Question 1

If net income is rising, but sales and the gross profit percentage remain the same, then:

Accepted Answer

A)  operating expenses are falling. 
B)  operating expenses are rising. 
C)  cost of goods sold is falling. 
D)  cost of goods sold is rising. 
A)  operating expenses are falling. 
B)  operating expenses are rising. 
C)  cost of goods sold is falling. 
D)  cost of goods sold is rising. A

Question 2

What is the gross profit percentage for 2011?

Accepted Answer

A)  42% 
B)  13.5% 
C)  57.7% 
D)  21.15% 
A)  42% 
B)  13.5% 
C)  57.7% 
D)  21.15% C

Question 3

What is the company' days to collect ratio for the current year?

Accepted Answer

A)  91.25 
B)  84.88 
C)  57.84 
D)  34.37 
A)  91.25 
B)  84.88 
C)  57.84 
D)  34.37 D

Question 4

What is the company's days to sell ratio for the current year?

Accepted Answer

A)  6.83 
B)  79.18 
C)  26.53 
D)  34.37 
A)  6.83 
B)  79.18 
C)  26.53 
D)  34.37

Question 5

Which of the following statements regarding the effects of a business decision on a financial ratio is true?

Accepted Answer

A)  If a company is expanding its facilities, its fixed asset turnover ratio is likely to fall temporarily. 
B)  If a company extends its payment period for customers, its quality of income ratio is likely to rise. 
C)  If a company eases its credit granting policies, the accounts receivable turnover is likely to rise. 
D)  If a company builds up inventories, its days to sell ratio is likely to fall. 
A)  If a company is expanding its facilities, its fixed asset turnover ratio is likely to fall temporarily. 
B)  If a company extends its payment period for customers, its quality of income ratio is likely to rise. 
C)  If a company eases its credit granting policies, the accounts receivable turnover is likely to rise. 
D)  If a company builds up inventories, its days to sell ratio is likely to fall.

Question 6

Which of the following financial factors is most likely to be a cause of a going-concern problem?

Accepted Answer

A)  Excessive reliance on debt financing. 
B)  A high inventory turnover ratio. 
C)  A high current ratio. 
D)  Stable net income growth. 
A)  Excessive reliance on debt financing. 
B)  A high inventory turnover ratio. 
C)  A high current ratio. 
D)  Stable net income growth.

Question 7

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

Accepted Answer

A)  large percentage of assets and inventory costs are stable. 
B)  large percentage of assets and inventory costs are not stable. 
C)  small percentage of assets and inventory costs are not stable. 
D)  small percentage of assets and inventory costs are stable. 
A)  large percentage of assets and inventory costs are stable. 
B)  large percentage of assets and inventory costs are not stable. 
C)  small percentage of assets and inventory costs are not stable. 
D)  small percentage of assets and inventory costs are stable.

Question 8

A debt to assets ratio of .50 indicates that the company has:

Accepted Answer

A)  more liabilities than stockholders' equity. 
B)  equal amounts of liabilities and stockholders' equity. 
C)  more stockholders' equity than liabilities. 
D)  no liabilities. 
A)  more liabilities than stockholders' equity. 
B)  equal amounts of liabilities and stockholders' equity. 
C)  more stockholders' equity than liabilities. 
D)  no liabilities.

Question 9

What is the price/earnings ratio for the current year?

Accepted Answer

A)  2.07 
B)  1.50 
C)  0.50 
D)  2.0 
A)  2.07 
B)  1.50 
C)  0.50 
D)  2.0

Question 10

The capital acquisitions ratio is a measure of liquidity.

Accepted Answer

A) True 
 B)False

Question 11

In general, P/E ratios are fairly consistent across industries, regardless of the goods or services sold.

Accepted Answer

A) True 
 B)False

Question 12

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover.

Accepted Answer

A) True 
 B)False

Question 13

The financial information below presents selected information from the financial statements of Johnson
Tools, Inc. for the year ending December 31, 2011.   Calculate the ratios below and comment on each ratio: A) Capital acquisitions ratio
B) Quality of income ratio
NOTE: I totally reformatted the feedback below. The words were running together - each word appeared to be in a separate text box?

