Question 1

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Accepted Answer

A) True 
 B)False

Question 2

A component of operating efficiency and profitability, calculated by expressing Net Income as a percent of Net Sales, is the:

Accepted Answer

A) Acid-test ratio. 
B) Merchandise turnover. 
C) Price earnings ratio. 
D) Accounts receivable turnover. 
E) Profit margin ratio. 
A) Acid-test ratio. 
B) Merchandise turnover. 
C) Price earnings ratio. 
D) Accounts receivable turnover. 
E) Profit margin ratio.

Question 3

Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory. The acid-test (quick) ratio is:

Accepted Answer

A) 1.4:1. 
B) 0.77:1. 
C) 0.54:1. 
D) 1:1. 
E) 0.64:1. 
A) 1.4:1. 
B) 0.77:1. 
C) 0.54:1. 
D) 1:1. 
E) 0.64:1.

Question 4

Internal users of financial information:

Accepted Answer

A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers, regulators, and the press. 
A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers, regulators, and the press.

Question 5

Three of the most common tools of financial analysis are:

Accepted Answer

A) Financial reporting, ratio analysis, vertical analysis. 
B) Ratio analysis, horizontal analysis, financial reporting. 
C) Horizontal analysis, vertical analysis, ratio analysis. 
D) Trend analysis, financial reporting, ratio analysis. 
E) Vertical analysis, political analysis, horizontal analysis. 
A) Financial reporting, ratio analysis, vertical analysis. 
B) Ratio analysis, horizontal analysis, financial reporting. 
C) Horizontal analysis, vertical analysis, ratio analysis. 
D) Trend analysis, financial reporting, ratio analysis. 
E) Vertical analysis, political analysis, horizontal analysis.

Question 6

The dollar change for a comparative financial statement item is calculated by:

Accepted Answer

A) Subtracting the analysis period amount from the base period amount. 
B) Subtracting the base period amount from the analysis period amount. 
C) Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
D) Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
E) Subtracting the base period amount from the analysis amount, then dividing the result by the base amount. 
A) Subtracting the analysis period amount from the base period amount. 
B) Subtracting the base period amount from the analysis period amount. 
C) Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
D) Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
E) Subtracting the base period amount from the analysis amount, then dividing the result by the base amount.

Question 7

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Accepted Answer

A) True 
 B)False

Question 8

Financial statement analysis may be used for personal financial investment decisions.

Accepted Answer

A) True 
 B)False

Question 9

Use the following information from the current year financial statements of a company to calculate the ratios below:
(a) Current ratio.
(b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.)
(c) Days' sales uncollected.
(d) Inventory turnover. (Assume the prior year's inventory was $50,200.)
(e) Times interest earned ratio.
(f) Return on common stockholders' equity. (Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.)
(g) Earnings per share (assuming the corporation has a simple capital structure, with only common stock outstanding).
(h) Price earnings ratio. (Assume the company's stock is selling for $26 per share.)
(i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.)

Accepted Answer

(a) @#IMG-DLM& Current ratio = $239,100/$96,000 =

Question 10

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 11

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio.

Accepted Answer

A) 2.75. 
B) 2.66. 
C) 0.92. 
D) 1.12. 
E) 1.63. 
A) 2.75. 
B) 2.66. 
C) 0.92. 
D) 1.12. 
E) 1.63.

Question 13

Common-size statements:

Accepted Answer

A) Reveal changes in the relative importance of each financial statement item to a base amount. 
B) Do not emphasize the relative importance of each item. 
C) Compare financial statements over time. 
D) Show the dollar amount of change for financial statement items. 
E) Reveal patterns in data across successive periods. 
A) Reveal changes in the relative importance of each financial statement item to a base amount. 
B) Do not emphasize the relative importance of each item. 
C) Compare financial statements over time. 
D) Show the dollar amount of change for financial statement items. 
E) Reveal patterns in data across successive periods.

