Question 1

Three measures of liquidity are: working capital, the acid-test ratio, and the debt-to-equity ratio.

Accepted Answer

A) True 
 B)False

Question 2

A non-business entity would be particularly concerned about its

Accepted Answer

A)  earnings per share 
B)  price/earnings ratio 
C)  liquidity 
D)  income tax rate 
A)  earnings per share 
B)  price/earnings ratio 
C)  liquidity 
D)  income tax rate

Question 3

The concept of leverage is

Accepted Answer

A)  it is appropriate to borrow if the return on the assets is greater than the cost of the financing. 
B)  it is appropriate to borrow as long as the lender approves the loan. 
C)  it is unfavorable to borrow funds rather than raise the capital from stockholders. 
D)  that a high debt-to-equity ratio is favorable. 
A)  it is appropriate to borrow if the return on the assets is greater than the cost of the financing. 
B)  it is appropriate to borrow as long as the lender approves the loan. 
C)  it is unfavorable to borrow funds rather than raise the capital from stockholders. 
D)  that a high debt-to-equity ratio is favorable.

Question 4

Following are selected data from the financial statements of Mother Nature Supplies: $\begin{array} { r r }
& \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \ 
\text {Accounts receivable}&\$ 60,000 & \$ 38,000 \
\text {Merchandise inventory}& 12,000 & 16,000 \ 
\text {Total assets}&450,000 & 380,000 \ 
\text {Net sales}&380,000 & 270,000 \ 
\text {Cost of goods sold}&160,000 & 210,000 \end{array}$
-Refer to the data for Mother Nature Supplies. ?
Which of the following would result from a vertical analysis of its income statement?

Accepted Answer

A)  Accounts receivable increased $22,000 or 57.9% during 2017. 
B)  Gross profit is 57.9% of net sales for 2017. 
C)  Cost of goods sold increased $50,000 or 23.8% during 2017. 
D)  Net sales increased $110,000 or 28.9% during 2017. 
A)  Accounts receivable increased $22,000 or 57.9% during 2017. 
B)  Gross profit is 57.9% of net sales for 2017. 
C)  Cost of goods sold increased $50,000 or 23.8% during 2017. 
D)  Net sales increased $110,000 or 28.9% during 2017.

Question 5

Most companies

Accepted Answer

A)  are not concerned with the management of working capital because cash flows are good. 
B)  strive for a balance between current assets and current liabilities. 
C)  try to maintain protection from the creditors by keeping only a small amount of cash available. 
D)  agree that working capital of $3,000,000 is sufficient for business operations. 
A)  are not concerned with the management of working capital because cash flows are good. 
B)  strive for a balance between current assets and current liabilities. 
C)  try to maintain protection from the creditors by keeping only a small amount of cash available. 
D)  agree that working capital of $3,000,000 is sufficient for business operations.

Question 6

Which of the following generally indicates a positive change?

Accepted Answer

A)  Earnings per share decreases 
B)  The debt service coverage decreases 
C)  The acid-test ratio decreases 
D)  The number of days' sales in inventory decreases 
A)  Earnings per share decreases 
B)  The debt service coverage decreases 
C)  The acid-test ratio decreases 
D)  The number of days' sales in inventory decreases

Question 7

Indicate the type of each ratio listed below.
-Gross profit ratio

Accepted Answer

A) liquidity ratio 
B) solvency ratio 
C) profitability ratio 
A) liquidity ratio 
B) solvency ratio 
C) profitability ratio

Question 8

The number of days' sales in inventory is the same as a company's accounting cycle.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of liquidity analysis?

Accepted Answer

A)  Bonds payable are divided by total liabilities and stockholders' equity. 
B)  Net income is divided by total assets. 
C)  Net income is divided by the number of shares of stock outstanding 
D)  Current assets are divided by current liabilities. 
A)  Bonds payable are divided by total liabilities and stockholders' equity. 
B)  Net income is divided by total assets. 
C)  Net income is divided by the number of shares of stock outstanding 
D)  Current assets are divided by current liabilities.

Question 10

The ______________________ ratio indicates the company's ability to meet the current year's interest payments out of the current year's earnings.

Accepted Answer

times inte

Question 11

The ratio of net income to net sales is the relationship presented by the ______________ ratio.

Accepted Answer

The answer of The ratio of net income to net...

Question 12

Select the term below most properly satisfies each statement.
-When using vertical analysis, accounts on the income statement should be stated as a percentage of this amount

Accepted Answer

A) total assets 
B) horizontal analysis 
C) vertical analysis 
D) net sales 
A) total assets 
B) horizontal analysis 
C) vertical analysis 
D) net sales

Question 13

Ratios that focus on cash are more useful than those that focus on income in the evaluation of the liquidity of a company.

Accepted Answer

A) True 
 B)False

Question 14

Following are selected data from the financial statements of Mother Nature Supplies: $\begin{array} { r r }
& \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \ 
\text {Accounts receivable}&\$ 60,000 & \$ 38,000 \
\text {Merchandise inventory}& 12,000 & 16,000 \ 
\text {Total assets}&450,000 & 380,000 \ 
\text {Net sales}&380,000 & 270,000 \ 
\text {Cost of goods sold}&160,000 & 210,000 \end{array}$
-Refer to the data for Mother Nature Supplies. ?
Which of the following would not result from a vertical analysis of its balance sheet?

Accepted Answer

A)  Accounts receivable increased $22,000 or 36.7% during 2017. 
B)  Accounts receivable is five times larger than Merchandise inventory in 2017. 
C)  Accounts receivable is 13.3% of total assets for 2017. 
D)  Merchandise inventory is 2.7% of total assets for 2017. 
A)  Accounts receivable increased $22,000 or 36.7% during 2017. 
B)  Accounts receivable is five times larger than Merchandise inventory in 2017. 
C)  Accounts receivable is 13.3% of total assets for 2017. 
D)  Merchandise inventory is 2.7% of total assets for 2017.

Three measures of liquidity are: working capital, the acid-test ratio, and the debt-to-equity ratio.

A non-business entity would be particularly concerned about its

The concept of leverage is

Most companies

Which of the following generally indicates a positive change?

Indicate the type of each ratio listed below. -Gross profit ratio

The number of days' sales in inventory is the same as a company's accounting cycle.

Which of the following is an example of liquidity analysis?

The ______________________ ratio indicates the company's ability to meet the current year's interest payments out of the current year's earnings.

The ratio of net income to net sales is the relationship presented by the ______________ ratio.

Select the term below most properly satisfies each statement. -When using vertical analysis, accounts on the income statement should be stated as a percentage of this amount

Ratios that focus on cash are more useful than those that focus on income in the evaluation of the liquidity of a company.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Exploring Accounting Standards and Differences around the World

Filters

Exam 13: Financial Statement Analysis

Three measures of liquidity are: working capital, the acid-test ratio, and the debt-to-equity ratio.

A non-business entity would be particularly concerned about its

The concept of leverage is

Most companies

Which of the following generally indicates a positive change?

Indicate the type of each ratio listed below. -Gross profit ratio

The number of days' sales in inventory is the same as a company's accounting cycle.

Which of the following is an example of liquidity analysis?

The ______________________ ratio indicates the company's ability to meet the current year's interest payments out of the current year's earnings.

The ratio of net income to net sales is the relationship presented by the ______________ ratio.

Select the term below most properly satisfies each statement. -When using vertical analysis, accounts on the income statement should be stated as a percentage of this amount

Ratios that focus on cash are more useful than those that focus on income in the evaluation of the liquidity of a company.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Exploring Accounting Standards and Differences around the World

Filters