Question 1

-Using the information given, analyze the financial strength of Quotidian Industries for 2013.

Accepted Answer

Number of times bond interest earned = 31.2
Ratio of stockholders' equity to total equities = .828
Ratio of stockholders' equity to total liabilities = 4.815
Book value per share of common stock (N/A - no preferred stock)

Question 2

-Using the information given below, calculate the gross profit percentage based on net sales. What conclusions can be made about this company based on this trend analysis?

Accepted Answer

Conclusions: Although sales are increasing steadily, gross profit is declining. In 2014, the gross profit increased over 2013, but is still below the 53% shown in 2013. Future years will tell whether or not the company has turned the decline in the gross profit percentage or whether it was only that year. If management took steps in 2014 to turn the downward trend in gross profit, then those actions worked. Only future years will confirm this.

Question 3

-Using the information given, analyze the profitability ratios of Quotidian Industries for 2013.

Accepted Answer

Rate of Return on Net Sales = 34.67%
Rate of Return on Common Stock Equity = 40.20%
Earnings per share of common stock = 16.85
Price Earnings Ratio = 5.697
Yield on common stock = N/A No dividend reported declared or paid
Rate of Return on Total Assets = 22.8%
Asset Turnover = 59.26

Question 4

On a comparative balance sheet that shows horizontal analysis, the percentage of change in total assets must equal the percentage of change in total liabilities and stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 5

The following financial information was taken from a firm's accounting records on December 31, 2013. Use this information to determine the items below. $\begin{array}{lr}
\text { Net Sales } & \$ 400,000 \
\text { Net Income Before Income Tax } & 25,000 \
\text { Income Tax Expense } & 3,750 \
\text { Net Income After Income Tax } & 21,250 \
\text { Total Assets } & 160,000
\end{array}$ (1) Rate of return on net sales.
(2) Rate of return on total assets.
(3) Asset turnover.

Accepted Answer

1. 5.3%; 2

Question 6

You are a loan officer with Scotia Bank. Select at least two of the ratios listed as most useful to you for a decision regarding providing loan proceeds to DC, Inc. and AR, Inc. companies? What additional ratios would you request? Why?
Ratios: Working Capital
Current Ratio
Acid Test Ratio
Inventory Turnover
Accounts Receivable Turnover

Accepted Answer

The ratios listed are all liquidity rati

Question 7

The yield on common stock is computed by dividing the dividend per share of common stock by the current ____________________ price of the share.

Accepted Answer

The answer of The yield on common stock is computed...

Question 8

The following financial information was taken from a Unit Sales Inc.'s accounting records on December 31, 2013. Use this information to determine the items below. $$\begin{array} { l r } 
\text { Net Sales } & \$ 1,200,000 \
\text { Gross Profit on Sales } & 400,000 \
\text { Net Income Before Income Tax } & 66,000 \
\text { Income Tax Expense } & 21,000 \
\text { Net Income After Income Tax } & 45,500 \
\text { Total Assets } & \$ 800,000
\end{array}$$ (1) Rate of return on net sales.
(2) Rate of return on total assets.
(3) Asset turnover.

Accepted Answer

1. 5.50%;

Question 9

In vertical analysis of the balance sheet, each item is expressed as a percentage of

Accepted Answer

A)  current liabilities. 
B)  current assets. 
C)  long-term liabilities. 
D)  total assets or of total liabilities and stockholders' equity. 
A)  current liabilities. 
B)  current assets. 
C)  long-term liabilities. 
D)  total assets or of total liabilities and stockholders' equity.

Question 10

A decrease in cost of goods sold from 46.5% to 45.0% from 2012 to 2013 indicates a favorable long-term trend.

Accepted Answer

A) True 
 B)False

Question 11

Quick assets include cash, receivables, and inventories.

Accepted Answer

A) True 
 B)False

Question 12

What is a ratio that measures financial strength?

Accepted Answer

A)  ratio of stockholders' equity to total liabilities 
B)  current ratio 
C)  working capital 
D)  rate of return on sales 
A)  ratio of stockholders' equity to total liabilities 
B)  current ratio 
C)  working capital 
D)  rate of return on sales

Question 13

The acid-test ratio is computed by dividing ____________________ assets by current liabilities.

Accepted Answer

The answer of The acid-test ratio is computed by dividing...

Question 14

A company reported an expense of $30,000 for the current year that was $6,000 higher than the previous year. The increase from last year to this year was ____________________ percent.

Accepted Answer

The answer of A company reported an expense of $30,000...

Question 15

If current liabilities are $90,000, long-term liabilities are $270,000, and total assets are $600,000, what is the percentage of total liabilities to total assets?

