Exam 13: How Do Managers Use Financial and Nonfinancial Performance Measures

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31,2013. Inventory and prepaid expenses account for $50,000 of the 2013 current assets. Average inventory for 2013 is $36,000. Average net accounts receivable for 2013 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2013. The market price per share of common stock is $27 at the end of 2013. The EPS for 2013 is equal to $1.50 per share. -Refer to Exhibit 13-1.What is the market capitalization at the end of 2013?

(Multiple Choice)

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Question 41

A common-size analysis converts each line of financial statement data to an easily comparable amount measured in percent form.

(True/False)

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Question 42

A relatively high price-earnings ratio indicates investors expect favorable future earnings.

(True/False)

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Question 43

Return on assets is calculated as average total assets divided by net income.

(True/False)

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Question 44

The following condensed income statement is for Mason Inc. Compute the following long-term solvency ratios for 2013,and provide a brief explanation after each ratio (round computations to two decimal places): (1)Debt to assets (2)Debt to equity (3)Times interest earned

(Essay)

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Question 45

Savanah Company reported the following amounts of net income. Which of the following is the percentage change in net income from Year 2 to Year 3?

(Multiple Choice)

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Question 46

Which of the following is the best explanation of a company's inventory turnover of 12.0 for the year 2013?

(Multiple Choice)

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Question 47

In general,managers prefer the profit margin ratio to decrease over time.

(True/False)

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Question 48

Most accounting computer programs,such as QuickBooks,provide common-size analysis reports.

(True/False)

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Question 49

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31,2013. Inventory and prepaid expenses account for $50,000 of the 2013 current assets. Average inventory for 2013 is $36,000. Average net accounts receivable for 2013 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2013. The market price per share of common stock is $27 at the end of 2013. The EPS for 2013 is equal to $1.50 per share. -Refer to Exhibit 13-1.What is the debt to equity ratio for 2013 (rounded to two decimal places)?

(Multiple Choice)

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Question 50

All of the following are measures used in the balanced scorecard except:

(Multiple Choice)

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Question 51

Albany Company has net income before taxes of $90,000,interest expense of $36,000 and an income tax rate of 20%.Based on this information,the company's times interest earned ratio is:

(Multiple Choice)

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Question 52

A current ratio of greater than 1.0 would indicate that current assets exceed current liabilities.

(True/False)

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Question 53

If a company's return on assets is higher than its return on shareholders' equity,then it has positive financial leverage.

(True/False)

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Question 54

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31,2013. Inventory and prepaid expenses account for $50,000 of the 2013 current assets. Average inventory for 2013 is $36,000. Average net accounts receivable for 2013 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2013. The market price per share of common stock is $27 at the end of 2013. The EPS for 2013 is equal to $1.50 per share. -Refer to Exhibit 13-1.What is the debt to equity ratio for 2012 (rounded to two decimal places)?

(Multiple Choice)

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Question 55

Return on assets is a market valuation measure.

(True/False)

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Question 56

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31,2013. Inventory and prepaid expenses account for $50,000 of the 2013 current assets. Average inventory for 2013 is $36,000. Average net accounts receivable for 2013 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2013. The market price per share of common stock is $27 at the end of 2013. The EPS for 2013 is equal to $1.50 per share. -Refer to Exhibit 13-1.What is the profit margin ratio for 2013 (rounded to the nearest tenth of a percent)?

(Multiple Choice)

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Question 57

Times interest earned indicates the company's ability to cover its interest expense related to long-term debt with current period earnings..

(True/False)

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Question 58

Dresden Inc.has net sales of $1,200,000,cost of goods sold of $900,000,operating expenses of $200,000,interest expense of $30,000,and income tax expense of $10,000.The company's gross margin ratio is (round to the nearest tenth of a percent):

(Multiple Choice)

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Question 59

Which of the following types of companies would have the highest inventory turnover ratios?

(Multiple Choice)

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Question 60

Showing 41 - 60 of 62

A common-size analysis converts each line of financial statement data to an easily comparable amount measured in percent form.

A relatively high price-earnings ratio indicates investors expect favorable future earnings.

Return on assets is calculated as average total assets divided by net income.

The following condensed income statement is for Mason Inc. Compute the following long-term solvency ratios for 2013,and provide a brief explanation after each ratio (round computations to two decimal places): (1)Debt to assets (2)Debt to equity (3)Times interest earned

Savanah Company reported the following amounts of net income. Which of the following is the percentage change in net income from Year 2 to Year 3?

Which of the following is the best explanation of a company's inventory turnover of 12.0 for the year 2013?

In general,managers prefer the profit margin ratio to decrease over time.

Most accounting computer programs,such as QuickBooks,provide common-size analysis reports.

All of the following are measures used in the balanced scorecard except:

Albany Company has net income before taxes of $90,000,interest expense of $36,000 and an income tax rate of 20%.Based on this information,the company's times interest earned ratio is:

A current ratio of greater than 1.0 would indicate that current assets exceed current liabilities.

If a company's return on assets is higher than its return on shareholders' equity,then it has positive financial leverage.

Return on assets is a market valuation measure.

Times interest earned indicates the company's ability to cover its interest expense related to long-term debt with current period earnings..

Dresden Inc.has net sales of $1,200,000,cost of goods sold of $900,000,operating expenses of $200,000,interest expense of $30,000,and income tax expense of $10,000.The company's gross margin ratio is (round to the nearest tenth of a percent):

Which of the following types of companies would have the highest inventory turnover ratios?

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