Question 1

The current ratio may indicate that the company is using its assets effectively.

Accepted Answer

A) True 
 B)False  False

Question 2

Extracts from the balance sheet of Detroit,Inc.are as follows:
 $2019$ Assets
Current Assets:
 $\begin{array}{ll}
\text { Cash and Cash Equivalents } & \$ 30,000 \
\text { Accounts Receivable, Net } & 65,000 \
\text { Merchandise Inventory } & \underline{50,000} \
\text { Total Current Assets } & \underline{145,000} \
\text { Long-term Investments } & 150,000 \
\text { Property, Plant, and Equipment, Net } & \underline{250,000} \
\text { Total Assets } & \underline{\$ 545,000} \
\text { Total Current Liabilities } & \underline{\$ 150,000}
\end{array}$
 Compute the acid-test ratio.

Accepted Answer

Quick assets
 $\begin{array}{ll}
\text { Cash and Cash Equivalents } & \$ 30,000 \
\text { Accounts Receivable, Net } & \underline{65,000} \
\text { Total quick assets } & \$ 95,000 \
\text { Total Current Liabilities } & \$ 150,000
\end{array}$
 Quick ratio (Total quick assets / Total current liabilities)
 Quick ratio $( \$ 95,000 / \$ 150,000 )$ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $0.63

Question 3

The financial statements of Trenton Office Supply include the following items: $$\begin{array} { | l | r | r | } 
\hline & { 2019 } & { 2018 } \
\hline & & \
\hline \text { Cash } & \$ 51,500 & \$ 45,000 \
\hline \text { Short-term Investments } & 26,000 & 13,000 \
\hline \text { Net Accounts Receivable } & 94,000 & 100,000 \
\hline \text { Merchandise Inventory } & 135,000 & 126,000 \
\hline \text { Total Assets } & 534,000 & 550,000 \
\hline \text { Total Current Liabilities } & 260,000 & 235,000 \
\hline \text { Long-term Note Payable } & 57,000 & 50,000 \
\hline & & \
\hline
\end{array}$$ What is the 2019 current ratio? (Round your answer to two decimal places.)

Accepted Answer

A)  0.85 
B)  0.57 
C)  1.18 
D)  1.68 
A)  0.85 
B)  0.57 
C)  1.18 
D)  1.68 C

Question 4

Normally,companies with low gross profit percentages will have low asset turnover.

Accepted Answer

A) True 
 B)False

Question 5

Pizza,Inc.provides the following data: $$\begin{array} { | l | r | r | } 
\hline &\underline { 2019 } &  { \underline { 2018 } } \
\hline \text { Assets } & & \ 
\hline \text { Current Assets: } & & \
\hline \text { Cash and Cash Equivalents } & \$ 34,000 & \$ 25,000 \
\hline \text { Accounts Receivable, Net } & 39,000 & 62,000 \
\hline \text { Merchandise Inventory } & \underline { 55,000 } & \underline { 50,000 } \
\hline \text { Total Current Assets } & \$ 128,000 & 137,000 \
\hline \text { Property, Plant, and Equipment, Net } & \$ 120,000 & \underline { 120,000 } \
\hline \text { Total Assets } & \underline { \$ 248,000 } & \$ 257,000 \
\hline
\end{array}$$ For the year ending December 31,2019:
$$\begin{array} { | l | r | } 
\hline \text { Net Credit Sales } & \$ 500,000 \
\hline \text { Cost of Goods Sold } & \$ 160,000 \
\hline \text { Gross Profit } & \$ 340,000 \
\hline
\end{array}$$ There are no cash sales.Calculate the asset turnover ratio for 2019.(Round your answer to two decimal places.)

Accepted Answer

A)  3.91 times 
B)  0.99 times 
C)  0.65 times 
D)  1.98 times 
A)  3.91 times 
B)  0.99 times 
C)  0.65 times 
D)  1.98 times

Question 6

To accurately determine the financial performance of a company,it is necessary to compare its performance from year to year,with a competing company,and with the same industry as a whole.

Accepted Answer

A) True 
 B)False

Question 7

The dividend yield can be calculated for both common and preferred stockholders.

Accepted Answer

A) True 
 B)False

Question 8

The relationship between total liabilities and total assets is the ________.

Accepted Answer

A)  debt ratio 
B)  debt to equity ratio 
C)  current ratio 
D)  earnings per share 
A)  debt ratio 
B)  debt to equity ratio 
C)  current ratio 
D)  earnings per share

Question 9

The current ratio is calculated as total current assets divided by total current liabilities.

Accepted Answer

A) True 
 B)False

Question 10

A high times-interest-earned ratio indicates difficulty in paying interest expense.

Accepted Answer

A) True 
 B)False

Question 11

To accurately determine the financial performance of a company,it is necessary to compare the company's performance ________.

Accepted Answer

A)  with a competing company 
B)  to the budget 
C)  with companies in different industries 
D)  only with profitable companies 
A)  with a competing company 
B)  to the budget 
C)  with companies in different industries 
D)  only with profitable companies

Question 12

Horizontal analysis is computed by dividing a specific statement line item by its base amount and then multiplying by 100.

