Question 1

Ringer Corporation had a current ratio of 3.1 at the end of 2013.Current assets and current liabilities increased by equal amounts during 2014.The effects on net working capital and on the current ratio,respectively,were

Accepted Answer

A) no effect; increase. 
B) no effect; decrease. 
C) increase; increase. 
D) decrease; decrease.

Question 2

The calculation of the return on total assets ratio would use all of the following except

Accepted Answer

A) average stockholders' equity. 
B) total assets. 
C) average total assets. 
D) net sales.

Question 3

How would the quick ratio be affected by a prepayment of $30,000 for fire and liability insurance?

Accepted Answer

A) The quick ratio would decrease. 
B) The quick ratio would increase. 
C) The quick ratio would not change. 
D) The effect cannot be determined from the information given.

Question 4

Which of the following ratios would NOT be positively affected by a change from LIFO to FIFO,assuming that prices are rising?

Accepted Answer

A) Current ratio 
B) Debt to equity ratio 
C) Times interest earned 
D) Quick ratio

Question 5

Which of the following is true regarding the debt to equity ratio?

Accepted Answer

A) The debt to equity ratio is a stringent measure of liquidity. 
B) The debt to equity ratio measures the productivity and desirability of the equity investment. 
C) The debt to equity ratio measures management's ability to productively employ all its resources. 
D) The debt to equity ratio measures the capital structure of the entity.

Question 6

The following information has been collected regarding Hunter Company:
  
Estimate a price per share for the stock of Hunter using the following equity valuation models:
1.Constant future dividends
2.Constant dividend growth
3.Price-earnings multiple

Accepted Answer

The answer of The following information has been collected regarding...

Question 7

The following are comparative data for Jobs Company for the three-year period 2012-2014:
  
Compute the following measurements for 2014 and 2013:
(1)The receivables turnover rate.
(2)The average collection period for accounts receivable.

Accepted Answer

The answer of The following are comparative data for Jobs...

Question 8

The inventory turnover ratio

Accepted Answer

A) measures management's ability to productively employ all of its resources. 
B) measures the efficient use of assets held for resale. 
C) is a stringent measure of liquidity. 
D) provides a measure of the strength of the sales mix the company currently employs.

Question 9

During the year,The Core Company purchased $1,700,000 of inventory.The cost of goods sold for the year was $1,600,000 and the ending inventory at December 31 was $330,000.What was the inventory turnover for the year?

Accepted Answer

A) 2.9 
B) 3.3 
C) 5.7 
D) 6.1

Question 10

Which of the following is an appropriate computation for return on investment?

Accepted Answer

A) Sales divided by total assets 
B) Net income divided by total assets 
C) Net income divided by sales 
D) Sales divided by stockholders' equity

Question 11

An entity sells an equal dollar amount of convertible preferred stock and long-term notes payable.Prior to these transactions,total debt was less than total equity.How did the sale of the convertible preferred stock and the long-term notes payable affect the company's debt to total assets ratio?

Accepted Answer

A) The debt to total assets ratio would decrease. 
B) The debt to total assets ratio would increase. 
C) The debt to total assets ratio would remain the same. 
D) The effect on the debt to total assets ratio cannot be determined from the information given.

Question 12

Income statements for Maroon Co.show the following:
  
From the data presented,calculate the following ratios for 2014 and 2013:
(1)Inventory turnover rate.
(2)Number of days' sales in inventories.
(3)Gross profit margin on sales.

Accepted Answer

The answer of Income statements for Maroon Co.show the following:
...

Question 13

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below:
  
-Refer to the Sculley Corporation information above.Sculley's current ratio as of December 31,2014,is

Accepted Answer

A) 2.84 to 1. 
B) 3.37 to 1. 
C) 2.91 to 1. 
D) 3.33 to 1.

Question 14

Which of the following ratios does NOT measure efficiency or activity of an entity?

Accepted Answer

A) Accounts receivable turnover 
B) Age of accounts receivable 
C) Net cash flow to current liabilities 
D) Times interest earned

Question 15

Comparative balance sheet data for the Veronica Co.at the end of 2013 and 2014 follows:
  
Prepare a common-size balance sheet comparing financial structure percentages for the two-year period.Use total assets to standardize.

Accepted Answer

The answer of Comparative balance sheet data for the Veronica...

Question 16

Which of the following ratios does NOT measure liquidity?

Accepted Answer

A) Net cash flow to current liabilities 
B) Working capital to total assets 
C) Current ratio 
D) Quick ratio

Question 17

Which of the following transactions would increase a firm's current ratio?

Accepted Answer

A) Purchase of inventory on account 
B) Payment of accounts payable 
C) Collection of accounts receivable 
D) Purchase of temporary investments for cash

Question 18

Which of the following is included in the calculation of the acid-test (quick)ratio?

Accepted Answer

The answer of Which of the following is included in...

Question 19

If a firm changes its inventory method from FIFO to LIFO just prior to a period of rising prices,the effect in the next period will be

Accepted Answer

The answer of If a firm changes its inventory method...

Question 20

The following information is available from the Embargo Company accounting records:
  
Required:
1.Prepare a statement of cash flows in thousands of dollars using the indirect method.
2.Calculate the following ratios:
a.Current ratio
b.Quick ratio
c.Working capital to total assets
d.
Accounts receivable turnover
e.
Age of accounts receivable

Accepted Answer

The answer of The following information is available from the...

Exam 23: Analysis of Financial Statements