Question 1

Terms of sale can produce statistical variations among companies within the same industry.

Accepted Answer

A) True 
 B)False

Question 2

Toller Drug Store had net credit sales of $6,000,000 and cost of goods sold of $2,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $350,000 and $250,000, respectively. The accounts receivable turnover ratio was

Accepted Answer

A)  17.1 times. 
B)  10.0 times. 
C)  13.3 times. 
D)  20.0 times. 
A)  17.1 times. 
B)  10.0 times. 
C)  13.3 times. 
D)  20.0 times.

Question 3

A primary purpose of vertical analysis is to observe trends over a three-year period.

Accepted Answer

A) True 
 B)False

Question 4

Inventory turnover is a measure of liquidity that focuses on efficient use of inventory.

Accepted Answer

A) True 
 B)False

Question 5

MATCHING
Match the classifications of ratios with each description.
-Measures the degree of protection provided to company creditors

Accepted Answer

A) Liquidity Ratio 
B) Leverage Ratio 
C) Profitability Ratio 
D) Horizontal Analysis 
E) Trend Analysis 
A) Liquidity Ratio 
B) Leverage Ratio 
C) Profitability Ratio 
D) Horizontal Analysis 
E) Trend Analysis

Question 6

A common measure of profitability is

Accepted Answer

A)  the quick ratio. 
B)  times-interest-earned ratio. 
C)  return on common stockholders' equity ratio. 
D)  debt ratio. 
A)  the quick ratio. 
B)  times-interest-earned ratio. 
C)  return on common stockholders' equity ratio. 
D)  debt ratio.

Question 7

The quick ratio

Accepted Answer

A)  does not include inventory as part of the numerator. 
B)  does not include all current liabilities in the calculation. 
C)  is a quick calculation of an approximation of the current ratio. 
D)  includes prepaid expenses as part of the numerator. 
A)  does not include inventory as part of the numerator. 
B)  does not include all current liabilities in the calculation. 
C)  is a quick calculation of an approximation of the current ratio. 
D)  includes prepaid expenses as part of the numerator.

Question 8

A number of online sources contain competitive information on individual company's ratios.

Accepted Answer

A) True 
 B)False

Question 9

Creditors would like the debt-to-equity ratio to be _______, indicating that stockholders have financed most of the assets of the firm.

Accepted Answer

The answer of Creditors would like the debt-to-equity ratio to...

Question 10

Eaton Corporation had net income of $6,000,000 in 2010. Using 2014 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014.
Required: Compute the net income reported by Eaton Corporation for 2013 and 2014.

Accepted Answer

The answer of Eaton Corporation had net income of $6,000,000...

Question 11

The two major techniques for financial analysis are

Accepted Answer

A)  horizontal analysis and circular analysis. 
B)  receivable analysis and profitability analysis. 
C)  vertical analysis and budget analysis. 
D)  common-size analysis and ratio analysis. 
A)  horizontal analysis and circular analysis. 
B)  receivable analysis and profitability analysis. 
C)  vertical analysis and budget analysis. 
D)  common-size analysis and ratio analysis.

Question 12

A high accounts receivable turnover ratio indicates

Accepted Answer

A)  customers are making payments quickly. 
B)  a large portion of the company's sales are on credit. 
C)  many customers are not paying their receivables. 
D)  the company's sales have increased. 
A)  customers are making payments quickly. 
B)  a large portion of the company's sales are on credit. 
C)  many customers are not paying their receivables. 
D)  the company's sales have increased.

Question 13

A company has an average inventory on hand of $100,000 and the days in inventory are 73 days. What is the cost of goods sold?

Accepted Answer

A)  $500,000 
B)  $7,300,000 
C)  $1,000,000 
D)  $3,650,000 
A)  $500,000 
B)  $7,300,000 
C)  $1,000,000 
D)  $3,650,000

Question 14

Siri Company has $20,000 in cash, $8,000 in marketable securities, $36,000 in current receivables, $18,000 in inventories, and $68,000 in current liabilities. The company's quick ratio is closest to

Accepted Answer

A)  .94. 
B)  .41. 
C)  1.88. 
D)  1.21. 
A)  .94. 
B)  .41. 
C)  1.88. 
D)  1.21.

Question 15

Which of the following is an example of liquidity analysis?

Accepted Answer

A)  Bonds payable are divided by total liabilities and stockholders' equity. 
B)  Current assets are divided by current liabilities. 
C)  Net income is divided by the number of shares of stock outstanding. 
D)  Net income is divided by total assets. 
A)  Bonds payable are divided by total liabilities and stockholders' equity. 
B)  Current assets are divided by current liabilities. 
C)  Net income is divided by the number of shares of stock outstanding. 
D)  Net income is divided by total assets.

Question 16

Select the ratio that each statement below most properly satisfies.
-A ratio that indicates what proportion of equity and debt the company is using to finance its assets.

