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

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

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

On a common-size income statement,net income should be stated as a percentage of:

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 market capitalization at the end of 2017?

The following condensed income statement is for Boston Inc. Boston Inc. Income Statement Years ended December 31, 2017 and 2016 (in thousands) 2017 2016 Net sales \ 20,000 \ 13,000 Cost of goods sold 13,000 9,000 Gross margin 7,000 4,000 Selling and administrative expenses 3,000 2,000 Operating income 4,000 2,000 Other expense, net 300 200 Income before taxes 3,700 1,800 Income tax expense 800 400 Net income \ 2.900 \ 1.400 Prepare a trend analysis of the income statements from 2016 to 2017.(Round percent computations to one decimal place. )

The total assets dollar amount is typically used as the base for a common-size balance sheet analysis.

During 2017,Columbia Inc.had beginning accounts receivable of $680,000 and ending accounts receivable of $760,000.Its net sales of $4,500,000 are composed of 20% cash sales and 80% credit sales.Based on this information,what is Columbia's average collection period?

In general,managers prefer expenses as a percent of net sales to increase over time.

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 ratios for 2017,and provide a brief explanation after each ratio (round computations to two decimal places): (1)Current ratio (2)Quick ratio (3)Receivables turnover ratio (4)Average collection period (5)Inventory turnover ratio (6)Average sale period

Filmore Inc.has the following information available for 2016 and 2017: 2016 2017 Curtent liabilities \ 250,000 \ 400,000 If you were performing a trend analysis on this information,you would say that current liabilities have:

The quick ratio is a short-term liquidity ratio.

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 price-earnings ratio at the end of 2017 (rounded to two decimal places)?

All of the following accounts would typically be used to calculate the quick ratio except:

All of the following account balances would typically be used to calculate a current ratio except:

All of the following measures focus on long-term solvency except:

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

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 debt to equity ratio for 2017 (rounded to two decimal places)?

Declan Inc.calculated its accounts receivable turnover for 2017 to be 20.0.Both years prior to 2017 showed accounts receivable turnovers to be 12.0.Based on this information,what is the best explanation for the change?

If Company A had earnings per share of $4 and Company B had earnings per share of $3,then it is accurate to conclude that Company A was more profitable.

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 return on assets for 2017 (rounded to the nearest tenth of a percent)?