Question 1

The debt ratio of a company is an example of a _____.

Accepted Answer

A)  turnover ratio 
B)  liquidity ratio 
C)  profitability ratio 
D)  leverage ratio

Question 2

The inventory turnover ratio measures the number of days the average balance of accounts receivable is outstanding before being converted into cash.

Accepted Answer

A) True 
 B)False

Question 3

______________ and ____________ are the two major sources of capital.

Accepted Answer

The answer of ______________ and ____________ are the two major...

Question 4

Which of the following is used to compute return on sales?

Accepted Answer

A)  Sales / Equity 
B)  Sales / Debt 
C)  Gross Profit / Sales 
D)  Net Income / Sales

Question 5

Dartmouth Company has a quick ratio of 2.5 to 1.It has current liabilities of $40,000 and noncurrent assets of $70,000.If Dartmouth's current ratio is 3.1 to 1, its inventory and prepaid expenses must be:

Accepted Answer

A)  $12,400. 
B)  $24,000. 
C)  $30,000. 
D)  $40,000.

Question 6

The _____________________ gives the number of days inventory is held before being sold.

Accepted Answer

The answer of The _____________________ gives the number of days...

Question 7

Refer to the information taken from a company's financial records for the current year: The price-earnings ratio is:

Accepted Answer

A)  12. 
B)  10. 
C)  18. 
D)  20.

Question 8

The _________________ is a measure of liquidity that compares only the most liquid assets with current liabilities.

Accepted Answer

The answer of The _________________ is a measure of liquidity...

Question 9

The dividend payout ratio is equal to common dividends divided by (Net Income − Preferred Dividends).

Accepted Answer

A) True 
 B)False

Question 10

Wellston Company's net income last year was $300,000.The company has 100,000 shares of common stock and 30,000 shares of preferred stock outstanding.There was no change in the number of common or preferred shares outstanding during the year.The company declared and paid dividends last year of $1.90 per share on the common stock and $1.70 per share on the preferred stock.The earnings per share of common stock is closest to

Accepted Answer

A)  $2.49. 
B)  $1.10. 
C)  $3.51. 
D)  $3.00.

Question 11

Select the ratio that each statement below most properly satisfies.
-A measure viewed by many investors as an important indicator of stock values.It is found by dividing the market price per share by the earnings per share

Accepted Answer

A) Dividend yield ratio 
B) Current ratio 
C) Debt ratio 
D) Return on common stockholders' equity ratio 
E) Times-interest-earned ratio
F)Quick ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price-earnings ratio

Question 12

If sales revenue in Year 1 equals $500,000, Year 2 equals $510,000, and Year 3 equals $540,000, the percentage to be assigned for Year 3 in a trend analysis, assuming that Year 1 is the base year, is:

Accepted Answer

A)  100%. 
B)  159%. 
C)  125%. 
D)  108%.

Question 13

Horizontal analysis involves comparing two or more years' financial data for a single company.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the information given below for Bronze Company's common stock: The price-earnings ratio would be

Accepted Answer

A)  5.0. 
B)  2.0. 
C)  4.0. 
D)  6.0.

Question 15

Lost Shoe Company, a retailer, had cost of goods sold of $220,000 last year.The beginning inventory balance was $30,000 and the ending inventory balance was $21,000.The company's inventory turnover ratio was closest to

Accepted Answer

A)  10.48. 
B)  7.33. 
C)  4.31. 
D)  8.63.

Question 16

The quick ratio differs from the current ratio in that it

Accepted Answer

A)  represents the amount of cash on hand instead of the amount of working capital. 
B)  is a stricter test of a company's ability to pay its current debts as they are due. 
C)  excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible default on payment. 
D)  is more difficult to calculate.

Question 17

Last year the return on total assets in Justin Company was 8.5%.The total assets were $2,900,000 at the beginning of the year and $3,100,000 at the end of the year.The tax rate was 30%, interest expense totaled $110,000, and sales were $5,200,000.Net income for the year was

Accepted Answer

A)  $145,000. 
B)  $222,000. 
C)  $332,000. 
D)  $178,000.

Question 18

Which of the following expresses each item as a percentage of some prior-period amount?

Accepted Answer

A)  Standard analysis 
B)  Ratio analysis 
C)  Vertical analysis 
D)  Horizontal analysis

Question 19

A company has an average inventory on hand of $100,000 and the days in inventory are 73 days.What is the cost of goods sold?

Accepted Answer

A)  $500,000 
B)  $7,300,000 
C)  $1,000,000 
D)  $3,650,000

Question 20

Cottle Company has total assets of $180,000 and total liabilities of $54,000.The company's debt-to-equity ratio is closest to

Accepted Answer

A)  0.32. 
B)  2.3. 
C)  0.30. 
D)  0.43.

Exam 15: Financial Statement Analysis

The debt ratio of a company is an example of a _____.

The inventory turnover ratio measures the number of days the average balance of accounts receivable is outstanding before being converted into cash.

__ and are the two major sources of capital.

Which of the following is used to compute return on sales?

Dartmouth Company has a quick ratio of 2.5 to 1.It has current liabilities of $40,000 and noncurrent assets of $70,000.If Dartmouth's current ratio is 3.1 to 1, its inventory and prepaid expenses must be:

The _____________________ gives the number of days inventory is held before being sold.

Refer to the information taken from a company's financial records for the current year: The price-earnings ratio is:

The _________________ is a measure of liquidity that compares only the most liquid assets with current liabilities.

The dividend payout ratio is equal to common dividends divided by (Net Income − Preferred Dividends).

Select the ratio that each statement below most properly satisfies. -A measure viewed by many investors as an important indicator of stock values.It is found by dividing the market price per share by the earnings per share

If sales revenue in Year 1 equals $500,000, Year 2 equals $510,000, and Year 3 equals $540,000, the percentage to be assigned for Year 3 in a trend analysis, assuming that Year 1 is the base year, is:

Horizontal analysis involves comparing two or more years' financial data for a single company.

Refer to the information given below for Bronze Company's common stock: The price-earnings ratio would be

Lost Shoe Company, a retailer, had cost of goods sold of $220,000 last year.The beginning inventory balance was $30,000 and the ending inventory balance was $21,000.The company's inventory turnover ratio was closest to

The quick ratio differs from the current ratio in that it

Last year the return on total assets in Justin Company was 8.5%.The total assets were $2,900,000 at the beginning of the year and $3,100,000 at the end of the year.The tax rate was 30%, interest expense totaled $110,000, and sales were $5,200,000.Net income for the year was

Which of the following expresses each item as a percentage of some prior-period amount?

A company has an average inventory on hand of $100,000 and the days in inventory are 73 days.What is the cost of goods sold?

Cottle Company has total assets of $180,000 and total liabilities of $54,000.The company's debt-to-equity ratio is closest to