Question 1

Industrial figures, standards and statistics should be used with so much care that they are not a very good reference point to compare companies.

Accepted Answer

A) True 
 B)False

Question 2

Short-term creditors are usually most interested in assessing

Accepted Answer

A)  leverage. 
B)  liquidity. 
C)  marketability. 
D)  profitability. 
A)  leverage. 
B)  liquidity. 
C)  marketability. 
D)  profitability.

Question 3

A common measure of liquidity is

Accepted Answer

A)  return on total assets. 
B)  accounts receivable turnover. 
C)  return on sales. 
D)  debt to equity ratio. 
A)  return on total assets. 
B)  accounts receivable turnover. 
C)  return on sales. 
D)  debt to equity ratio.

Question 4

If equal amounts are added to the numerator and the denominator of a current ratio equal to one, the ratio will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  equal zero. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  equal zero.

Question 5

Clover Company's net income last year was $80,000. The company paid preferred dividends of $12,000 and its average common stockholders' equity was $340,000. The company's return on common stockholders' equity for the year was closest to

Accepted Answer

A)  27.1%. 
B)  3.5%. 
C)  20.0%. 
D)  23.5%. 
A)  27.1%. 
B)  3.5%. 
C)  20.0%. 
D)  23.5%.

Question 6

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Accepted Answer

A) True 
 B)False

Question 7

Trend analysis is analysis

Accepted Answer

A)  of percentage changes over several years. 
B)  in which all items are presented as a percentage of one selected item on a financial statement. 
C)  in which a statistic is calculated for the relationship between tow items on a single financial statement or for two items on different financial statements. 
D)  of all ratios that increased or decreased over past accounting periods. 
A)  of percentage changes over several years. 
B)  in which all items are presented as a percentage of one selected item on a financial statement. 
C)  in which a statistic is calculated for the relationship between tow items on a single financial statement or for two items on different financial statements. 
D)  of all ratios that increased or decreased over past accounting periods.

Question 8

Figure 16-2.Financial statements for Grange Company appear below:
     Dividends during 2014 totaled $127,000, of which $5,000 were preferred dividends.The market price of a share of common stock on December 31, 2014, was $100.
-The following ratios have been computed for Gilbert Company for 2014.
   Gilbert Company's 2014 financial statements with missing information follow:
     Required: Use the above ratios and information from the Gilbert Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.

Accepted Answer

The answer of Figure 16-2.Financial statements for Grange Company appear...

Question 9

Presented below are selected data from the financial statements of DeBruce Corp. for 2014 and 2013. $\begin{array}{lrr}&2014&2013\
\text { Net income } & \$ 110,000 & \$ 123,000 \
\text { Cash dividends paid on common stock } & \$ 42,000 & \$ 38,000 \
\text { Market price per share of common stock at the end of the year } & \$ 16.00 & \$ 13.00 \
\text { Earnings per share } & \$ 0.84 & \$ 0.74 \
\text { Shares of common stock outstanding } & 140,000 & 100,000
\end{array}$ The dividend payout ratio for 2014 is

Accepted Answer

A)  0.382. 
B)  0.05. 
C)  0.28. 
D)  0.50. 
A)  0.382. 
B)  0.05. 
C)  0.28. 
D)  0.50.

Question 10

In vertical analysis of the balance sheet, total liabilities are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 11

When computing the quick ratio, a short-term note receivable would be included.

Accepted Answer

A) True 
 B)False

Question 12

Jill's Market has an inventory turnover of 120 times. Scott's Market has a turnover of 128 times. Scott's is more effective in managing inventory.

Accepted Answer

A) True 
 B)False

Question 13

The quick ratio differs from the current ratio in that it

Accepted Answer

A)  represents the amount of cash on hand instead of the amount of working capital. 
B)  is a stricter test of a company's ability to pay its current debts as they are due. 
C)  excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible default on payment. 
D)  is more difficult to calculate. 
A)  represents the amount of cash on hand instead of the amount of working capital. 
B)  is a stricter test of a company's ability to pay its current debts as they are due. 
C)  excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible default on payment. 
D)  is more difficult to calculate.

