Question 1

Which of the following is not a profitability ratio?

Accepted Answer

A)  Return on equity 
B)  Asset turnover 
C)  Return on assets 
D)  Quick ratio 
A)  Return on equity 
B)  Asset turnover 
C)  Return on assets 
D)  Quick ratio D

Question 2

Within a few days of certain major events, a report must be issued by publicly held corporations to

Accepted Answer

A)  stockholders. 
B)  the SEC. 
C)  Dun & Bradstreet. 
D)  creditors. 
A)  stockholders. 
B)  the SEC. 
C)  Dun & Bradstreet. 
D)  creditors. B

Question 3

The interest coverage ratio and the debt to equity ratio are short-term measures of liquidity.

Accepted Answer

A) True 
 B)False  False

Question 4

Ratio analysis is useful only if the ratio states a meaningful relationship between two numbers.

Accepted Answer

A) True 
 B)False

Question 5

One reason that a common-size statement is a useful tool in financial performance evaluation is that it enables the user to

Accepted Answer

A)  make better comparisons of two companies of different sizes in the same industry. 
B)  determine which companies in a single industry are of the same size. 
C)  judge the relative potential of two companies of similar size in different industries. 
D)  determine which companies in a single industry are of the same value. 
A)  make better comparisons of two companies of different sizes in the same industry. 
B)  determine which companies in a single industry are of the same size. 
C)  judge the relative potential of two companies of similar size in different industries. 
D)  determine which companies in a single industry are of the same value.

Question 6

Use the following information to calculate the ratios requested below. Round answers to two decimal places. Show your work.

Accepted Answer

The answer of Use the following information to calculate the...

Question 7

For 2010, Black & White Corporation had average total assets of $300,000, net sales of $250,000, net income of $20,000, net cash flows from operating activities of $30,000, dividend payments of $15,000, purchases of plant assets of $70,000, and sales of plant assets of $30,000. Using this information, compute (a) cash flow yield, (b) cash flows to sales, (c) cash flows to assets, and (d) free cash flow. Round amounts to one decimal place.

Accepted Answer

a. 1.5 times
b. 12 p

Question 8

Rule-of-thumb measures are the best standards of comparison in financial performance evaluation.

Accepted Answer

A) True 
 B)False

Question 9

The annual report of a publicly held corporation usually does not contain the auditors' report.

Accepted Answer

A) True 
 B)False

Question 10

The receivables turnover measures the relative size of the accounts receivable and the effectiveness of credit policies.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following best describes the debt to equity ratio?

Accepted Answer

A)  Average total assets divided by total liabilities 
B)  Average total assets divided by stockholders' equity 
C)  Stockholders' equity divided by total liabilities 
D)  Total liabilities divided by stockholders' equity 
A)  Average total assets divided by total liabilities 
B)  Average total assets divided by stockholders' equity 
C)  Stockholders' equity divided by total liabilities 
D)  Total liabilities divided by stockholders' equity

Question 12

Given the following information, calculate the payables turnover and days' payable. Round answers to two decimal places.
   
a. Payables turnover
b. Days' payable

Accepted Answer

a. 5.57 times
{($8,321 + $125)

Question 13

To find the most comprehensive information about a company's performance during the year, one would look to

Accepted Answer

A)  interim financial statements. 
B)  the annual report sent to the SEC. 
C)  The Wall Street Journal. 
D)  the annual report sent to stockholders. 
A)  interim financial statements. 
B)  the annual report sent to the SEC. 
C)  The Wall Street Journal. 
D)  the annual report sent to stockholders.

Question 14

When using an index number, one sets the first (oldest) number in a series equal to 100.

Accepted Answer

A) True 
 B)False

Question 15

Financial statements for Cancun Corporation are presented below.
     Note: Dividends of $0.60 per share were declared and paid during 2010. The market price of the stock on December 31, 2010 was $18.00 per share.
Compute the following for 2010 and place your answers in the spaces provided. Round answers to two decimal places. Show your work.

Accepted Answer

The answer of Financial statements for Cancun Corporation are presented...

Question 16

Why is the quick ratio probably better than the current ratio as a measure of short-term liquidity?

Accepted Answer

The current ratio includes all current a

Question 17

Use the following information to calculate the ratios requested below. Round answers to two decimal places. Show your work.

Accepted Answer

The answer of Use the following information to calculate the...

Question 18

A company with a current ratio of 2.4 times will see that ratio decrease when the company

Accepted Answer

A)  pays a large current liability. 
B)  declares a 10 percent stock dividend on its common stock. 
C)  borrows cash by issuing a short-term note payable. 
D)  converts a short-term liability to a long-term liability. 
A)  pays a large current liability. 
B)  declares a 10 percent stock dividend on its common stock. 
C)  borrows cash by issuing a short-term note payable. 
D)  converts a short-term liability to a long-term liability.

Question 19

During the year, Dempsey Corporation's current ratio increased while its quick ratio decreased. Which of the following could help explain this situation?

Accepted Answer

A)  A decrease in accounts receivable during the year 
B)  An increase in accounts payable during the year 
C)  The sale of short-term investments during the year 
D)  An increase in inventory levels during the year 
A)  A decrease in accounts receivable during the year 
B)  An increase in accounts payable during the year 
C)  The sale of short-term investments during the year 
D)  An increase in inventory levels during the year

Question 20

The index number used in trend analysis is computed by dividing the base year amount by the index year amount, and multiplying that result by 100.

Accepted Answer

A) True 
 B)False

Exam 16: Financial Performance Measurement

Which of the following is not a profitability ratio?

Within a few days of certain major events, a report must be issued by publicly held corporations to

The interest coverage ratio and the debt to equity ratio are short-term measures of liquidity.

Ratio analysis is useful only if the ratio states a meaningful relationship between two numbers.

One reason that a common-size statement is a useful tool in financial performance evaluation is that it enables the user to

Use the following information to calculate the ratios requested below. Round answers to two decimal places. Show your work.

Rule-of-thumb measures are the best standards of comparison in financial performance evaluation.

The annual report of a publicly held corporation usually does not contain the auditors' report.

The receivables turnover measures the relative size of the accounts receivable and the effectiveness of credit policies.

Which of the following best describes the debt to equity ratio?

Given the following information, calculate the payables turnover and days' payable. Round answers to two decimal places. a. Payables turnover b. Days' payable

To find the most comprehensive information about a company's performance during the year, one would look to

When using an index number, one sets the first (oldest) number in a series equal to 100.

Why is the quick ratio probably better than the current ratio as a measure of short-term liquidity?

Use the following information to calculate the ratios requested below. Round answers to two decimal places. Show your work.

A company with a current ratio of 2.4 times will see that ratio decrease when the company

During the year, Dempsey Corporation's current ratio increased while its quick ratio decreased. Which of the following could help explain this situation?

The index number used in trend analysis is computed by dividing the base year amount by the index year amount, and multiplying that result by 100.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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