Question 1

Recovery Solutions, Inc.Comparative financial statements are provided below:  ​ 
-Refer to Recovery Solutions, Inc. Calculate the current ratio, quick ratio, and cash ratio for 2021. If you were a banker, would you lend money to this company under a short-term note payable?

Accepted Answer

The answer of Recovery Solutions, Inc.Comparative financial statements are provided...

Question 2

Turnover ratios differ from the current and quick ratios in that they

Accepted Answer

A) are based on net sales instead of cash. 
B) are based on a point in time rather than a period of time. 
C) measure the efficiency with which a company uses its assets. 
D) measure the profitability of a company instead of its liquidity.

Question 3

Match these terms to their correct definition.
-An even more conservative short-term liquidity ratio than the quick ratio.

Accepted Answer

A) Accounts receivable turnover ratio 
B) Cash ratio 
C) Gross profit percentage 
D) Inventory turnover ratio 
E) Net profit margin percentage
F)Operating margin percentage
G)Quick ratio
H)Total payout ratio

Question 4

For each of the following sentences, select the phrase or group of words that best completes the statement.
-Relationship between total liabilities and stockholders' equity.

Accepted Answer

A) Debt-to-equity ratio 
B) Dividend payout ratio 
C) Dividend yield ratio 
D) Earnings per share 
E) Leverage
F)Return on assets ratio
G)Return on common equity ratio
H)Stock repurchase payout

Question 5

Earnings per share is an indication of how much

Accepted Answer

A) cash the company has for each share of all outstanding stock. 
B) earnings the company has for each share of outstanding common stock. 
C) earnings the company has for each share of all outstanding stock. 
D) dividends the company paid for each share of outstanding common stock.

Question 6

For each of the following sentences, select the phrase or group of words that best completes the statement.
-Total stockholders' equity

Accepted Answer

A) Debt-to-equity ratio 
B) Dividend payout ratio 
C) Dividend yield ratio 
D) Earnings per share 
E) Leverage
F)Return on assets ratio
G)Return on common equity ratio
H)Stock repurchase payout

Question 7

A company's relative mix of debt and equity financing is referred to as its __________ structure.

Accepted Answer

The answer of A company's relative mix of debt and...

Question 8

A company issued additional shares of stock. Which of the following is true with regard to the effect of the stock issuance transaction on the company's ratio computations?

Accepted Answer

A) Earnings per share decreased. 
B) The debt-to-equity ratio increased. 
C) The asset turnover ratio decreased. 
D) Return on equity remained unchanged.

Question 9

Ratios that focus on cash are more useful than those that focus on income in the evaluation of a company's liquidity.

Accepted Answer

A) True 
 B)False

Question 10

In evaluating a company's financial statements, the least useful information would be derived from a comparison of the current period data with

Accepted Answer

A) economic and industry data. 
B) another company in the same industry for the same period. 
C) the same company's data from five years ago. 
D) the same company's data from the prior year.

Question 11

The following information was included in a note to the current year financial statements of Romeo Productions: The company has a loan agreement with First National Bank that states:
1)The current ratio must be 2.0 or higher at all times.
2)The debt-to-equity ratio must not exceed 0.7 at any time.
3)The times interest earned ratio must be 5.0 or higher.
4)The inventory turnover ratio must be 4.0 or higher.
The company's ratios are: current ratio, 2.3; debt-to-equity ratio, 0.6; times interest earned ratio, 7.1; and inventory turnover ratio, 3.7. Based on this information, the company was in default of its loan agreement because of the

Accepted Answer

A) current ratio. 
B) debt-to-equity ratio. 
C) times interest earned ratio. 
D) inventory turnover ratio.

Question 12

The amount of working capital is more meaningful to users than the current ratio because working capital provides information on the composition of the current accounts.

Accepted Answer

A) True 
 B)False

Question 13

When calculating the return on common equity ratio, dividends to preferred stockholders are deducted from net income because

Accepted Answer

A) the ratio is an indicator of the return on common stockholders equity rather than the return on total equity. 
B) dividends are not expenses on the current period income statement. 
C) conservatism indicates that stockholders prefer a smaller numerator. 
D) dividends are only available for distribution to common stockholders after the preferred stockholders have received their dividends.

Question 14

When trying to predict future profits, analysts often take a top-down approach which starts with gathering economic and industry data to supplement what they are able to find out about the specific corporations they follow.

Accepted Answer

A) True 
 B)False

Question 15

Selected data from the financial statements are presented below:
 
-Refer to Rapid Sign Corporation. What is the dividend payout ratio for 2020?

Accepted Answer

A) 30.0% 
B) 30.9% 
C) 36.3% 
D) 38.2%

Question 16

Which of the following would be generally viewed as a negative change?

