Question 1

An increase in the number of shares of common stock outstanding will increase a company's price-earnings ratio if the market price per share remains unchanged.

Accepted Answer

A) True 
 B)False

Question 2

Data from Lheureux Corporation's most recent balance sheet and the company's income statement appear below:     The debt-to-equity ratio at the end of Year 2 is closest to:

Accepted Answer

A) 0.38 
B) 0.13 
C) 0.16 
D) 0.43 
A) 0.38 
B) 0.13 
C) 0.16 
D) 0.43

Question 3

The acid-test ratio is usually greater than the current ratio.

Accepted Answer

A) True 
 B)False

Question 4

Klein Corporation has provided the following data: $$\begin{array} { | l | r | r | } 
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Total assets } & \$ 1,337,000 & \$ 1,310,000 \
\hline \text { Total liabilities } & \$ 598,000 & \$ 580,000 \
\hline \begin{array} { l } 
\text { Total stockholders' } \
\text { equity }
\end{array} & \$ 739,000 & \$ 730,000 \
\hline
\end{array}$$ The company's equity multiplier is closest to:

Accepted Answer

A) 1.24 
B) 0.56 
C) 1.80 
D) 0.81 
A) 1.24 
B) 0.56 
C) 1.80 
D) 0.81

Question 5

Data from Keniston Corporation's most recent balance sheet and income statement appear below: $$\begin{array} { | l r | r | } 
\hline & \text { This Year } & \text { Last Year } \
\hline \text { Accounts receivable } & \$ 128,000 & \$ 114,000 \
\hline \text { Inventory } & \$ 228,000 & \$ 193,000 \
\hline \text { Sales on account } & \$ 813,000 & \
\hline \text { Cost of goods sold } & \$ 597,000 & \
\hline
\end{array}$$ The average collection period for this year is closest to:

Accepted Answer

A) 39.1 days 
B) 45.1 days 
C) 54.3 days 
D) 57.5 days 
A) 39.1 days 
B) 45.1 days 
C) 54.3 days 
D) 57.5 days

Question 6

Walker Corporation has provided the following financial data:   The company's net operating income for Year 2 was $63,615 and its interest expense was $15,000.
Required:
a. What is the company's working capital at the end of Year 2?
b. What is the company's current ratio at the end of Year 2?
c. What is the company's acid-test (quick) ratio at the end of Year 2?
d. What is the company's times interest earned for Year 2?
e. What is the company's debt-to-equity ratio at the end of Year 2?
f. What is the company's equity multiplier at the end of Year 2?

Accepted Answer

a. Working capital = Current assets - Cu

Question 7

Rawdon Corporation's net operating income in Year 2 was $52,429, net income before taxes was $34,429, and the net income was $24,100. Total common stock was $360,000 at the end of both Year 2 and Year 1. The par value of common stock is $4 per share. The company's total stockholders' equity at the end of Year 2 amounted to $976,000 and at the end of Year 1 to $960,000. The company's earnings per share for Year 2 is closest to:

Accepted Answer

A) $0.58 per share 
B) $0.38 per share 
C) $0.27 per share 
D) $5.84 per share 
A) $0.58 per share 
B) $0.38 per share 
C) $0.27 per share 
D) $5.84 per share

Question 8

Nickolls Corporation has provided the following financial data:   The company's acid-test (quick) ratio is closest to:

Accepted Answer

A) 2.47 
B) 2.83 
C) 3.10 
D) 4.25 
A) 2.47 
B) 2.83 
C) 3.10 
D) 4.25

Question 9

All other things the same, when a customer purchases an item for cash, the accounts receivable turnover ratio increases.

Accepted Answer

A) True 
 B)False

Question 10

Guttery Corporation has provided the following financial data from its balance sheet:   Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's average collection period (age of receivables) for Year 2 is closest to:

Accepted Answer

A) 1.1 days 
B) 28.2 days 
C) 1.0 days 
D) 27.9 days 
A) 1.1 days 
B) 28.2 days 
C) 1.0 days 
D) 27.9 days

Question 11

Financial statements for Maraby Corporation appear below:     Maraby Corporation's working capital (in thousands of dollars) at the end of Year 2 was closest to:

Accepted Answer

A) $260 
B) $620 
C) $360 
D) $990 
A) $260 
B) $620 
C) $360 
D) $990

Question 12

If current assets exceed current liabilities, prepaying an expense on the last day of the year will:

Accepted Answer

A) decrease the current ratio. 
B) increase the acid-test ratio. 
C) decrease the acid-test ratio. 
D) increase the current ratio. 
A) decrease the current ratio. 
B) increase the acid-test ratio. 
C) decrease the acid-test ratio. 
D) increase the current ratio.

Question 13

Kearin Corporation has provided the following financial data:     Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at the end of Year 2 was $2.02 per share. The company's gross margin percentage for Year 2 is closest to:

Accepted Answer

A) 62.5% 
B) 4.2% 
C) 38.5% 
D) 2381.0% 
A) 62.5% 
B) 4.2% 
C) 38.5% 
D) 2381.0%

Question 14

Excerpts from Colter Corporation's most recent balance sheet appear below:   Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The acid-test ratio at the end of Year 2 is closest to:

Accepted Answer

A) 0.72 
B) 0.83 
C) 0.59 
D) 1.25 
A) 0.72 
B) 0.83 
C) 0.59 
D) 1.25

Question 15

For Year 2, Etzkorn Corporation's sales were $1,480,000, its gross margin was $580,000, its net operating income was $63,714, its net income before taxes was $42,714, and its net income was $29,900. The company's total stockholders' equity at the end of Year 2 amounted to $829,000 and at the end of Year 1 to $800,000. The company's return on equity for Year 2 is closest to:

Accepted Answer

A) 3.67% 
B) 60.16% 
C) 5.24% 
D) 7.82% 
A) 3.67% 
B) 60.16% 
C) 5.24% 
D) 7.82%

Question 16

Excerpts from Candle Corporation's most recent balance sheet (in thousands of dollars) appear below:   Sales on account during the year totaled $1,200 thousand. Cost of goods sold was $800 thousand.
Required:
Compute the following for Year 2:
a. Working capital.
b. Current ratio.
c. Acid-test ratio.
d. Accounts receivable turnover.
e. Average collection period.
f. Inventory turnover.
g. Average sale period.