Accepted Answer

A) Dividend yield ratio 
B) Current ratio 
C) Debt ratio 
D) Return on common stockholders' equity ratio 
E) Times-interest-earned ratio
F)Quick ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price-earnings ratio 
A) Dividend yield ratio 
B) Current ratio 
C) Debt ratio 
D) Return on common stockholders' equity ratio 
E) Times-interest-earned ratio
F)Quick ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price-earnings ratio

Question 17

Starbuck Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000 in 2013. The weighted average number of shares outstanding in 2013 was 50,000 shares. Starbuck Corporation's common stock is selling for $40 per share on the New York Stock Exchange.
-Refer to Starbuck's dividend payout ratio for 2013 is

Accepted Answer

A)  $5 per share. 
B)  0.25. 
C)  0.20. 
D)  0.125. 
A)  $5 per share. 
B)  0.25. 
C)  0.20. 
D)  0.125.

Question 18

The current assets of Caitlin Company are $360,000. The current liabilities are $240,000. The current ratio is

Accepted Answer

A)  1.25. 
B)  1.50. 
C)  0.67. 
D)  cannot be determined from the information provided. 
A)  1.25. 
B)  1.50. 
C)  0.67. 
D)  cannot be determined from the information provided.

Question 19

Dividing the market price of a share of stock by the earnings per share gives the price-earnings ratio.

Accepted Answer

A) True 
 B)False

Question 20

The inventory turnover ratio measures the number of days the average balance of accounts receivable is outstanding before being converted into cash.

Accepted Answer

A) True 
 B)False

Terms of sale can produce statistical variations among companies within the same industry.

Toller Drug Store had net credit sales of $6,000,000 and cost of goods sold of $2,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $350,000 and $250,000, respectively. The accounts receivable turnover ratio was

A primary purpose of vertical analysis is to observe trends over a three-year period.

Inventory turnover is a measure of liquidity that focuses on efficient use of inventory.

MATCHING Match the classifications of ratios with each description. -Measures the degree of protection provided to company creditors

A common measure of profitability is

The quick ratio

A number of online sources contain competitive information on individual company's ratios.

Creditors would like the debt-to-equity ratio to be _______, indicating that stockholders have financed most of the assets of the firm.

Eaton Corporation had net income of $6,000,000 in 2010. Using 2014 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014. Required: Compute the net income reported by Eaton Corporation for 2013 and 2014.

The two major techniques for financial analysis are

A high accounts receivable turnover ratio indicates

A company has an average inventory on hand of $100,000 and the days in inventory are 73 days. What is the cost of goods sold?

Siri Company has $20,000 in cash, $8,000 in marketable securities, $36,000 in current receivables, $18,000 in inventories, and $68,000 in current liabilities. The company's quick ratio is closest to

Which of the following is an example of liquidity analysis?

Select the ratio that each statement below most properly satisfies. -A ratio that indicates what proportion of equity and debt the company is using to finance its assets.

The current assets of Caitlin Company are $360,000. The current liabilities are $240,000. The current ratio is

Dividing the market price of a share of stock by the earnings per share gives the price-earnings ratio.

The inventory turnover ratio measures the number of days the average balance of accounts receivable is outstanding before being converted into cash.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Filters

Exam 16: Financial Statement Analysis

Terms of sale can produce statistical variations among companies within the same industry.

Toller Drug Store had net credit sales of $6,000,000 and cost of goods sold of $2,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $350,000 and $250,000, respectively. The accounts receivable turnover ratio was

A primary purpose of vertical analysis is to observe trends over a three-year period.

Inventory turnover is a measure of liquidity that focuses on efficient use of inventory.

MATCHING Match the classifications of ratios with each description. -Measures the degree of protection provided to company creditors

A common measure of profitability is

The quick ratio

A number of online sources contain competitive information on individual company's ratios.

Creditors would like the debt-to-equity ratio to be _______, indicating that stockholders have financed most of the assets of the firm.

Eaton Corporation had net income of $6,000,000 in 2010. Using 2014 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014. Required: Compute the net income reported by Eaton Corporation for 2013 and 2014.

The two major techniques for financial analysis are

A high accounts receivable turnover ratio indicates

A company has an average inventory on hand of $100,000 and the days in inventory are 73 days. What is the cost of goods sold?

Siri Company has $20,000 in cash, $8,000 in marketable securities, $36,000 in current receivables, $18,000 in inventories, and $68,000 in current liabilities. The company's quick ratio is closest to

Which of the following is an example of liquidity analysis?

Select the ratio that each statement below most properly satisfies. -A ratio that indicates what proportion of equity and debt the company is using to finance its assets.

The current assets of Caitlin Company are $360,000. The current liabilities are $240,000. The current ratio is

Dividing the market price of a share of stock by the earnings per share gives the price-earnings ratio.

The inventory turnover ratio measures the number of days the average balance of accounts receivable is outstanding before being converted into cash.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Filters