Question 1

CrossSports had interest expense of $12,000 and its income before interest and income taxes was $28,000.Its times interest earned ratio:

Accepted Answer

A)  Is 2.3. 
B)  Is 0.3. 
C)  Is acceptable. 
D)  Is both 2.3 and acceptable. 
E)  Is both 0.3 and acceptablE. 
A)  Is 2.3. 
B)  Is 0.3. 
C)  Is acceptable. 
D)  Is both 2.3 and acceptable. 
E)  Is both 0.3 and acceptablE.

Question 2

Return on equity increases when the expected rate of return from new assets is greater than the interest rate on the bonds issued to finance the assets.

Accepted Answer

A) True 
 B)False

Question 3

Ratios that measure solvency include:

Accepted Answer

A)  Pledged assets to secured liabilities. 
B)  Current ratio. 
C)  Times interest earned. 
D)  Total asset turnover. 
E)  Both pledged assets to secured liabilities and times interest earned. 
A)  Pledged assets to secured liabilities. 
B)  Current ratio. 
C)  Times interest earned. 
D)  Total asset turnover. 
E)  Both pledged assets to secured liabilities and times interest earned.

Question 4

An advantage of common-size statements is that they reflect the relative sizes of companies under analysis.

Accepted Answer

A) True 
 B)False

Question 5

Liquidity problems are likely to exist for a company when its acid-test ratio:

Accepted Answer

A)  Is less than the industry average. 
B)  Is lower than 1 to 1. 
C)  Is higher than 1 to 1. 
D)  Is 1 to 1. 
E)  Is both less than the industry average and lower than 1 to 1. 
A)  Is less than the industry average. 
B)  Is lower than 1 to 1. 
C)  Is higher than 1 to 1. 
D)  Is 1 to 1. 
E)  Is both less than the industry average and lower than 1 to 1.

Question 6

Financial reporting refers to:

Accepted Answer

A)  The communication of relevant financial information to decision makers. 
B)  The application of analytical tools to general-purpose financial statements. 
C)  Financial statements only. 
D)  Ratio analysis. 
E)  The application of analytical tools to general-purpose financial statements and ratio analysis. 
A)  The communication of relevant financial information to decision makers. 
B)  The application of analytical tools to general-purpose financial statements. 
C)  Financial statements only. 
D)  Ratio analysis. 
E)  The application of analytical tools to general-purpose financial statements and ratio analysis.

Question 7

SportsWorld had income before interest and income tax expense of $395,000 in Year 1 and $427,000 in Year 2.Its interest expense was $125,000 for both years.Calculate the times interest earned ratio for both years and comment on the company's level of risk.

Accepted Answer

Year 1 $395,000/$125,000 = 3.2

Question 8

GAP's earnings per share is $3.11.Its common dividend is $.36 per share and its market price is $40 per share.The dividend yield is 0.9%.

Accepted Answer

A) True 
 B)False

Question 9

The acid-test ratio is also called the quick ratio.

Accepted Answer

A) True 
 B)False

Question 10

Popeye Supply's current ratio is 3 to 1.Its quick ratio is 2 to 1.Popeye Supply is a good credit risk because the ratios reveal no liquidity problem.

Accepted Answer

A) True 
 B)False

Question 11

Harmony Inc.had net income of $225,300 in Year 1 and $320,900 in Year 2.The company had average total assets of $1,230,000 in Year 1 and $1,550,000 in Year 2.Calculate the return on total assets for Year 1 and Year 2.Comment on the results.

Accepted Answer

Year 1: $225,300/$1,230,000 =

Question 12

The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the:

Accepted Answer

A)  Dividend payout ratio. 
B)  Dividend yield. 
C)  Price-earnings ratio. 
D)  Current yield. 
E)  Earnings per sharE. 
A)  Dividend payout ratio. 
B)  Dividend yield. 
C)  Price-earnings ratio. 
D)  Current yield. 
E)  Earnings per sharE.

Question 13

The base amount for a common-size balance sheet is usually total assets.

Accepted Answer

A) True 
 B)False

Question 14

Oyster Company's sales in 2012 were $145,000.Sales in 2013 were $167,600.Using 2012 as the base year,the trend percentage for 2013 is:

Accepted Answer

A)  81.3%. 
B)  100.0%. 
C)  115.6%. 
D)  147.6%. 
E)  12.3%. 
A)  81.3%. 
B)  100.0%. 
C)  115.6%. 
D)  147.6%. 
E)  12.3%.

Question 15

The current ratio and the quick ratio are used to measure the ________________ of a business.

Accepted Answer

Liquidity

Question 16

Alternative City had net income of $150,000 and average total assets of $312,700.Calculate its return on total assets.