Question 14

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Accepted Answer

A) .0785%. 
B) 7.85%. 
C) 12.73%. 
D) 1273%. 
E) 7850%. 
A) .0785%. 
B) 7.85%. 
C) 12.73%. 
D) 1273%. 
E) 7850%.

Question 15

Dividing ending Inventory by Cost of Goods Sold and multiplying the result by 365 is the:

Accepted Answer

A) Inventory turnover ratio. 
B) Profit margin. 
C) Days' sales in inventory. 
D) Current ratio. 
E) Total asset turnover. 
A) Inventory turnover ratio. 
B) Profit margin. 
C) Days' sales in inventory. 
D) Current ratio. 
E) Total asset turnover.

Question 16

Trend percentage is calculated by dividing _________________________ by ___________________________ and multiplying the result by 100.

Accepted Answer

analysis p

Question 17

The gross margin ratio, return on total assets, and basic earnings per share are all _____________ ratios.

Accepted Answer

The answer of The gross margin ratio, return on total...

Question 18

Use the financial data shown below to calculate the following ratios for the current year:
(a) Current ratio.
(b) Acid-test ratio.
(c) Accounts receivable turnover.
(d) Days' sales uncollected.
(e) Inventory turnover.
(f) Days' sales in inventory.

Accepted Answer

(a) Current ratio:
($19,500 + $65,000 +

Question 19

Clairmont Industries reported Net Income of $283,000 and average Total Assets of $637,000. The return on total assets is:

Accepted Answer

A) 55.6%. 
B) 88.8%. 
C) 61.5%. 
D) 44.4%. 
E) 125.1%. 
A) 55.6%. 
B) 88.8%. 
C) 61.5%. 
D) 44.4%. 
E) 125.1%.

Question 20

The return on total assets can be calculated as profit margin times total asset turnover.

Accepted Answer

A) True 
 B)False

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

A component of operating efficiency and profitability, calculated by expressing Net Income as a percent of Net Sales, is the:

Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory. The acid-test (quick) ratio is:

Internal users of financial information:

Three of the most common tools of financial analysis are:

The dollar change for a comparative financial statement item is calculated by:

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Financial statement analysis may be used for personal financial investment decisions.

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio.

Common-size statements:

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Dividing ending Inventory by Cost of Goods Sold and multiplying the result by 365 is the:

Trend percentage is calculated by dividing _ by ___ and multiplying the result by 100.

The gross margin ratio, return on total assets, and basic earnings per share are all _____________ ratios.

Use the financial data shown below to calculate the following ratios for the current year: (a) Current ratio. (b) Acid-test ratio. (c) Accounts receivable turnover. (d) Days' sales uncollected. (e) Inventory turnover. (f) Days' sales in inventory.

Clairmont Industries reported Net Income of $283,000 and average Total Assets of $637,000. The return on total assets is:

The return on total assets can be calculated as profit margin times total asset turnover.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 13: Analyzing and Interpreting Financial Statements

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

A component of operating efficiency and profitability, calculated by expressing Net Income as a percent of Net Sales, is the:

Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory. The acid-test (quick) ratio is:

Internal users of financial information:

Three of the most common tools of financial analysis are:

The dollar change for a comparative financial statement item is calculated by:

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Financial statement analysis may be used for personal financial investment decisions.

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio.

Common-size statements:

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Dividing ending Inventory by Cost of Goods Sold and multiplying the result by 365 is the:

Trend percentage is calculated by dividing _________________________ by ___________________________ and multiplying the result by 100.

The gross margin ratio, return on total assets, and basic earnings per share are all _____________ ratios.

Use the financial data shown below to calculate the following ratios for the current year: (a) Current ratio. (b) Acid-test ratio. (c) Accounts receivable turnover. (d) Days' sales uncollected. (e) Inventory turnover. (f) Days' sales in inventory.

Clairmont Industries reported Net Income of $283,000 and average Total Assets of $637,000. The return on total assets is:

The return on total assets can be calculated as profit margin times total asset turnover.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Trend percentage is calculated by dividing _ by ___ and multiplying the result by 100.