Question 1

The quick ratio:

Accepted Answer

A) Is computed by dividing current assets by current liabilities. 
B) Is always higher than the current ratio. 
C) Cannot be higher than the current ratio. 
D) May be higher or lower than the current ratio. 
A) Is computed by dividing current assets by current liabilities. 
B) Is always higher than the current ratio. 
C) Cannot be higher than the current ratio. 
D) May be higher or lower than the current ratio.

Question 2

Which American industry would tend to have the greatest debt ratio?

Accepted Answer

A) Auto. 
B) Retail clothing. 
C) Manufacturing. 
D) Banking. 
A) Auto. 
B) Retail clothing. 
C) Manufacturing. 
D) Banking.

Question 3

Computation of profitability ratios
Shown below are selected data from a recent annual report of Tall Oaks Co.(Dollar amounts are in thousands.)   Compute for the year the company's:

Accepted Answer

The answer of Computation of profitability ratios
Shown below are selected...

Question 4

The inventory turnover rate indicates how quickly inventory sells.

Accepted Answer

A) True 
 B)False

Question 5

During the years 2013 through 2015,Powers,Inc.,reported the following amounts of net income (dollars in thousands):   Relative to the prior year,the percentage change in net income:

Accepted Answer

A) Was the same in 2014 and 2015. 
B) Was larger in 2015 than in 2014. 
C) Was smaller in 2015 than in 2014. 
D) Cannot be determined without knowing how many shares of stock were outstanding. 
A) Was the same in 2014 and 2015. 
B) Was larger in 2015 than in 2014. 
C) Was smaller in 2015 than in 2014. 
D) Cannot be determined without knowing how many shares of stock were outstanding.

Question 6

The price-earnings ratio is measured by dividing:

Accepted Answer

A) Book value by earnings per share. 
B) Par value by earnings per share. 
C) Market value by earnings per share. 
D) Market value by total net income. 
A) Book value by earnings per share. 
B) Par value by earnings per share. 
C) Market value by earnings per share. 
D) Market value by total net income.

Question 7

The price-earnings ratio is calculated by dividing earnings per share by the current market price of a share of the company's stock.

Accepted Answer

A) True 
 B)False

Question 8

The quick ratio is especially useful in evaluating the liquidity of a company with fast moving inventories.

Accepted Answer

A) True 
 B)False

Question 9

In a classified balance sheet,assets are subdivided into current assets,plant and equipment and other assets,while liabilities are all classified as current.

Accepted Answer

A) True 
 B)False

Question 10

The financial ratio intended to measure the effectiveness with which management has utilized the resources of the business,regardless of how these resources are financed,is:

Accepted Answer

A) Gross profit rate. 
B) Current ratio. 
C) Return on assets. 
D) Return on equity. 
A) Gross profit rate. 
B) Current ratio. 
C) Return on assets. 
D) Return on equity.

Question 11

All of the following captions or subtotals are typical of a multiple-step income statement,except:

Accepted Answer

A) Net sales. 
B) Gross profit. 
C) Total costs and expenses. 
D) Operating income. 
A) Net sales. 
B) Gross profit. 
C) Total costs and expenses. 
D) Operating income.

Question 12

Effects of events on financial measurements
Indicate the probable effects of each of the following strategies or events upon the financial measurements of Lindsay Corp.listed below.Use the code letters I = Increase,D = Decrease,and NE = No Effect.

Accepted Answer

The answer of Effects of events on financial measurements
Indicate the...

Question 13

The excess of current assets over current liabilities is called:

Accepted Answer

A) Current ratio. 
B) Working capital. 
C) Debt ratio. 
D) Quick ratio. 
A) Current ratio. 
B) Working capital. 
C) Debt ratio. 
D) Quick ratio.

Question 14

Use and interpretation of financial measurements
Shown below are various financial measurements for two companies which are similar in size and sell similar products:   Instructions: You are to enter code letters in the spaces provided in the two right-hand columns.
In the first column,indicate which of the following three groups probably would be most interested in the specified financial measurement.Identify one group,using the following code letters: STC = indicating short-term creditors,LTC = indicating long-term creditors,and S = indicating stockholders.
In the second column,enter an X or a Y to indicate whether your "most interested group" would p

Accepted Answer

The answer of Use and interpretation of financial measurements
Shown below...

Question 15

A company whose future earnings are expected to rise substantially is likely to have a higher price-earnings ratio than a company whose future earnings are expected to decline.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a measure of long-term credit risk?

Accepted Answer

A) Quick ratio. 
B) Debt ratio. 
C) Interest coverage ratio. 
D) Yield rate on bonds. 
A) Quick ratio. 
B) Debt ratio. 
C) Interest coverage ratio. 
D) Yield rate on bonds.

Question 17

Comparative financial statements compare the company's current statements with:

Accepted Answer

A) Those of prior periods. 
B) Those of other companies in the same industry. 
C) Those of the company's principal competitor. 
D) The budgeted level of performance for the period. 
A) Those of prior periods. 
B) Those of other companies in the same industry. 
C) Those of the company's principal competitor. 
D) The budgeted level of performance for the period.

Question 18

In calculating earnings per share,the denominator of the equation includes:

Accepted Answer

A) Only common stock outstanding. 
B) Common stock plus preferred stock. 
C) Common stock less preferred stock. 
D) The total shares of authorized common stock. 
A) Only common stock outstanding. 
B) Common stock plus preferred stock. 
C) Common stock less preferred stock. 
D) The total shares of authorized common stock.

Question 19

If the return on total assets ratio is substantially below the cost of borrowing,common stockholders will benefit from a high debt ratio.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is considered a quick asset?

Accepted Answer

A) Accounts receivable. 
B) Inventory. 
C) Automobiles. 
D) Prepaid expenses. 
A) Accounts receivable. 
B) Inventory. 
C) Automobiles. 
D) Prepaid expenses.

Exam 14: Financial Statement Analysis

The quick ratio:

Which American industry would tend to have the greatest debt ratio?

Computation of profitability ratios Shown below are selected data from a recent annual report of Tall Oaks Co.(Dollar amounts are in thousands.) Compute for the year the company's:

The inventory turnover rate indicates how quickly inventory sells.

During the years 2013 through 2015,Powers,Inc.,reported the following amounts of net income (dollars in thousands): Relative to the prior year,the percentage change in net income:

The price-earnings ratio is measured by dividing:

The price-earnings ratio is calculated by dividing earnings per share by the current market price of a share of the company's stock.

The quick ratio is especially useful in evaluating the liquidity of a company with fast moving inventories.

In a classified balance sheet,assets are subdivided into current assets,plant and equipment and other assets,while liabilities are all classified as current.

The financial ratio intended to measure the effectiveness with which management has utilized the resources of the business,regardless of how these resources are financed,is:

All of the following captions or subtotals are typical of a multiple-step income statement,except:

Effects of events on financial measurements Indicate the probable effects of each of the following strategies or events upon the financial measurements of Lindsay Corp.listed below.Use the code letters I = Increase,D = Decrease,and NE = No Effect.

The excess of current assets over current liabilities is called:

A company whose future earnings are expected to rise substantially is likely to have a higher price-earnings ratio than a company whose future earnings are expected to decline.

Which of the following is not a measure of long-term credit risk?

Comparative financial statements compare the company's current statements with:

In calculating earnings per share,the denominator of the equation includes:

If the return on total assets ratio is substantially below the cost of borrowing,common stockholders will benefit from a high debt ratio.

Which of the following is considered a quick asset?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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