Accepted Answer

$150,000/$

Question 17

Accounts receivable turnover measures:

Accepted Answer

A)  How often a company converts its average accounts receivable into cash during the period. 
B)  How long it takes to sell inventory on credit. 
C)  The relationship of cash sales to credit sales. 
D)  How long it takes to sell inventory on credit and how often a company converts its average accounts receivable into cash during the period. 
E)  How often a company converts its average accounts receivable into cash during the period and the relationship of cash sales to credit sales. 
A)  How often a company converts its average accounts receivable into cash during the period. 
B)  How long it takes to sell inventory on credit. 
C)  The relationship of cash sales to credit sales. 
D)  How long it takes to sell inventory on credit and how often a company converts its average accounts receivable into cash during the period. 
E)  How often a company converts its average accounts receivable into cash during the period and the relationship of cash sales to credit sales.

Question 18

Evaluation of company performance includes (1)past and current performance,(2)current financial position,and (3)future performance and risk.

Accepted Answer

A) True 
 B)False

Question 19

The days' sales uncollected ratio measures the liquidity of receivables.

Accepted Answer

A) True 
 B)False

Question 20

Graphical analysis is useful in assessing sources of financing and identification of investing activities.

Accepted Answer

A) True 
 B)False

CrossSports had interest expense of $12,000 and its income before interest and income taxes was $28,000.Its times interest earned ratio:

Return on equity increases when the expected rate of return from new assets is greater than the interest rate on the bonds issued to finance the assets.

Ratios that measure solvency include:

An advantage of common-size statements is that they reflect the relative sizes of companies under analysis.

Liquidity problems are likely to exist for a company when its acid-test ratio:

Financial reporting refers to:

SportsWorld had income before interest and income tax expense of $395,000 in Year 1 and $427,000 in Year 2.Its interest expense was $125,000 for both years.Calculate the times interest earned ratio for both years and comment on the company's level of risk.

GAP's earnings per share is $3.11.Its common dividend is $.36 per share and its market price is $40 per share.The dividend yield is 0.9%.

The acid-test ratio is also called the quick ratio.

Popeye Supply's current ratio is 3 to 1.Its quick ratio is 2 to 1.Popeye Supply is a good credit risk because the ratios reveal no liquidity problem.

Harmony Inc.had net income of $225,300 in Year 1 and $320,900 in Year 2.The company had average total assets of $1,230,000 in Year 1 and $1,550,000 in Year 2.Calculate the return on total assets for Year 1 and Year 2.Comment on the results.

The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the:

The base amount for a common-size balance sheet is usually total assets.

Oyster Company's sales in 2012 were $145,000.Sales in 2013 were $167,600.Using 2012 as the base year,the trend percentage for 2013 is:

The current ratio and the quick ratio are used to measure the ________________ of a business.

Alternative City had net income of $150,000 and average total assets of $312,700.Calculate its return on total assets.

Accounts receivable turnover measures:

Evaluation of company performance includes (1)past and current performance,(2)current financial position,and (3)future performance and risk.

The days' sales uncollected ratio measures the liquidity of receivables.

Graphical analysis is useful in assessing sources of financing and identification of investing activities.

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

CrossSports had interest expense of $12,000 and its income before interest and income taxes was $28,000.Its times interest earned ratio:

Return on equity increases when the expected rate of return from new assets is greater than the interest rate on the bonds issued to finance the assets.

Ratios that measure solvency include:

An advantage of common-size statements is that they reflect the relative sizes of companies under analysis.

Liquidity problems are likely to exist for a company when its acid-test ratio:

Financial reporting refers to:

SportsWorld had income before interest and income tax expense of $395,000 in Year 1 and $427,000 in Year 2.Its interest expense was $125,000 for both years.Calculate the times interest earned ratio for both years and comment on the company's level of risk.

GAP's earnings per share is $3.11.Its common dividend is $.36 per share and its market price is $40 per share.The dividend yield is 0.9%.

The acid-test ratio is also called the quick ratio.

Popeye Supply's current ratio is 3 to 1.Its quick ratio is 2 to 1.Popeye Supply is a good credit risk because the ratios reveal no liquidity problem.

Harmony Inc.had net income of $225,300 in Year 1 and $320,900 in Year 2.The company had average total assets of $1,230,000 in Year 1 and $1,550,000 in Year 2.Calculate the return on total assets for Year 1 and Year 2.Comment on the results.

The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the:

The base amount for a common-size balance sheet is usually total assets.

Oyster Company's sales in 2012 were $145,000.Sales in 2013 were $167,600.Using 2012 as the base year,the trend percentage for 2013 is:

The current ratio and the quick ratio are used to measure the ________________ of a business.

Alternative City had net income of $150,000 and average total assets of $312,700.Calculate its return on total assets.

Accounts receivable turnover measures:

Evaluation of company performance includes (1)past and current performance,(2)current financial position,and (3)future performance and risk.

The days' sales uncollected ratio measures the liquidity of receivables.

Graphical analysis is useful in assessing sources of financing and identification of investing activities.

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