Question 1

The acid-test ratio is always smaller than the current ratio.

Accepted Answer

A) True 
 B)False

Question 2

Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below:     Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share.
-The dividend yield ratio for Year 2 is closest to:

Accepted Answer

A) 2.81% 
B) 66.67% 
C) 1.87% 
D) 0.94% 
A) 2.81% 
B) 66.67% 
C) 1.87% 
D) 0.94%

Question 3

Dieringer Corporation's most recent balance sheet and income statement appear below:    
-The working capital at the end of Year 2 is:

Accepted Answer

A) $970 thousand 
B) $570 thousand 
C) $280 thousand 
D) $810 thousand 
A) $970 thousand 
B) $570 thousand 
C) $280 thousand 
D) $810 thousand

Question 4

Hick Corporation's most recent balance sheet and income statement appear below:     Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $20 thousand. The market price of common stock at the end of Year 2 was $9.57 per share.
-The earnings per share of common stock for Year 2 is closest to:

Accepted Answer

A) $0.55 
B) $0.93 
C) $1.01 
D) $0.65 
A) $0.55 
B) $0.93 
C) $1.01 
D) $0.65

Question 5

Last year Jason Company had a net income of $250,000,income tax expense of $78,000,and interest expense of $30,000.The company's times interest earned was closest to:

Accepted Answer

A) 4.73 
B) 9.33 
C) 11.93 
D) 8.33 
A) 4.73 
B) 9.33 
C) 11.93 
D) 8.33

Question 6

Financial statements for Marcell Company appear below:    
-Marcell Company's acid-test ratio at the end of Year 2 was closest to:

Accepted Answer

A) 0.33 
B) 1.35 
C) 0.60 
D) 0.74 
A) 0.33 
B) 1.35 
C) 0.60 
D) 0.74

Question 7

Assuming stable business conditions,an increase in the accounts receivable turnover ratio could be explained by:

Accepted Answer

A) stricter policies with respect to the granting of credit to customers. 
B) an easing of policies with respect to the granting of credit to customers. 
C) a slowdown in collecting accounts receivables from customers. 
D) none of these. 
A) stricter policies with respect to the granting of credit to customers. 
B) an easing of policies with respect to the granting of credit to customers. 
C) a slowdown in collecting accounts receivables from customers. 
D) none of these.

Question 8

When computing the acid-test ratio,a short-term note receivable would be included in the numerator.

Accepted Answer

A) True 
 B)False

Question 9

Financial statements for Marcell Company appear below:    
-Marcell Company's inventory turnover for Year 2 was closest to:

Accepted Answer

A) 16.2 
B) 23.2 
C) 14.2 
D) 9.9 
A) 16.2 
B) 23.2 
C) 14.2 
D) 9.9

Question 10

Data from Kooistra Corporation's most recent balance sheet appear below:   Sales on account in Year 2 amounted to $1,270 and the cost of goods sold was $770.
-The working capital at the end of Year 2 is:

Accepted Answer

A) $990 
B) $170 
C) $1,010 
D) $450 
A) $990 
B) $170 
C) $1,010 
D) $450

Question 11

Gulick Corporation's most recent income statement appears below: 
  
 The beginning balance of total assets was $320,000 and the ending balance was $280,000.
Required:
Compute the return on total assets.Show your work!

Accepted Answer

Average total assets = ($320,000 + $280,

Question 12

Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below:     Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share.
-The return on total assets for Year 2 is closest to:

Accepted Answer

A) 5.74% 
B) 7.46% 
C) 7.40% 
D) 5.79% 
A) 5.74% 
B) 7.46% 
C) 7.40% 
D) 5.79%

Question 13

Financial statements for Marcell Company appear below:    
-Marcell Company's average collection period for Year 2 was closest to:

Accepted Answer

A) 22.6 days 
B) 15.7 days 
C) 25.8 days 
D) 36.9 days 
A) 22.6 days 
B) 15.7 days 
C) 25.8 days 
D) 36.9 days

Question 14

Deschambault Corporation's total current assets are $260,000,its noncurrent assets are $700,000,its total current liabilities are $130,000,its long-term liabilities are $510,000,and its stockholders' equity is $320,000.Working capital is:

Accepted Answer

A) $260,000 
B) $320,000 
C) $190,000 
D) $130,000 
A) $260,000 
B) $320,000 
C) $190,000 
D) $130,000

Question 15

Basta Corporation's net income last year was $1,401,000.The dividend on common stock was $1.00 per share and the dividend on preferred stock was $3.90 per share.The market price of common stock at the end of the year was $65.40 per share.Throughout the year,300,000 shares of common stock and 100,000 shares of preferred stock were outstanding.
Required:
Compute the price-earnings ratio.Show your work!

