Question 1

The common-size percent is calculated by

Accepted Answer

A) Dividing the analysis amount by the base amount 
B) Dividing the base amount by the analysis amount 
C) Dividing the analysis amount by the base amount and multiplying the result by 100 
D) Dividing the base amount by the analysis amount and multiplying the result by 100 
E) Subtracting the base amount from the analysis amount and multiplying the result by 100

Question 2

Discuss the purpose of the accounts receivable turnover ratio and explain how it is calculated.

Accepted Answer

The answer of Discuss the purpose of the accounts receivable...

Question 3

Accounts payable turnover is a measure of liquidity.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Liquidity refers to the availability of resources to meet short-term cash requirements.

Accepted Answer

A) True 
 B)False

Question 6

Comparison standards for financial statement analysis include

Accepted Answer

A) Intracompany 
B) Competition 
C) Industry 
D) Guidelines 
E) All of these

Question 7

Describe horizontal financial statement analysis.

Accepted Answer

The answer of Describe horizontal financial statement analysis....

Question 8

Explain how inventory management is evaluated using the merchandise turnover and days' sales in inventory ratios.

Accepted Answer

The answer of Explain how inventory management is evaluated using...

Question 9

Quickcom has net sales of $135,000 and average accounts receivable of $67,000.What is the accounts receivable turnover for the period?

Accepted Answer

A) 20 
B) 73 
C) 1,825 
D) 2 
E) 25

Question 10

Halifax Company had profit of $37,843 in Year 1 and $43,876 in Year 2.Its net sales were $319,483 in Year 1 and $305,415 in Year 2.Its average total assets in Year 1 were $334,890 and $356,132 in Year 2.Calculate the profit margin,total asset turnover,and return on total assets for both years.Comment on the results.
Profit margin,Year 1: $37,843/$319,483 = 11.8%
Profit margin,Year 2: $43,876/$305,415 = 14.4%
Total asset turnover,Year 1: $319,483/$334,890 = .954
Total asset turnover,Year 2: $305,415/$356,132 = .858
Return on total assets,Year 1: $37,843/$334,890 = 11.3%
Return on total assets,Year 2: $43,876/$356,132 = 12.3%

Accepted Answer

The answer of Halifax Company had profit of $37,843 in...

Question 11

Marko Inc.paid a cash dividend of $0.24 per share.There were 16,000 common shares issued,and 1,000 treasury shares.The market price per share was $17.18.Calculate the following: (1)the total amount of dividends paid to common shareholders and (2)the dividend yield.

Accepted Answer

The answer of Marko Inc.paid a cash dividend of $0.24...

Question 12

Gluten Corporation had profit 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.

Accepted Answer

The answer of Gluten Corporation had profit of $1,718,000.It paid...

Question 13

The number of days' sales uncollected

Accepted Answer

A) Measures how much time is likely to pass before a company receives cash receipts from credit sales equal to the current amount of accounts receivable 
B) Is used to compare a company to other companies in the same industry 
C) Is used to compare between current and prior periods 
D) Is used to compare a company to other companies in the same industry and is used to compare between current and prior periods 
E) All of these

Question 14

Sports World had net sales of $230,000 for Year 1 and $276,000 for Year 2.Its average total assets for Year 1 were $150,000 and $180,000 for Year 2.Calculate the total asset turnover for each year and comment on the firm's efficiency in the use of its assets.

Accepted Answer

The answer of Sports World had net sales of $230,000...

Question 15

The debt ratio is used to

Accepted Answer

A) Measure the relationship of equity to debt 
B) Describe the risk associated with a company's debts 
C) Is used only by banks when a business applies for a loan 
D) Measure the relationship of equity to debt and describe the risk associated with a company's debts 
E) Describe the risk associated with a company's debts and is used only by banks when a business applies for a loan

Question 16

The acid-test ratio is also called the quick ratio.

Accepted Answer

A) True 
 B)False

Question 17

To calculate trend percents

Accepted Answer

A) Select a base period and assign each item for the base period statement a weight of 100% 
B) Express financial numbers from other periods as a percent of the related base period number 
C) Subtract the analysis period number from the base period number 
D) Select a base period and assign each item for the base period statement a weight of 100% and express financial numbers from other periods as a percent of the related base period number 
E) All of these

Question 18

The acid-test ratio differs from the current ratio

Accepted Answer

A) Because it excludes prepaid expenses and inventory 
B) Because liabilities are divided by current assets 
C) Because it measures profitability 
D) Because it excludes short-term investments 
E) Because it excludes prepaid expenses and inventory and because it measures profitability

Question 19

Explain the current ratio.Describe how it is used to evaluate a company.

Accepted Answer

The answer of Explain the current ratio.Describe how it is...

Question 20

Chicago Company's cost of goods sold was $19,250.Its average merchandise inventory was $4,575.Its merchandise turnover was 4.2.

Accepted Answer

A) True 
 B)False

Exam 9: Analyzing Financial Statements

The common-size percent is calculated by

Discuss the purpose of the accounts receivable turnover ratio and explain how it is calculated.

Accounts payable turnover is a measure of liquidity.

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

Liquidity refers to the availability of resources to meet short-term cash requirements.

Comparison standards for financial statement analysis include

Describe horizontal financial statement analysis.

Explain how inventory management is evaluated using the merchandise turnover and days' sales in inventory ratios.

Quickcom has net sales of $135,000 and average accounts receivable of $67,000.What is the accounts receivable turnover for the period?

Marko Inc.paid a cash dividend of $0.24 per share.There were 16,000 common shares issued,and 1,000 treasury shares.The market price per share was $17.18.Calculate the following: (1)the total amount of dividends paid to common shareholders and (2)the dividend yield.

Gluten Corporation had profit 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.

The number of days' sales uncollected

Sports World had net sales of $230,000 for Year 1 and $276,000 for Year 2.Its average total assets for Year 1 were $150,000 and $180,000 for Year 2.Calculate the total asset turnover for each year and comment on the firm's efficiency in the use of its assets.

The debt ratio is used to

The acid-test ratio is also called the quick ratio.

To calculate trend percents

The acid-test ratio differs from the current ratio

Explain the current ratio.Describe how it is used to evaluate a company.

Chicago Company's cost of goods sold was $19,250.Its average merchandise inventory was $4,575.Its merchandise turnover was 4.2.