Accepted Answer

A)  15 percent 
B)  45 percent 
C)  60 percent 
D)  100 percent 
A)  15 percent 
B)  45 percent 
C)  60 percent 
D)  100 percent

Question 16

-Using the information shown, prepare a vertical analysis. Carry all calculations to two decimal places and then round to one decimal place. (Leave all percentages unadjusted.)

Accepted Answer

The answer of  
-Using the information shown, prepare a...

Question 17

The following financial information was taken from a firm's accounting records for 2013. Use this information to determine the items below. $\begin{array}{lrr} 
& \text { Jan. 1 } & {\text { Dec. } 31} \
\text { Accounts Receivable } & \$ 285,000 & \$ 418,000 \
\text { Merchandise Inventory } & 375,000 & 425,000 \
\text { Net Credit Sales } & & 3,200,000 \
\text { Gross Profit on Sales } & & 2,200,000
\end{array}$ (1) Inventory turnover.
(2) Accounts receivable turnover.
(3) Average collection period of accounts receivable.

Accepted Answer

1. 2.5 tim

Question 18

In vertical analysis, it is customary to express each item on the balance sheet as a percentage of total liabilities.

Accepted Answer

A) True 
 B)False

Question 19

The rate of return on net sales is a basic measure of operating efficiency and ___________________.

Accepted Answer

The answer of The rate of return on net sales...

Question 20

A comparison of data for the current period with the same data of the company for previous periods is called ____________________ analysis.

Accepted Answer

The answer of A comparison of data for the current...

-Using the information given, analyze the financial strength of Quotidian Industries for 2013.

-Using the information given below, calculate the gross profit percentage based on net sales. What conclusions can be made about this company based on this trend analysis?

-Using the information given, analyze the profitability ratios of Quotidian Industries for 2013.

On a comparative balance sheet that shows horizontal analysis, the percentage of change in total assets must equal the percentage of change in total liabilities and stockholders' equity.

The yield on common stock is computed by dividing the dividend per share of common stock by the current ____________________ price of the share.

In vertical analysis of the balance sheet, each item is expressed as a percentage of

A decrease in cost of goods sold from 46.5% to 45.0% from 2012 to 2013 indicates a favorable long-term trend.

Quick assets include cash, receivables, and inventories.

What is a ratio that measures financial strength?

The acid-test ratio is computed by dividing ____________________ assets by current liabilities.

A company reported an expense of $30,000 for the current year that was $6,000 higher than the previous year. The increase from last year to this year was ____________________ percent.

If current liabilities are $90,000, long-term liabilities are $270,000, and total assets are $600,000, what is the percentage of total liabilities to total assets?

-Using the information shown, prepare a vertical analysis. Carry all calculations to two decimal places and then round to one decimal place. (Leave all percentages unadjusted.)

In vertical analysis, it is customary to express each item on the balance sheet as a percentage of total liabilities.

The rate of return on net sales is a basic measure of operating efficiency and ___________________.

A comparison of data for the current period with the same data of the company for previous periods is called ____________________ analysis.

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

Filters

Exam 23: Financial Statement Analysis

-Using the information given, analyze the financial strength of Quotidian Industries for 2013.

-Using the information given below, calculate the gross profit percentage based on net sales. What conclusions can be made about this company based on this trend analysis?

-Using the information given, analyze the profitability ratios of Quotidian Industries for 2013.

On a comparative balance sheet that shows horizontal analysis, the percentage of change in total assets must equal the percentage of change in total liabilities and stockholders' equity.

The yield on common stock is computed by dividing the dividend per share of common stock by the current ____________________ price of the share.

In vertical analysis of the balance sheet, each item is expressed as a percentage of

A decrease in cost of goods sold from 46.5% to 45.0% from 2012 to 2013 indicates a favorable long-term trend.

Quick assets include cash, receivables, and inventories.

What is a ratio that measures financial strength?

The acid-test ratio is computed by dividing ____________________ assets by current liabilities.

A company reported an expense of $30,000 for the current year that was $6,000 higher than the previous year. The increase from last year to this year was ____________________ percent.

If current liabilities are $90,000, long-term liabilities are $270,000, and total assets are $600,000, what is the percentage of total liabilities to total assets?

-Using the information shown, prepare a vertical analysis. Carry all calculations to two decimal places and then round to one decimal place. (Leave all percentages unadjusted.)

In vertical analysis, it is customary to express each item on the balance sheet as a percentage of total liabilities.

The rate of return on net sales is a basic measure of operating efficiency and ___________________.

A comparison of data for the current period with the same data of the company for previous periods is called ____________________ analysis.

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

Filters