Question 1

Some of the ratios that are used to determine a company's short-term debt paying ability are

Accepted Answer

A) asset turnover, times interest earned, current ratio, and receivables turnover. 
B) times interest earned, inventory turnover, current ratio, and receivables turnover. 
C) times interest earned, current ratio, and inventory turnover. 
D) current ratio, receivables turnover, and inventory turnover. 
A) asset turnover, times interest earned, current ratio, and receivables turnover. 
B) times interest earned, inventory turnover, current ratio, and receivables turnover. 
C) times interest earned, current ratio, and inventory turnover. 
D) current ratio, receivables turnover, and inventory turnover. D

Question 2

From a creditor's point of view, the higher the debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

Accepted Answer

A) True 
 B)False  False

Question 3

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2021 and 2022.
  
-What is the inventory turnover ratio for 2022?

Accepted Answer

A) 2.3 times 
B) 2.0 times 
C) 1.8 times 
D) 0.5 times 
A) 2.3 times 
B) 2.0 times 
C) 1.8 times 
D) 0.5 times B

Question 4

Many firms today are so diversified that they cannot be classified by industry.

Accepted Answer

A) True 
 B)False

Question 5

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Accepted Answer

A) True 
 B)False

Question 6

Comparisons of basic earnings per share with other companies and the industry averages are usually not very meaningful.

Accepted Answer

A) True 
 B)False

Question 7

Horizontal analysis

Accepted Answer

A) is financial statement data that is viewed horizontally from the right to left across time. 
B) requires the financial statement data under analysis to be divided by the base amount in that financial statement. 
C) is financial statement data that is viewed vertically from top to bottom within the same period of time. 
D) is always used for intercompany comparisons. 
A) is financial statement data that is viewed horizontally from the right to left across time. 
B) requires the financial statement data under analysis to be divided by the base amount in that financial statement. 
C) is financial statement data that is viewed vertically from top to bottom within the same period of time. 
D) is always used for intercompany comparisons.

Question 8

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

Accepted Answer

A) True 
 B)False

Question 9

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2021 and 2022:
  
-What are the basic earnings per share for 2022?

Accepted Answer

A) $15.83 
B) $5.00 
C) $2.50 
D) $0.90 
A) $15.83 
B) $5.00 
C) $2.50 
D) $0.90

Question 10

A liquidity ratio measures the

Accepted Answer

A) net income or operating success of a company over a period of time. 
B) ability of the company to survive over a long period of time. 
C) short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. 
D) ability of a company to raise capital. 
A) net income or operating success of a company over a period of time. 
B) ability of the company to survive over a long period of time. 
C) short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. 
D) ability of a company to raise capital.

Question 11

Use the following information for questions 
  
-In performing a vertical analysis, the percentage for cost of goods sold is

Accepted Answer

A) 4.4%. 
B) 40.0%. 
C) 44.4%. 
D) 400.0%. 
A) 4.4%. 
B) 40.0%. 
C) 44.4%. 
D) 400.0%.

Question 12

Use the following information for questions 
During 2022, Amazing Corp.reported after-tax net income of $900,000 and paid $175,000 in common dividends.The weighted average number of common shares issued in 2022 was 200,000.There are no preferred shares issued.At year end, Amazing's common shares are selling for $81 per share on the Toronto Stock Exchange.
-Amazing's basic earnings per share for 2022 is

Accepted Answer

A) $22.22. 
B) $3.63. 
C) $4.50. 
D) $5.14. 
A) $22.22. 
B) $3.63. 
C) $4.50. 
D) $5.14.

Question 13

Sales are $2,700,000, beginning total assets are $750,000, and the asset turnover is 3.0.What is the ending total assets?

Accepted Answer

A) $600,000 
B) $900,000 
C) $1,050,000 
D) $1,125,000 
A) $600,000 
B) $900,000 
C) $1,050,000 
D) $1,125,000

Question 14

When preparing a vertical analysis on an statement of income, sales are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 15

A company has a receivables turnover ratio of 12.The average gross accounts receivable during the period is $360,000.What is the amount of credit sales for the period?

