A) Is current assets divided by current liabilities. B) Helps to assess a company's ability to pay its debts in the near future. C) Reveals problems in a business if it is less than 1. D) Is current assets divided by current liabilities and helps to assess a company's ability to pay its debts in the near future. E) All of these answers are correct. A) Is current assets divided by current liabilities. B) Helps to assess a company's ability to pay its debts in the near future. C) Reveals problems in a business if it is less than 1. D) Is current assets divided by current liabilities and helps to assess a company's ability to pay its debts in the near future. E) All of these answers are correct.

Exam 18: Analyzing Financial Statements

Annies Attick reported the following information for December 31. (1)Explain the purpose of the acid-test ratio. (2)Calculate the acid-test ratio. (3)What does the acid-test ratio reveal about Annies Attick?

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Question 1

Correct Answer:

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(1)The purpose of the acid-test ratio is to measure the ability of a firm to convert assets into cash.The cash is then available to pay current liabilities. (2) (3)Annies Attick does not have enough quick assets to be considered liquid.The business has too much money tied up in inventory.

Gluten Corporation had net income of $1,718,000.It paid preferred dividends of $65,000.There were 600,000 common shares outstanding.The market price per share was $59.46.Calculate the price-earnings ratio.

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Question 2

Correct Answer:

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EPS = ($1,718,000 - $65,000)/600,000 = $2.76 PER $59.46/$2.76 = 21.54

Days' sales in inventory:

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Question 3

Correct Answer:

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Accounts receivable turnover is calculated by:

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Question 4

The current ratio:

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Question 5

Select comparative financial data information for Russian Corp is presented below: (a)Calculate return on total assets for Year 2. (b)Calculate return on common shareholders' equity for Year 2.

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Question 6

FastForward had $3,000 of net income for October.Total revenues were $10,000.Calculate the profit margin.

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Question 7

The number of days' sales uncollected:

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Question 8

General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of changes in equity,(4)statement of cash flows,and (5)notes related to the statements.

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Question 9

Comparative financial statements in which each amount is expressed as a percentage of a base amount,and in which the base amount is expressed as 100%,are called:

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Question 10

Guidelines or rules of thumb should be always be applied in financial analysis.

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Question 11

Comparative financial data for Assembly Corp are presented below: Calculate accounts receivable turnover for Year 2. Calculate merchandise turnover for Year 2.

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Question 12

Micron Company had net income for Year 1 of $47,950 and $53,425 in Year 2.The company had net sales of $363,250 in Year 1 and $392,750 in Year 2.The company's average total assets in Year 1 were $942,550 and $877,560 in Year 2.Calculate Micron's profit margin,total asset turnover,and return on total assets for Year 1 and Year 2.Comment on the results.

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Question 13

The debt ratio is used to:

(Multiple Choice)

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Question 14

The current ratio is used to evaluate the ability of a business to meet its short-term obligations.

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Question 15

The ratio of a company's book value of pledged assets to the book value of its secured liabilities is called the:

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Question 16

If the times interest earned ratio:

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Question 17

Quantum Corp.had earnings per share of $6.32.It paid a $7.50 dividend per share to preferred shareholders,and a $2.50 dividend per share to common shareholders.There were 1,000 preferred shares outstanding and 6,000 common shares outstanding.The market price per common share was $25.Calculate the dividend yield for common shares.

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Question 18

David Company had assets of $13,500,000,net income of $3,900,000,and net sales of $167,155,000.Its profit margin was 2.3%.

(True/False)

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Question 19

Templeton Corporation has the following balance sheet: Calculate the current ratio and the acid-test ratio.

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Question 20

Showing 1 - 20 of 332

Annies Attick reported the following information for December 31. (1)Explain the purpose of the acid-test ratio. (2)Calculate the acid-test ratio. (3)What does the acid-test ratio reveal about Annies Attick?

Gluten Corporation had net income of $1,718,000.It paid preferred dividends of $65,000.There were 600,000 common shares outstanding.The market price per share was $59.46.Calculate the price-earnings ratio.

Days' sales in inventory:

Accounts receivable turnover is calculated by:

The current ratio:

Select comparative financial data information for Russian Corp is presented below: (a)Calculate return on total assets for Year 2. (b)Calculate return on common shareholders' equity for Year 2.

FastForward had $3,000 of net income for October.Total revenues were $10,000.Calculate the profit margin.

The number of days' sales uncollected:

General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of changes in equity,(4)statement of cash flows,and (5)notes related to the statements.

Comparative financial statements in which each amount is expressed as a percentage of a base amount,and in which the base amount is expressed as 100%,are called:

Guidelines or rules of thumb should be always be applied in financial analysis.

Comparative financial data for Assembly Corp are presented below: Calculate accounts receivable turnover for Year 2. Calculate merchandise turnover for Year 2.

The debt ratio is used to:

The current ratio is used to evaluate the ability of a business to meet its short-term obligations.

The ratio of a company's book value of pledged assets to the book value of its secured liabilities is called the:

If the times interest earned ratio:

David Company had assets of $13,500,000,net income of $3,900,000,and net sales of $167,155,000.Its profit margin was 2.3%.

Templeton Corporation has the following balance sheet: Calculate the current ratio and the acid-test ratio.

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

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