Exam 13: Understanding Financial Statements and Forecasting

A company has revenues of $700,000; invested capital of $3,000,000; total debt of $ 1,500,000 of which it pays 2.5% interest; current,long-term,and other assets totalling $4,000,000; and total expenses of $550,000.What is the company's return on assets?

An entrepreneur is happy with how her business is progressing and forecasts excellent growth.She wants to purchase a building to expand operations and negotiates financing with a bank.What did she negotiate with the bank?

Accounts receivable consist of payments due from a company's customers from previous credit sales.

The amounts and types of assets required are roughly the same for all new ventures.

An entrepreneur of a custom sign company is reviewing reports showing the cost of printing machines,supplies,and labour so that she can make comparisons to the revenue being generated.What reports are being reviewed?

An owner of an archery shooting gallery calculates he has invested $450,000 into the business.He wants to determine if his investment has been worthwhile.What financial ratio should he review?

Diana is a painter.She finishes work for a client in May.The client pays Diana for the job in August and that is when Diana records the sale.Which method of accounting is Diana using?

What will the amount and type of assets required for a new venture depend on?

An investor is inquiring about purchasing a company and wants to determine the total amount invested in the business by the owner plus the accumulation of profits in the business.What will provide this information?

What does working capital include?

The accrual method of accounting is a method of accounting in which revenues,when they are earned,are matched against the expenses associated with those revenues.

Carefully maintained cash records showing all receipts and disbursements are necessary to safeguard cash.

The controller of garden supply distribution company is concerned about the increase in the number of different products the company now re-sells.He wants to determine how well costs are being managed because the workers seem less efficient.What financial ratio should he review?

Describe the asset and financing requirements of the new venture.

A company has revenues of $700,000; invested capital of $3,000,000; total debt of $ 1,500,000 of which it pays 2.5% interest; current,long-term,and other assets totalling $4,000,000; and total expenses of $550,000.What is the company's total asset turnover?

Name and define three categories of assets.

Which of the following is a current asset?

Total asset turnover is the ratio of sales to total assets,showing the efficiency with which a firm's assets are used to generate sales.

Which statement best describes a firm's liquidity?

Financial management becomes important once a business is established and showing signs of growth.