Exam 12: Performance Evaluation Revisited: a Balanced Approach

The income statement for Otto Construction Company appears below: Average total assets total $240,000.Otto's income tax rate is 25%.What is the times interest earned ratio?

Which of the following is not a leverage ratio?

The gross margin percentage is calculated as

Which of the following ratios uses the smallest dollar value of assets?

The accounts receivable turnover is calculated as

Investors, employees, managers, and creditors are all interested in a company's ability to remain profitable over the long-run.Answer the following questions relating to profitability ratios. a.What does the gross margin percentage measure and how is it calculated? b.What does the return on assets measure and how is it calculated? c.What does the return on common stockholders' equity measure and how is it calculated?

Which of the following is the reason that preferred dividends are deducted from net income in calculating earnings per share?

The formula for calculating the debt ratio is

In preparing a common-size balance sheet, you express all individual liability or equity account balances as a percentage of total assets.

Walker Company had net income of $30,000.The company has 10,000 shares of common stock and 3,000 shares of preferred stock outstanding.There was no change in the number of shares of stock from the previous year.The company declared and paid dividends of $2.00 per share on the common stock and $1.70 per share on the preferred stock.What is Walker's earnings per common share?

A firm's ability to pay its obligations as they come due and to meet any unforeseen needs for cash is called

The income statement for Otto Construction Company appears below: Average total assets total $240,000.Otto's income tax rate is 25%.What is the gross margin percentage?

The formula for calculating the debt-to-equity ratio is

The following financial statement items are shown for J&T Manufacturing. Calculate the common-size percentage for salaries payable.

The gross margin percentage shows how much of each sales dollar is available to cover operating expenses and provide a profit after the cost of goods sold has been covered.

While the current and acid-test ratios provide information about liquidity, they do not indicate the underlying quality of current assets.

Because the assets included in the current ratio have different levels of liquidity that reflect different degrees of collectability, many companies use which of the following ratios to measure current liquidity?

The average collection period reveals how many days, on average,

The times interest earned ratio measures a company's ability to

The income statement for Otto Construction Company appears below: Average total assets total $240,000.Otto's income tax rate is 25%. What is the return on assets?