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

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:

All of the following are nonfinancial measures that might be used by transportation companies such as FedEx except:

Which of the following is the best reason to use a common-size analysis?

Savanah Company reported the following amounts of net income. Year 1 \ 50,000 Year 2 \ 70,000 Year 3 \ 56,000 Which of the following is the percentage change in net income from Year 2 to Year 3?

The following condensed income statement is for Mason Inc. Mason Inc. Income Statement Years ended December 31, 2017 and 2016 (in thousands) 2017 2016 Net sales ( 80\% are credit sales) \ 60,000 \ 46,000 Cost of goods sold 26,000 20,000 Gross margin 34,000 26,000 Selling and administrative expenses 6,000 4,000 Operating income 28,000 22,000 Interest expense 1,000 1,000 Income before taxes 27,000 21,000 Income tax expense 2,000 1,000 Net income \ 25,000 \ 20,000 Compute the following long-term solvency ratios for 2017,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

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):

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

The current ratio is the same as the quick ratio.

All of the following measures focus on short-term liquidity except:

Which of the following types of analyses would show whether sales increased by $160,000 from one year to the next?

If net sales is growing at a greater rate than cost of goods sold,which of the following will always be true?

On a common-size balance sheet,current liabilities should be stated as a percentage of:

Belden Company has a profit margin ratio of 10%.This means that for every dollar of net sales the company makes,it generates ten dollars in net income.

The price-earnings ratio measures the premium investors are willing to pay for a company's stock relative to its earnings.

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

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

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

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

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31,2017. Net sales revenue (all credit) \ 1,700,000 Cost of goods sold 1,040,000 Gross margin 660,000 Selling and general expenses 420,000 Interest expense \ 0,000 Net income \ 180,000 Current assets \ 100,000 \ 90,000 Long-term assets 830,000 800,000 Total assets \ 930,000 \ 890,00 Current liabilities \ 56,00 Long-term liabilities 204,000 390,00 Common stockholders' equity 654,000 444,00 Total liabilities and stockholders' equity \ 930,000 \ 890,00 Inventory and prepaid expenses account for $50,000 of the 2017 current assets. Average inventory for 2017 is $36,000. Average net accounts receivable for 2017 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2017. The market price per share of common stock is $27 at the end of 2017. The EPS for 2017 is equal to $1.50 per share. -Refer to Exhibit 13-1.What is the profit margin ratio for 2017 (rounded to the nearest tenth of a percent)?