Accepted Answer

@#IMG-DLM& Comments: A capital acquisitions ratio

Question 14

The fixed asset turnover ratio is a measure of the efficiency of a company.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding trend analysis is true?

Accepted Answer

A)  Time-series analysis is an example of trend analysis. 
B)  Trend data are always in dollars. 
C)  Trend analysis is also known as vertical analysis. 
D)  Common-size analysis is an example of trend analysis. 
A)  Time-series analysis is an example of trend analysis. 
B)  Trend data are always in dollars. 
C)  Trend analysis is also known as vertical analysis. 
D)  Common-size analysis is an example of trend analysis.

Question 16

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Accepted Answer

A)  Profit margin ratio. 
B)  Current ratio. 
C)  Days to collect ratio. 
D)  Days to sell ratio. 
A)  Profit margin ratio. 
B)  Current ratio. 
C)  Days to collect ratio. 
D)  Days to sell ratio.

Question 17

Horizontal analysis is the comparison of a company's financial information to a base amount.

Accepted Answer

A) True 
 B)False

Question 18

Net income divided by Net sales is the calculation for which of the following ratios?

Accepted Answer

A)  Return on equity ratio. 
B)  Net profit margin ratio. 
C)  Current ratio. 
D)  Asset turnover ratio. 
A)  Return on equity ratio. 
B)  Net profit margin ratio. 
C)  Current ratio. 
D)  Asset turnover ratio.

Question 19

If EPS (earnings per share) decreases, it must mean that the company's net income has fallen.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following types of items would you be most likely to see below the Income Tax Expense line on an Income Statement prepared in 2011?

Accepted Answer

A)  Gain on Sale of Discontinued Operations, Net of Tax 
B)  Gross Profit 
C)  Cumulative Effect of Accounting Change 
D)  Salaries Expense 
A)  Gain on Sale of Discontinued Operations, Net of Tax 
B)  Gross Profit 
C)  Cumulative Effect of Accounting Change 
D)  Salaries Expense

If net income is rising, but sales and the gross profit percentage remain the same, then:

What is the gross profit percentage for 2011?

What is the company' days to collect ratio for the current year?

What is the company's days to sell ratio for the current year?

Which of the following statements regarding the effects of a business decision on a financial ratio is true?

Which of the following financial factors is most likely to be a cause of a going-concern problem?

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

A debt to assets ratio of .50 indicates that the company has:

What is the price/earnings ratio for the current year?

The capital acquisitions ratio is a measure of liquidity.

In general, P/E ratios are fairly consistent across industries, regardless of the goods or services sold.

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover.

The fixed asset turnover ratio is a measure of the efficiency of a company.

Which of the following statements regarding trend analysis is true?

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Horizontal analysis is the comparison of a company's financial information to a base amount.

Net income divided by Net sales is the calculation for which of the following ratios?

If EPS (earnings per share) decreases, it must mean that the company's net income has fallen.

Which of the following types of items would you be most likely to see below the Income Tax Expense line on an Income Statement prepared in 2011?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

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Exam 13: Measuring and Evaluating Financial Performance

If net income is rising, but sales and the gross profit percentage remain the same, then:

What is the gross profit percentage for 2011?

What is the company' days to collect ratio for the current year?

What is the company's days to sell ratio for the current year?

Which of the following statements regarding the effects of a business decision on a financial ratio is true?

Which of the following financial factors is most likely to be a cause of a going-concern problem?

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

A debt to assets ratio of .50 indicates that the company has:

What is the price/earnings ratio for the current year?

The capital acquisitions ratio is a measure of liquidity.

In general, P/E ratios are fairly consistent across industries, regardless of the goods or services sold.

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover.

The fixed asset turnover ratio is a measure of the efficiency of a company.

Which of the following statements regarding trend analysis is true?

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Horizontal analysis is the comparison of a company's financial information to a base amount.

Net income divided by Net sales is the calculation for which of the following ratios?

If EPS (earnings per share) decreases, it must mean that the company's net income has fallen.

Which of the following types of items would you be most likely to see below the Income Tax Expense line on an Income Statement prepared in 2011?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Filters