Accepted Answer

Earnings per share = (Net Income - Prefe

Question 16

Financial statements for Pracht Company appear below: Pracht Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
    
Dividends during Year 2 totaled $62 thousand,of which $15 thousand were preferred dividends.
The market price of a share of common stock on December 31,Year 2 was $160.
Required:
Compute the following for Year 2:
a.Earnings per share of common stock.
b.Price-earnings ratio.
c.Dividend payout ratio.
d.Dividend yield ratio.
e.Return on total assets.
f.Return on common stockholders' equity.
g.Book value per share.
h.Working capital.
i.Current ratio.
j.Acid-test ratio.
k.Accounts receivable turnover.
l.Average collection period.
m.Inventory turnover.
n.Average sale period.
o.Times interest earned.
p.Debt-to-equity ratio.

Accepted Answer

a.Earnings per share = (Net Income - Pre

Question 17

Assume a company has a current ratio that is greater than 1.Which of the following transactions will reduce the company's current ratio?

Accepted Answer

A) Selling office equipment at book value. 
B) Paying a cash dividend already declared. 
C) Borrowing by taking out a short-term loan. 
D) Selling equipment at a loss. 
A) Selling office equipment at book value. 
B) Paying a cash dividend already declared. 
C) Borrowing by taking out a short-term loan. 
D) Selling equipment at a loss.

Question 18

Excerpts from Zorra Corporation's most recent balance sheet appear below:   Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
-The inventory turnover for Year 2 is closest to:

Accepted Answer

A) 4.05 
B) 4.36 
C) 1.17 
D) 0.86 
A) 4.05 
B) 4.36 
C) 1.17 
D) 0.86

Question 19

What is the effect of a purchase of inventory on account on the current ratio and on working capital,respectively? (Assume a current ratio greater than one prior to this transaction. ) $\begin{array}{lll}&\text { Current ratio}&\text { Working capital }\
\text { A) } & \text { decrease } & \text { no effect } \
\text { B) } & \text { no effect } & \text { decrease } \
\text { C) } & \text { decrease } & \text { decrease } \
\text { D) } & \text { no effect } & \text { no effect }
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 20

The following selected data are for Geneva Company:  
-The earnings per share of common stock for Year 2 is closest to:

Accepted Answer

A) $1.60 
B) $2.07 
C) $3.27 
D) $3.67 
A) $1.60 
B) $2.07 
C) $3.27 
D) $3.67

Exam 14: Financial Statement Analysis

The acid-test ratio is always smaller than the current ratio.

Dieringer Corporation's most recent balance sheet and income statement appear below: -The working capital at the end of Year 2 is:

Last year Jason Company had a net income of $250,000,income tax expense of $78,000,and interest expense of $30,000.The company's times interest earned was closest to:

Financial statements for Marcell Company appear below: -Marcell Company's acid-test ratio at the end of Year 2 was closest to:

Assuming stable business conditions,an increase in the accounts receivable turnover ratio could be explained by:

When computing the acid-test ratio,a short-term note receivable would be included in the numerator.

Financial statements for Marcell Company appear below: -Marcell Company's inventory turnover for Year 2 was closest to:

Data from Kooistra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,270 and the cost of goods sold was $770. -The working capital at the end of Year 2 is:

Gulick Corporation's most recent income statement appears below: The beginning balance of total assets was $320,000 and the ending balance was $280,000. Required: Compute the return on total assets.Show your work!

Financial statements for Marcell Company appear below: -Marcell Company's average collection period for Year 2 was closest to:

Deschambault Corporation's total current assets are $260,000,its noncurrent assets are $700,000,its total current liabilities are $130,000,its long-term liabilities are $510,000,and its stockholders' equity is $320,000.Working capital is:

Assume a company has a current ratio that is greater than 1.Which of the following transactions will reduce the company's current ratio?

Excerpts from Zorra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850. -The inventory turnover for Year 2 is closest to:

The following selected data are for Geneva Company: -The earnings per share of common stock for Year 2 is closest to:

Managerial Accounting and Cost Concepts

Job-Order Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Activity-Based Costing: a Tool to Aid Decision Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Least-Squares Regression Computations

Appendix B: Cost of Quality

The Predetermined Overhead Rate and Capacity

Further Classification of Labor Costs

Fifo Method

Service Department Allocations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to Determine Product Costs for External Reports

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

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

Pricing Products and Services

Profitability Analysis

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