Accepted Answer

A) True 
 B)False

Question 13

Pearlman,Inc.provides the following information for 2019: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 285,000 \
\hline \text { Market price per share of common stock } & \$ 30.00 / \text { share } \
\hline \text { Dividends paid } & \$ 1,00 / \text { share } \
\hline \text { Common stock outstanding at Jan. } 1,2019 & 120,000 \text { shares } \
\hline \text { Common stock outstanding at Dec. } 31,2019 & 130,000 \text { shares } \
\hline
\end{array}$$ The company has no preferred stock outstanding.Calculate the dividend payout ratio.(Round any intermediate calculations and your final answer to two decimal places.)

Accepted Answer

A)  42.02% 
B)  23.36% 
C)  30.00% 
D)  43.86% 
A)  42.02% 
B)  23.36% 
C)  30.00% 
D)  43.86%

Question 14

Which of the following is NOT a purpose of using of using ratios to explain different aspects of a company?

Accepted Answer

A)  evaluating profitability 
B)  evaluating stock as an investment 
C)  evaluating the ability to pay current liabilities 
D)  evaluating income tax return information 
A)  evaluating profitability 
B)  evaluating stock as an investment 
C)  evaluating the ability to pay current liabilities 
D)  evaluating income tax return information

Question 15

Benchmarking is the practice of comparing a company with other leading companies.

Accepted Answer

A) True 
 B)False

Question 16

In a vertical analysis of the balance sheet,each line item is shown as a percentage of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 17

What is an annual report? Briefly describe the key parts of the annual report.

Accepted Answer

An annual report (10-K)is a report requi

Question 18

The horizontal analysis of the balance sheet is based on the comparative balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Amber,Inc.provides the following information for 2019: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 250,000 \
\hline \text { Market price per share of common stock } & \$ 50 \text { per share } \
\hline \text { Dividends paid } & \$ 180,000 \
\hline \text { Common stock outstanding at Jan. } 1,2019 & 160,000 \text { shares } \
\hline \text { Common stock outstanding at Dec. } 31,2019 & 200,000 \text { shares } \
\hline
\end{array}$$ The company has no preferred stock outstanding.Calculate the earnings per share for 2019.(Round your answer to two decimal places.)

Accepted Answer

A)  $0.39 per share 
B)  $1.56 per share 
C)  $1.39 per share 
D)  $1.25 per share 
A)  $0.39 per share 
B)  $1.56 per share 
C)  $1.39 per share 
D)  $1.25 per share

Question 20

Commons,Inc.provides the following information for 2018: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 32,000 \
\hline \text { Market price per share of common stock } & \$ 19 / \text { share } \
\hline \text { Dividends paid } & \$ 0.75 / \text { share } \
\hline \text { Common stock outstanding at Jan. } 1,2018 & 110,000 \text { shares } \
\hline \text { Common stock outstanding at Dec. } 31,2018 & 165,000 \text { shares } \
\hline
\end{array}$$ The company has no preferred stock outstanding.Calculate the dividend yield for common stock.(Round your answer to two decimal places.)

Accepted Answer

A)  3.95% 
B)  1.21% 
C)  2.74% 
D)  4.11% 
A)  3.95% 
B)  1.21% 
C)  2.74% 
D)  4.11%

The current ratio may indicate that the company is using its assets effectively.

Normally,companies with low gross profit percentages will have low asset turnover.

To accurately determine the financial performance of a company,it is necessary to compare its performance from year to year,with a competing company,and with the same industry as a whole.

The dividend yield can be calculated for both common and preferred stockholders.

The relationship between total liabilities and total assets is the ________.

The current ratio is calculated as total current assets divided by total current liabilities.

A high times-interest-earned ratio indicates difficulty in paying interest expense.

To accurately determine the financial performance of a company,it is necessary to compare the company's performance ________.

Horizontal analysis is computed by dividing a specific statement line item by its base amount and then multiplying by 100.

Which of the following is NOT a purpose of using of using ratios to explain different aspects of a company?

Benchmarking is the practice of comparing a company with other leading companies.

In a vertical analysis of the balance sheet,each line item is shown as a percentage of stockholders' equity.

What is an annual report? Briefly describe the key parts of the annual report.

The horizontal analysis of the balance sheet is based on the comparative balance sheet.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 17: Financial Statement Analysis

The current ratio may indicate that the company is using its assets effectively.

Normally,companies with low gross profit percentages will have low asset turnover.

To accurately determine the financial performance of a company,it is necessary to compare its performance from year to year,with a competing company,and with the same industry as a whole.

The dividend yield can be calculated for both common and preferred stockholders.

The relationship between total liabilities and total assets is the ________.

The current ratio is calculated as total current assets divided by total current liabilities.

A high times-interest-earned ratio indicates difficulty in paying interest expense.

To accurately determine the financial performance of a company,it is necessary to compare the company's performance ________.

Horizontal analysis is computed by dividing a specific statement line item by its base amount and then multiplying by 100.

Which of the following is NOT a purpose of using of using ratios to explain different aspects of a company?

Benchmarking is the practice of comparing a company with other leading companies.

In a vertical analysis of the balance sheet,each line item is shown as a percentage of stockholders' equity.

What is an annual report? Briefly describe the key parts of the annual report.

The horizontal analysis of the balance sheet is based on the comparative balance sheet.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters