Question 1

The gross margin ratio is gross profit divided by net sales.

Accepted Answer

A) True 
 B)False

Question 2

The merchandise turnover ratio:

Accepted Answer

A)  Is used to analyze profitability. 
B)  Is used to measure solvency. 
C)  Depends on the type of inventory valuation method. 
D)  Validates the acid-test ratio. 
E)  Measures how quickly a firm sells its merchandise inventory. 
A)  Is used to analyze profitability. 
B)  Is used to measure solvency. 
C)  Depends on the type of inventory valuation method. 
D)  Validates the acid-test ratio. 
E)  Measures how quickly a firm sells its merchandise inventory.

Question 3

Explain the use of the acid-test ratio as a measure of a company's liquidity.

Accepted Answer

The acid-test measures the ability of a

Question 4

The following information is for Z-Mart and its competition Diablo.   Instructions:
(1)Calculate the dollar amount of gross margin and the gross margin ratio for each company for both years.
(2)Which company had the more favourable ratio each year?
(3)Which company had the more favourable trend over the 2-year period?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& (2)Z-Mart had the more favou

Question 5

The common goal of users of financial statements in evaluating a company's performance includes evaluation of (1)__________________,(2)_________________,and (3)___________________.

Accepted Answer

Past and current per

Question 6

SportsWorld had net sales of $230,000 for Year 1 and $276,000 for Year 2.Its average total assets for Year 1 were $150,000 and $180,000 for Year 2.Calculate the total asset turnover for each year and comment on the firm's efficiency in the use of its assets.

Accepted Answer

Year 1 = 1.53; Year 2 = 1.53 F

Question 7

Off the Record's current ratio is .9 to 1.The industry average current ratio is 1.2.Off the Record does not have a problem in covering liabilities because of its strong sales and position in its industry.

Accepted Answer

A) True 
 B)False

Question 8

Total asset turnover measures:

Accepted Answer

A)  Liquidity. 
B)  The company's ability to use its assets to generate sales. 
C)  The quality of assets. 
D)  Profitability. 
E)  Both profitability and the company's ability to use its assets to generate sales. 
A)  Liquidity. 
B)  The company's ability to use its assets to generate sales. 
C)  The quality of assets. 
D)  Profitability. 
E)  Both profitability and the company's ability to use its assets to generate sales.

Question 9

Return on total assets is calculated by dividing _____________ by _______________.

Accepted Answer

Net income

Question 10

_______________________ are reports where financial amounts are placed side by side in columns on a single statement for analytical purposes.

Accepted Answer

Comparativ

Question 11

Quantum's earnings per share is $2.47.The dividend per share is $.25 and the market price per share is $45.The price-earnings ratio is 5.5.

Accepted Answer

A) True 
 B)False

Question 12

The comparative balance sheet for Seasons Corp is shown below.Express the balance sheet in common-size percentages.(Round all percentages to two decimals)

Accepted Answer

@#IMG-DLM& *Due to rounding,co

Question 13

Liquidity refers to the availability of resources to meet short-term cash requirements.

Accepted Answer

A) True 
 B)False

Question 14

The formula for times interest earned is:

Accepted Answer

A)  Net income + Interest expense + Income taxes divided by Interest expense. 
B)  Net income + Interest expense - Income taxes divided by Interest expense. 
C)  Net income - Interest expense - Income taxes divided by Interest expense. 
D)  Net income - Interest expense + Income taxes divided by Interest expense. 
E)  Interest expense divided by Net income + Interest expense + Income taxes expensE. 
A)  Net income + Interest expense + Income taxes divided by Interest expense. 
B)  Net income + Interest expense - Income taxes divided by Interest expense. 
C)  Net income - Interest expense - Income taxes divided by Interest expense. 
D)  Net income - Interest expense + Income taxes divided by Interest expense. 
E)  Interest expense divided by Net income + Interest expense + Income taxes expensE.

Question 15

Profitability is the ability to generate future revenues and meet long-term obligations.

Accepted Answer

A) True 
 B)False

Question 16

Total asset turnover is calculated by dividing:

Accepted Answer

A)  Gross sales by average total assets. 
B)  Net sales by average total assets. 
C)  Average total assets by gross sales. 
D)  Average total assets by net sales. 
E)  Net accounts receivables by total assets. 
A)  Gross sales by average total assets. 
B)  Net sales by average total assets. 
C)  Average total assets by gross sales. 
D)  Average total assets by net sales. 
E)  Net accounts receivables by total assets.

Question 17

Intercompany analysis is based on internal comparisons.

