Question 1

Why is liquidity important for businesses?

Accepted Answer

Liquidity is a relative measure of the n

Question 2

Which of the following is a total dollar measure of liquidity?

Accepted Answer

A) accounts receivable turnover ratio 
B) cash to cash operating cycle 
C) number of days' sales in inventory 
D) working capital 
A) accounts receivable turnover ratio 
B) cash to cash operating cycle 
C) number of days' sales in inventory 
D) working capital

Question 3

The Stockholders' Equity section of the balance sheet for Calhoun Industries at the end of 2014 is as follows:

Accepted Answer

The lower portion of the 2014 income sta

Question 4

Back Company sold merchandise on credit.Its gross profit ratio is 23%.The effect of this transaction is that the

Accepted Answer

A) earnings per share decreased 
B) current ratio was unchanged 
C) debt-to-equity ratio increased 
D) earnings per share increased 
A) earnings per share decreased 
B) current ratio was unchanged 
C) debt-to-equity ratio increased 
D) earnings per share increased

Question 5

What numerators are used in the computation of the following ratios? Inventory turnover ratio Accounts receivable turnover ratio

Accepted Answer

A) Cost of Goods Sold Cost of Goods Sold 
B) Net Credit Sales Net Credit Sales 
C) Net Credit Sales Cost of Goods Sold 
D) Cost of Goods Sold Net Credit Sales 
A) Cost of Goods Sold Cost of Goods Sold 
B) Net Credit Sales Net Credit Sales 
C) Net Credit Sales Cost of Goods Sold 
D) Cost of Goods Sold Net Credit Sales

Question 6

What is the best way to assess solvency? Explain.

Accepted Answer

Evaluating leverage best assesses solven

Question 7

The return on sales ratio is a variation of the profit margin ratio.

Accepted Answer

A) True 
 B)False

Question 8

The following information was obtained from the 2012 and 2011 financial statements
Better Books and Tenacious Texts.Assume all sales are on credit for both companies.
(in millions)

Accepted Answer

Better Boo

Question 9

If the current ratio is 3 to 1 and the working capital is $100,000,then the current assets are

Accepted Answer

A) $150,000 
B) $200,000 
C) $300,000 
D) $450,000 
A) $150,000 
B) $200,000 
C) $300,000 
D) $450,000

Question 10

______________________________________ is a line item on the income statement to reflect the net income or loss of a discontinued business segment as well as any gain or loss incurred from its disposal.

Accepted Answer

Discontinu

Question 11

The following analysis is based on information obtained from 2012 financial statements of Lake Company,River Corporation,and Ocean Company.

Accepted Answer

The answer of The following analysis is based on information...

Question 12

If a company must pay more for the amounts provided by creditors and preferred stockholders than it can earn overall,as indicated by the return on assets,there will be favorable leverage.

Accepted Answer

A) True 
 B)False

Question 13

Computech Industries Below is financial data for Computech Industries' current year.
  Refer to the data for Computech Industries.
Based on this information,what is Computech's inventory turnover ratio for the current period?

Accepted Answer

A) 1.67 times 
B) 2.73 times 
C) 0.33 times 
D) 3.00 times 
A) 1.67 times 
B) 2.73 times 
C) 0.33 times 
D) 3.00 times

Question 14

Scrubber,Inc.presented the following information in a note to its financial statements for the year ending December 31,2012: The company has a loan agreement with Mountain State Bank that states:
1)The current ratio should remain at least 2.0 to 1 at all times.
2)The debt-to-equity ratio should not exceed .7 to 1 at any time.
3)The company must maintain $75,000 cash at all times.
The ratios at year-end are: current ratio,2.3 to 1 and debt-to-equity ratio,.2 to 1.The amount of cash on the bank statement is $75,400,but the cash account after the adjustments from the bank reconciliation has a balance of $74,900.Has Scrubber violated its loan agreement?

Accepted Answer

A) No 
B) Yes,the cash balance is less than $75,000. 
C) Yes,the current ratio is .3 or 30% larger than the agreement indicates. 
D) Yes,the cash balance is less than $75,000,and the debt-to-equity ratio is overstated. 
A) No 
B) Yes,the cash balance is less than $75,000. 
C) Yes,the current ratio is .3 or 30% larger than the agreement indicates. 
D) Yes,the cash balance is less than $75,000,and the debt-to-equity ratio is overstated.

Question 15

Auto Industries Company reported the following on its income statement:   If the income statement also shows interest expense equal to $80,000,what is the company's times interest earned ratio?

Accepted Answer

A) 5 times. 
B) 8 times. 
C) 5.25 times. 
D) 6.25 times. 
A) 5 times. 
B) 8 times. 
C) 5.25 times. 
D) 6.25 times.