Accepted Answer

a. Working capital = Current assets - Cu

Question 17

As the accounts receivable turnover ratio decreases, the average collection period increases.

Accepted Answer

A) True 
 B)False

Question 18

Guttery Corporation has provided the following financial data from its balance sheet:   Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's accounts receivable turnover for Year 2 is closest to:

Accepted Answer

A) 12.95 
B) 1.02 
C) 0.98 
D) 13.06 
A) 12.95 
B) 1.02 
C) 0.98 
D) 13.06

Question 19

Dahn Corporation has provided the following financial data:     Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's average sale period (turnover in days) for Year 2 is closest to:

Accepted Answer

A) 226.5 days 
B) 60.1 days 
C) 40.0 days 
D) 64.4 days 
A) 226.5 days 
B) 60.1 days 
C) 40.0 days 
D) 64.4 days

Question 20

Turner Co. presently has a current ratio of 0.8. The company has been informed by its bank that it must improve its current ratio to qualify for a line of credit. Which of the following actions would improve the current ratio?

Accepted Answer

A) Use cash to pay off some current liabilities. 
B) Purchase additional marketable securities with cash. 
C) Acquire a parcel of land in exchange for common stock. 
D) Purchase additional inventory on credit. 
A) Use cash to pay off some current liabilities. 
B) Purchase additional marketable securities with cash. 
C) Acquire a parcel of land in exchange for common stock. 
D) Purchase additional inventory on credit.

An increase in the number of shares of common stock outstanding will increase a company's price-earnings ratio if the market price per share remains unchanged.

Data from Lheureux Corporation's most recent balance sheet and the company's income statement appear below: The debt-to-equity ratio at the end of Year 2 is closest to:

The acid-test ratio is usually greater than the current ratio.

Klein Corporation has provided the following data: Year 2 Year 1 Total assets \ 1,337,000 \ 1,310,000 Total liabilities \ 598,000 \ 580,000 Total stockholders' equity \ 739,000 \ 730,000 The company's equity multiplier is closest to:

Data from Keniston Corporation's most recent balance sheet and income statement appear below: This Year Last Year Accounts receivable \ 128,000 \ 114,000 Inventory \ 228,000 \ 193,000 Sales on account \ 813,000 Cost of goods sold \ 597,000 The average collection period for this year is closest to:

Nickolls Corporation has provided the following financial data: The company's acid-test (quick) ratio is closest to:

All other things the same, when a customer purchases an item for cash, the accounts receivable turnover ratio increases.

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's average collection period (age of receivables) for Year 2 is closest to:

Financial statements for Maraby Corporation appear below: Maraby Corporation's working capital (in thousands of dollars) at the end of Year 2 was closest to:

If current assets exceed current liabilities, prepaying an expense on the last day of the year will:

Kearin Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at the end of Year 2 was $2.02 per share. The company's gross margin percentage for Year 2 is closest to:

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The acid-test ratio at the end of Year 2 is closest to:

As the accounts receivable turnover ratio decreases, the average collection period increases.

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's accounts receivable turnover for Year 2 is closest to:

Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's average sale period (turnover in days) for Year 2 is closest to:

Turner Co. presently has a current ratio of 0.8. The company has been informed by its bank that it must improve its current ratio to qualify for a line of credit. Which of the following actions would improve the current ratio?

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

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Exam 13: Financial Statement Analysis

An increase in the number of shares of common stock outstanding will increase a company's price-earnings ratio if the market price per share remains unchanged.

Data from Lheureux Corporation's most recent balance sheet and the company's income statement appear below: The debt-to-equity ratio at the end of Year 2 is closest to:

The acid-test ratio is usually greater than the current ratio.

Klein Corporation has provided the following data: Year 2 Year 1 Total assets \ 1,337,000 \ 1,310,000 Total liabilities \ 598,000 \ 580,000 Total stockholders' equity \ 739,000 \ 730,000 The company's equity multiplier is closest to:

Data from Keniston Corporation's most recent balance sheet and income statement appear below: This Year Last Year Accounts receivable \ 128,000 \ 114,000 Inventory \ 228,000 \ 193,000 Sales on account \ 813,000 Cost of goods sold \ 597,000 The average collection period for this year is closest to:

Nickolls Corporation has provided the following financial data: The company's acid-test (quick) ratio is closest to:

All other things the same, when a customer purchases an item for cash, the accounts receivable turnover ratio increases.

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's average collection period (age of receivables) for Year 2 is closest to:

Financial statements for Maraby Corporation appear below: Maraby Corporation's working capital (in thousands of dollars) at the end of Year 2 was closest to:

If current assets exceed current liabilities, prepaying an expense on the last day of the year will:

Kearin Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at the end of Year 2 was $2.02 per share. The company's gross margin percentage for Year 2 is closest to:

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The acid-test ratio at the end of Year 2 is closest to:

As the accounts receivable turnover ratio decreases, the average collection period increases.

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's accounts receivable turnover for Year 2 is closest to:

Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's average sale period (turnover in days) for Year 2 is closest to:

Turner Co. presently has a current ratio of 0.8. The company has been informed by its bank that it must improve its current ratio to qualify for a line of credit. Which of the following actions would improve the current ratio?

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

Filters