What are they?

Segment data contain information about geographic markets,including foreign countries.

Either a drop in net profit margin or a drop in total asset turnover,or both,can cause return on assets to fall.

In order to compute gross profit margin,the income statement must be in single-step format.

Match the ratio that goes with each formula. - Gross Profit NetSales \frac{\text { Gross Profit }}{\text { NetSales }} NetSales Gross Profit ​

Match each term to its best description or definition. -Vertical,common-size statement

Net profit margin is net profit before noncontrolling share of earnings and nonrecurring items to total assets.

Which of the following is not a base against which profits are measured?

Changes in the cost of goods sold can have a substantial impact on gross profit margin.

Match the ratio that goes with each formula. - Operating Income Net Sales \frac{\text { Operating Income }}{\text { Net Sales }} Net Sales Operating Income ​

Interim reporting recognizes that timeliness of data offsets lack of detail and requires only minimum data.

Noncontrolling interest share of earnings is:

Total asset turnover measures the ability of a firm to:

Net earnings before deducting noncontrolling share of earnings is utilized in the following ratios,since noncontrolling interests are included in the base.Which ratio is an exception to this statement?

Which of the following is not a reporting requirement on interim reports?

Return on investment measures the return on long-term suppliers of funds.

Ratios of profits to sales and to identifiable assets can help to analyze profitability by segment.

Match each term to its best description or definition. -Segment reporting

High fixed costs in a period of low activity can cause a low net profit margin.

Equity earnings are usually lower than the cash generated from the investment as dividends.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Match the ratio that goes with each formula. - $\frac{\text { Gross Profit }}{\text { NetSales }}$

Match the ratio that goes with each formula. - $\frac{\text { Operating Income }}{\text { Net Sales }}$