Question 14

Return on sales is calculated by dividing

Accepted Answer

A)  sales by cost of goods sold. 
B)  gross profit by net sales. 
C)  net income by stockholders' equity. 
D)  net income by sales. 
A)  sales by cost of goods sold. 
B)  gross profit by net sales. 
C)  net income by stockholders' equity. 
D)  net income by sales.

Question 15

Select the ratio that each statement below most properly satisfies.
-A measure of the company's success in earning a return for the common stockholders

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 16

The accounts receivable turnover and inventory turnover ratios are used to analyze

Accepted Answer

A)  long-term debt-paying ability. 
B)  profitability. 
C)  leverage. 
D)  liquidity. 
A)  long-term debt-paying ability. 
B)  profitability. 
C)  leverage. 
D)  liquidity.

Question 17

The ___________________ is calculated by dividing the market price per share by earnings per share.

Accepted Answer

price-earn

Question 18

Figure 16-2.Financial statements for Grange Company appear below:
     Dividends during 2014 totaled $127,000, of which $5,000 were preferred dividends.The market price of a share of common stock on December 31, 2014, was $100.
-Refer to Figure 16-2.
Required: Compute the following profitability ratios for 2014:

Accepted Answer

The answer of Figure 16-2.Financial statements for Grange Company appear...

Question 19

Profitability ratios assess the ability of a company to meets its long- and short-term obligations.

Accepted Answer

A) True 
 B)False

Question 20

Goslier Company's net income last year was $130,000. The company paid preferred dividends of $42,000 and its average common stockholders' equity was $610,000. The company's return on common stockholders' equity for the year was closest to

Accepted Answer

A)  15.8%. 
B)  28.1%. 
C)  21.3%. 
D)  14.4%. 
A)  15.8%. 
B)  28.1%. 
C)  21.3%. 
D)  14.4%.

Industrial figures, standards and statistics should be used with so much care that they are not a very good reference point to compare companies.

Short-term creditors are usually most interested in assessing

A common measure of liquidity is

If equal amounts are added to the numerator and the denominator of a current ratio equal to one, the ratio will

Clover Company's net income last year was $80,000. The company paid preferred dividends of $12,000 and its average common stockholders' equity was $340,000. The company's return on common stockholders' equity for the year was closest to

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Trend analysis is analysis

In vertical analysis of the balance sheet, total liabilities are represented by 100%.

When computing the quick ratio, a short-term note receivable would be included.

Jill's Market has an inventory turnover of 120 times. Scott's Market has a turnover of 128 times. Scott's is more effective in managing inventory.

The quick ratio differs from the current ratio in that it

Return on sales is calculated by dividing

Select the ratio that each statement below most properly satisfies. -A measure of the company's success in earning a return for the common stockholders

The accounts receivable turnover and inventory turnover ratios are used to analyze

The ___________________ is calculated by dividing the market price per share by earnings per share.

Profitability ratios assess the ability of a company to meets its long- and short-term obligations.

Goslier Company's net income last year was $130,000. The company paid preferred dividends of $42,000 and its average common stockholders' equity was $610,000. The company's return on common stockholders' equity for the year was closest to

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

Industrial figures, standards and statistics should be used with so much care that they are not a very good reference point to compare companies.

Short-term creditors are usually most interested in assessing

A common measure of liquidity is

If equal amounts are added to the numerator and the denominator of a current ratio equal to one, the ratio will

Clover Company's net income last year was $80,000. The company paid preferred dividends of $12,000 and its average common stockholders' equity was $340,000. The company's return on common stockholders' equity for the year was closest to

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Trend analysis is analysis

In vertical analysis of the balance sheet, total liabilities are represented by 100%.

When computing the quick ratio, a short-term note receivable would be included.

Jill's Market has an inventory turnover of 120 times. Scott's Market has a turnover of 128 times. Scott's is more effective in managing inventory.

The quick ratio differs from the current ratio in that it

Return on sales is calculated by dividing

Select the ratio that each statement below most properly satisfies. -A measure of the company's success in earning a return for the common stockholders

The accounts receivable turnover and inventory turnover ratios are used to analyze

The ___________________ is calculated by dividing the market price per share by earnings per share.

Profitability ratios assess the ability of a company to meets its long- and short-term obligations.

Goslier Company's net income last year was $130,000. The company paid preferred dividends of $42,000 and its average common stockholders' equity was $610,000. The company's return on common stockholders' equity for the year was closest to

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