Question 1

Profitability is the ability to pay bills when due and to meet unexpected needs for cash.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following describes the asset turnover ratio?

Accepted Answer

A)  Average total assets divided by sales 
B)  Net sales divided by net income 
C)  Net sales divided by average total assets 
D)  Average total assets divided by net income 
A)  Average total assets divided by sales 
B)  Net sales divided by net income 
C)  Net sales divided by average total assets 
D)  Average total assets divided by net income

Question 3

Using the income statement below, develop a common-size statement by filling in the blanks provided. Show your work. Round to one decimal place.

Accepted Answer

The answer of Using the income statement below, develop a...

Question 4

Asset turnover is most closely associated with a company's liquidity position.

Accepted Answer

A) True 
 B)False

Question 5

The following information pertains to Jasmin Corporation. Assume that all balance sheet amounts represent both average and ending figures.     Jasmin Corporation had 6,000 shares of common stock issued and outstanding. The market price of Jasmin common stock on December 31, 2009, was $20. Jasmin paid dividends of $0.90 per share during 2009.
What is the debt to equity ratio for this corporation? Round your answer to 1 decimal place.

Accepted Answer

A)  0.4 times 
B)  0.6 times 
C)  1.0 times 
D)  2.5 times 
A)  0.4 times 
B)  0.6 times 
C)  1.0 times 
D)  2.5 times

Question 6

An example of horizontal analysis is

Accepted Answer

A)  common-size statements. 
B)  trend analysis. 
C)  ratio analysis. 
D)  profitability analysis. 
A)  common-size statements. 
B)  trend analysis. 
C)  ratio analysis. 
D)  profitability analysis.

Question 7

The receivable turnover and inventory turnover ratios are used to analyze

Accepted Answer

A)  leverage. 
B)  long-term solvency. 
C)  profitability. 
D)  liquidity. 
A)  leverage. 
B)  long-term solvency. 
C)  profitability. 
D)  liquidity.

Question 8

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures.     What is the profit margin for this corporation? Round your answer to one decimal place.

Accepted Answer

A)  22.5 percent 
B)  30.0 percent 
C)  40.0 percent 
D)  53.3 percent 
A)  22.5 percent 
B)  30.0 percent 
C)  40.0 percent 
D)  53.3 percent

Question 9

The current ratio is a

Accepted Answer

A)  liquidity ratio. 
B)  profitability ratio. 
C)  long-term solvency ratio. 
D)  market strength ratio. 
A)  liquidity ratio. 
B)  profitability ratio. 
C)  long-term solvency ratio. 
D)  market strength ratio.

Question 10

Prepare a horizontal analysis by computing the amounts and percentage changes for the following balance sheet items; place your answers in the blanks provided.

Accepted Answer

The answer of Prepare a horizontal analysis by computing the...

Question 11

Does the existence of conglomerates make financial performance evaluation easier or more difficult? Why?

Accepted Answer

Conglomerates, or diversified companies,

Question 12

One of the best places to look for early signals of change in a company's profitability is the

Accepted Answer

A)  annual report sent to the SEC. 
B)  year-end financial statements. 
C)  interim financial statements. 
D)  annual report sent to stockholders. 
A)  annual report sent to the SEC. 
B)  year-end financial statements. 
C)  interim financial statements. 
D)  annual report sent to stockholders.

Question 13

Companies in the same industry are required to use the same methods to value inventory and to depreciate similar assets.

Accepted Answer

A) True 
 B)False

Question 14

The quick ratio and the debt to equity ratio are measures of short-term debt-paying ability.

Accepted Answer

A) True 
 B)False

Question 15

Days' payable is a measure of

Accepted Answer

A)  liquidity. 
B)  volatility. 
C)  long-term solvency. 
D)  profitability. 
A)  liquidity. 
B)  volatility. 
C)  long-term solvency. 
D)  profitability.

Question 16

Market strength refers most closely to the ability to

Accepted Answer

A)  survive for many years. 
B)  pay bills when they fall due. 
C)  earn a satisfactory net income. 
D)  increase the wealth of stockholders. 
A)  survive for many years. 
B)  pay bills when they fall due. 
C)  earn a satisfactory net income. 
D)  increase the wealth of stockholders.

Question 17

The following information pertains to Flintridge Corporation:
   Calculate the asset turnover ratio for 2010. Round your answer to two decimal places.

Accepted Answer

0.73 times {$33,000

Question 18

Declining profitability and liquidity ratios are indications that a company may not survive.

Accepted Answer

A) True 
 B)False

Question 19

Per the Sarbanes-Oxley Act of 2002, public corporations must establish a compensation committee to determine how its top executives will be compensated.

Accepted Answer

A) True 
 B)False

Question 20

What is the best way to study the relationship of the components of financial statements?

Accepted Answer

A)  Perform ratio analysis. 
B)  Perform trend analysis. 
C)  Perform horizontal analysis. 
D)  Prepare common-size statements. 
A)  Perform ratio analysis. 
B)  Perform trend analysis. 
C)  Perform horizontal analysis. 
D)  Prepare common-size statements.

Exam 16: Financial Performance Measurement

Profitability is the ability to pay bills when due and to meet unexpected needs for cash.

Which of the following describes the asset turnover ratio?

Using the income statement below, develop a common-size statement by filling in the blanks provided. Show your work. Round to one decimal place.

Asset turnover is most closely associated with a company's liquidity position.

An example of horizontal analysis is

The receivable turnover and inventory turnover ratios are used to analyze

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures. What is the profit margin for this corporation? Round your answer to one decimal place.

The current ratio is a

Prepare a horizontal analysis by computing the amounts and percentage changes for the following balance sheet items; place your answers in the blanks provided.

Does the existence of conglomerates make financial performance evaluation easier or more difficult? Why?

One of the best places to look for early signals of change in a company's profitability is the

Companies in the same industry are required to use the same methods to value inventory and to depreciate similar assets.

The quick ratio and the debt to equity ratio are measures of short-term debt-paying ability.

Days' payable is a measure of

Market strength refers most closely to the ability to

The following information pertains to Flintridge Corporation: Calculate the asset turnover ratio for 2010. Round your answer to two decimal places.

Declining profitability and liquidity ratios are indications that a company may not survive.

Per the Sarbanes-Oxley Act of 2002, public corporations must establish a compensation committee to determine how its top executives will be compensated.

What is the best way to study the relationship of the components of financial statements?

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

Filters