Question 16

The concept of leverage is

Accepted Answer

A) it is appropriate to borrow if the return on the assets is greater than the cost of the financing. 
B) it is appropriate to borrow as long as the lender approves the loan. 
C) it is unfavorable to borrow funds rather than raise the capital from stockholders 
D) that a high debt-to-equity ratio is favorable. 
A) it is appropriate to borrow if the return on the assets is greater than the cost of the financing. 
B) it is appropriate to borrow as long as the lender approves the loan. 
C) it is unfavorable to borrow funds rather than raise the capital from stockholders 
D) that a high debt-to-equity ratio is favorable.

Question 17

Presented below are selected data from the financial statements of Ripple Company for 2012,2011,and 2010.

Accepted Answer

The answer of Presented below are selected data from the...

Question 18

A high P/E ratio always indicates that a stock is overpriced by the market.

Accepted Answer

A) True 
 B)False

Question 19

What situations could cause a decrease in the current ratio,but an increase in the acid-test ratio? If this happens,is management to be commended or is a problem evident? Explain

Accepted Answer

The current ratio is comprised of curren

Question 20

Presented below are selected data from the financial statements of Carnival Corp.for 2012 and 2011.   The dividend yield ratio for 2012 is

Accepted Answer

A) 1.9% 
B) 2.1% 
C) 36.3% 
D) 38.1% 
A) 1.9% 
B) 2.1% 
C) 36.3% 
D) 38.1%

Why is liquidity important for businesses?

Which of the following is a total dollar measure of liquidity?

The Stockholders' Equity section of the balance sheet for Calhoun Industries at the end of 2014 is as follows:

Back Company sold merchandise on credit.Its gross profit ratio is 23%.The effect of this transaction is that the

What numerators are used in the computation of the following ratios? Inventory turnover ratio Accounts receivable turnover ratio

What is the best way to assess solvency? Explain.

The return on sales ratio is a variation of the profit margin ratio.

The following information was obtained from the 2012 and 2011 financial statements Better Books and Tenacious Texts.Assume all sales are on credit for both companies. (in millions)

If the current ratio is 3 to 1 and the working capital is $100,000,then the current assets are

______________________________________ is a line item on the income statement to reflect the net income or loss of a discontinued business segment as well as any gain or loss incurred from its disposal.

The following analysis is based on information obtained from 2012 financial statements of Lake Company,River Corporation,and Ocean Company.

If a company must pay more for the amounts provided by creditors and preferred stockholders than it can earn overall,as indicated by the return on assets,there will be favorable leverage.

Computech Industries Below is financial data for Computech Industries' current year. Refer to the data for Computech Industries. Based on this information,what is Computech's inventory turnover ratio for the current period?

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000,what is the company's times interest earned ratio?

The concept of leverage is

Presented below are selected data from the financial statements of Ripple Company for 2012,2011,and 2010.

A high P/E ratio always indicates that a stock is overpriced by the market.

What situations could cause a decrease in the current ratio,but an increase in the acid-test ratio? If this happens,is management to be commended or is a problem evident? Explain

Presented below are selected data from the financial statements of Carnival Corp.for 2012 and 2011. The dividend yield ratio for 2012 is

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International Financial Reporting Standards

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Exam 13: Financial Statement Analysis

Why is liquidity important for businesses?

Which of the following is a total dollar measure of liquidity?

The Stockholders' Equity section of the balance sheet for Calhoun Industries at the end of 2014 is as follows:

Back Company sold merchandise on credit.Its gross profit ratio is 23%.The effect of this transaction is that the

What numerators are used in the computation of the following ratios? Inventory turnover ratio Accounts receivable turnover ratio

What is the best way to assess solvency? Explain.

The return on sales ratio is a variation of the profit margin ratio.

The following information was obtained from the 2012 and 2011 financial statements Better Books and Tenacious Texts.Assume all sales are on credit for both companies. (in millions)

If the current ratio is 3 to 1 and the working capital is $100,000,then the current assets are

______________________________________ is a line item on the income statement to reflect the net income or loss of a discontinued business segment as well as any gain or loss incurred from its disposal.

The following analysis is based on information obtained from 2012 financial statements of Lake Company,River Corporation,and Ocean Company.

If a company must pay more for the amounts provided by creditors and preferred stockholders than it can earn overall,as indicated by the return on assets,there will be favorable leverage.

Computech Industries Below is financial data for Computech Industries' current year. Refer to the data for Computech Industries. Based on this information,what is Computech's inventory turnover ratio for the current period?

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000,what is the company's times interest earned ratio?

The concept of leverage is

Presented below are selected data from the financial statements of Ripple Company for 2012,2011,and 2010.

A high P/E ratio always indicates that a stock is overpriced by the market.

What situations could cause a decrease in the current ratio,but an increase in the acid-test ratio? If this happens,is management to be commended or is a problem evident? Explain

Presented below are selected data from the financial statements of Carnival Corp.for 2012 and 2011. The dividend yield ratio for 2012 is

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International Financial Reporting Standards

Filters