Accepted Answer

A) True 
 B)False

Question 18

The Laughter Company had the following comparative income statements for Year 1 and Year 2.What are the cost of goods sold in common-size percentages for Year 1 and Year 2,respectively? (round percentages to one decimal)

Accepted Answer

The answer of The Laughter Company had the following comparative...

Question 19

BuyUS Inc.plans to issue 7%,$400,000,10-year bonds in order to finance an expansion.The expansion is expected to increase income before interest expense from $100,000 to $175,000.BuyUS has $1,000,000 in average common equity.Calculate the expected return on common shareholders' equity.(ignore income taxes)

Accepted Answer

A)  7.0%. 
B)  14.7%. 
C)  20.0%. 
D)  43.8%. 
E)  57.1%. 
A)  7.0%. 
B)  14.7%. 
C)  20.0%. 
D)  43.8%. 
E)  57.1%.

Question 20

External users of financial information:

Accepted Answer

A)  Are not directly involved in running the company. 
B)  Include internal auditors and consultants. 
C)  Are those individuals involved in managing and operating the company. 
D)  Make strategic decisions for a company. 
E)  Make operating decisions for a company. 
A)  Are not directly involved in running the company. 
B)  Include internal auditors and consultants. 
C)  Are those individuals involved in managing and operating the company. 
D)  Make strategic decisions for a company. 
E)  Make operating decisions for a company.

The gross margin ratio is gross profit divided by net sales.

The merchandise turnover ratio:

Explain the use of the acid-test ratio as a measure of a company's liquidity.

The common goal of users of financial statements in evaluating a company's performance includes evaluation of (1)__________,(2)_,and (3)___________.

SportsWorld had net sales of $230,000 for Year 1 and $276,000 for Year 2.Its average total assets for Year 1 were $150,000 and $180,000 for Year 2.Calculate the total asset turnover for each year and comment on the firm's efficiency in the use of its assets.

Off the Record's current ratio is .9 to 1.The industry average current ratio is 1.2.Off the Record does not have a problem in covering liabilities because of its strong sales and position in its industry.

Total asset turnover measures:

Return on total assets is calculated by dividing _ by ___.

_______________________ are reports where financial amounts are placed side by side in columns on a single statement for analytical purposes.

Quantum's earnings per share is $2.47.The dividend per share is $.25 and the market price per share is $45.The price-earnings ratio is 5.5.

The comparative balance sheet for Seasons Corp is shown below.Express the balance sheet in common-size percentages.(Round all percentages to two decimals)

Liquidity refers to the availability of resources to meet short-term cash requirements.

The formula for times interest earned is:

Profitability is the ability to generate future revenues and meet long-term obligations.

Total asset turnover is calculated by dividing:

Intercompany analysis is based on internal comparisons.

The Laughter Company had the following comparative income statements for Year 1 and Year 2.What are the cost of goods sold in common-size percentages for Year 1 and Year 2,respectively? (round percentages to one decimal)

External users of financial information:

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Filters

Exam 18: Analyzing Financial Statements

The gross margin ratio is gross profit divided by net sales.

The merchandise turnover ratio:

Explain the use of the acid-test ratio as a measure of a company's liquidity.

The common goal of users of financial statements in evaluating a company's performance includes evaluation of (1)__________________,(2)_________________,and (3)___________________.

SportsWorld had net sales of $230,000 for Year 1 and $276,000 for Year 2.Its average total assets for Year 1 were $150,000 and $180,000 for Year 2.Calculate the total asset turnover for each year and comment on the firm's efficiency in the use of its assets.

Off the Record's current ratio is .9 to 1.The industry average current ratio is 1.2.Off the Record does not have a problem in covering liabilities because of its strong sales and position in its industry.

Total asset turnover measures:

Return on total assets is calculated by dividing _____________ by _______________.

_______________________ are reports where financial amounts are placed side by side in columns on a single statement for analytical purposes.

Quantum's earnings per share is $2.47.The dividend per share is $.25 and the market price per share is $45.The price-earnings ratio is 5.5.

The comparative balance sheet for Seasons Corp is shown below.Express the balance sheet in common-size percentages.(Round all percentages to two decimals)

Liquidity refers to the availability of resources to meet short-term cash requirements.

The formula for times interest earned is:

Profitability is the ability to generate future revenues and meet long-term obligations.

Total asset turnover is calculated by dividing:

Intercompany analysis is based on internal comparisons.

The Laughter Company had the following comparative income statements for Year 1 and Year 2.What are the cost of goods sold in common-size percentages for Year 1 and Year 2,respectively? (round percentages to one decimal)

External users of financial information:

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Filters

The common goal of users of financial statements in evaluating a company's performance includes evaluation of (1)__________,(2)_,and (3)___________.

Return on total assets is calculated by dividing _ by ___.