Accepted Answer

A) $432,000 
B) $3,000,000 
C) $4,320,000 
D) Cannot be determined from the information given. 
A) $432,000 
B) $3,000,000 
C) $4,320,000 
D) Cannot be determined from the information given.

Question 16

A horizontal analysis is being conducted with year one as the base year.If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

Accepted Answer

A) 89%. 
B) 100%. 
C) 106%. 
D) 111%. 
A) 89%. 
B) 100%. 
C) 106%. 
D) 111%.

Question 17

A component of an entity represents a separate major line of business.

Accepted Answer

A) True 
 B)False

Question 18

Use the following information for questions 
Nelly Inc.reported credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year.The average inventory for the year was $6,000,000.
-The inventory turnover ratio for the year was

Accepted Answer

A) 3.0 times. 
B) 33.3 times. 
C) 4.0 times. 
D) 25.0 times. 
A) 3.0 times. 
B) 33.3 times. 
C) 4.0 times. 
D) 25.0 times.

Question 19

On financial statements that include vertical analysis, which of the following is set at 100%?

Accepted Answer

A) total liabilities 
B) net income 
C) total assets 
D) cost of goods sold 
A) total liabilities 
B) net income 
C) total assets 
D) cost of goods sold

Question 20

A weakness of the current ratio is

Accepted Answer

A) the difficulty of the calculation. 
B) that it doesn't take into account the composition of the current assets. 
C) that it is rarely used by sophisticated analysts. 
D) that it can be expressed as a percentage, as a rate, or as a proportion. 
A) the difficulty of the calculation. 
B) that it doesn't take into account the composition of the current assets. 
C) that it is rarely used by sophisticated analysts. 
D) that it can be expressed as a percentage, as a rate, or as a proportion.

Some of the ratios that are used to determine a company's short-term debt paying ability are

From a creditor's point of view, the higher the debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022. -What is the inventory turnover ratio for 2022?

Many firms today are so diversified that they cannot be classified by industry.

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Comparisons of basic earnings per share with other companies and the industry averages are usually not very meaningful.

Horizontal analysis

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What are the basic earnings per share for 2022?

A liquidity ratio measures the

Use the following information for questions -In performing a vertical analysis, the percentage for cost of goods sold is

Sales are $2,700,000, beginning total assets are $750,000, and the asset turnover is 3.0.What is the ending total assets?

When preparing a vertical analysis on an statement of income, sales are represented by 100%.

A company has a receivables turnover ratio of 12.The average gross accounts receivable during the period is $360,000.What is the amount of credit sales for the period?

A horizontal analysis is being conducted with year one as the base year.If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

A component of an entity represents a separate major line of business.

Use the following information for questions Nelly Inc.reported credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year.The average inventory for the year was $6,000,000. -The inventory turnover ratio for the year was

On financial statements that include vertical analysis, which of the following is set at 100%?

A weakness of the current ratio is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

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Exam 14: Performance Measurement

Some of the ratios that are used to determine a company's short-term debt paying ability are

From a creditor's point of view, the higher the debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022. -What is the inventory turnover ratio for 2022?

Many firms today are so diversified that they cannot be classified by industry.

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Comparisons of basic earnings per share with other companies and the industry averages are usually not very meaningful.

Horizontal analysis

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What are the basic earnings per share for 2022?

A liquidity ratio measures the

Use the following information for questions -In performing a vertical analysis, the percentage for cost of goods sold is

Sales are $2,700,000, beginning total assets are $750,000, and the asset turnover is 3.0.What is the ending total assets?

When preparing a vertical analysis on an statement of income, sales are represented by 100%.

A company has a receivables turnover ratio of 12.The average gross accounts receivable during the period is $360,000.What is the amount of credit sales for the period?

A horizontal analysis is being conducted with year one as the base year.If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

A component of an entity represents a separate major line of business.

Use the following information for questions Nelly Inc.reported credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year.The average inventory for the year was $6,000,000. -The inventory turnover ratio for the year was

On financial statements that include vertical analysis, which of the following is set at 100%?

A weakness of the current ratio is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Filters