Accepted Answer

A) Earnings per share increases. 
B) The debt-to-total assets ratio decreases. 
C) The acid test ratio increases. 
D) The return on common equity decreases.

Question 17

Agrefeld, Inc. has a return on assets of 12% and a return on common equity of 15%. What causes the difference in these two returns?

Accepted Answer

The answer of Agrefeld, Inc. has a return on assets...

Question 18

Recovery Solutions, Inc.Comparative financial statements are provided below:  ​ 
-Refer to Recovery Solutions, Inc. Perform DuPont analysis for 2021 and 2020, showing all three components. Assume that total assets and total stockholders' equity at June 30, 2019, were $1,250,000 and 969,000, respectively.

Accepted Answer

The answer of Recovery Solutions, Inc.Comparative financial statements are provided...

Question 19

Selected data from the financial statements are presented below:
 
-Refer to Rapid Sign Corporation. What is the total payout ratio for 2020?

Accepted Answer

A) 102% 
B) 88% 
C) 66% 
D) 30%

Question 20

Because of its relationship to dividends and market price, which of the following ratios is most important to investors?

Accepted Answer

A) current ratio 
B) debt-to-equity ratio 
C) dividend yield ratio 
D) asset turnover ratio

Exam 12: Financial Statement Analysis

Recovery Solutions, Inc.Comparative financial statements are provided below: -Refer to Recovery Solutions, Inc. Calculate the current ratio, quick ratio, and cash ratio for 2021. If you were a banker, would you lend money to this company under a short-term note payable?

Turnover ratios differ from the current and quick ratios in that they

Match these terms to their correct definition. -An even more conservative short-term liquidity ratio than the quick ratio.

For each of the following sentences, select the phrase or group of words that best completes the statement. -Relationship between total liabilities and stockholders' equity.

Earnings per share is an indication of how much

For each of the following sentences, select the phrase or group of words that best completes the statement. -Total stockholders' equity

A company's relative mix of debt and equity financing is referred to as its __________ structure.

A company issued additional shares of stock. Which of the following is true with regard to the effect of the stock issuance transaction on the company's ratio computations?

Ratios that focus on cash are more useful than those that focus on income in the evaluation of a company's liquidity.

In evaluating a company's financial statements, the least useful information would be derived from a comparison of the current period data with

The amount of working capital is more meaningful to users than the current ratio because working capital provides information on the composition of the current accounts.

When calculating the return on common equity ratio, dividends to preferred stockholders are deducted from net income because

When trying to predict future profits, analysts often take a top-down approach which starts with gathering economic and industry data to supplement what they are able to find out about the specific corporations they follow.

Selected data from the financial statements are presented below: -Refer to Rapid Sign Corporation. What is the dividend payout ratio for 2020?

Which of the following would be generally viewed as a negative change?

Agrefeld, Inc. has a return on assets of 12% and a return on common equity of 15%. What causes the difference in these two returns?

Selected data from the financial statements are presented below: -Refer to Rapid Sign Corporation. What is the total payout ratio for 2020?

Because of its relationship to dividends and market price, which of the following ratios is most important to investors?

Exam 12: Financial Statement Analysis

Recovery Solutions, Inc.Comparative financial statements are provided below: ​ -Refer to Recovery Solutions, Inc. Calculate the current ratio, quick ratio, and cash ratio for 2021. If you were a banker, would you lend money to this company under a short-term note payable?

Turnover ratios differ from the current and quick ratios in that they

Match these terms to their correct definition. -An even more conservative short-term liquidity ratio than the quick ratio.

For each of the following sentences, select the phrase or group of words that best completes the statement. -Relationship between total liabilities and stockholders' equity.

Earnings per share is an indication of how much

For each of the following sentences, select the phrase or group of words that best completes the statement. -Total stockholders' equity

A company's relative mix of debt and equity financing is referred to as its __________ structure.

A company issued additional shares of stock. Which of the following is true with regard to the effect of the stock issuance transaction on the company's ratio computations?

Ratios that focus on cash are more useful than those that focus on income in the evaluation of a company's liquidity.

In evaluating a company's financial statements, the least useful information would be derived from a comparison of the current period data with

The amount of working capital is more meaningful to users than the current ratio because working capital provides information on the composition of the current accounts.

When calculating the return on common equity ratio, dividends to preferred stockholders are deducted from net income because

When trying to predict future profits, analysts often take a top-down approach which starts with gathering economic and industry data to supplement what they are able to find out about the specific corporations they follow.

Selected data from the financial statements are presented below: -Refer to Rapid Sign Corporation. What is the dividend payout ratio for 2020?

Which of the following would be generally viewed as a negative change?

Agrefeld, Inc. has a return on assets of 12% and a return on common equity of 15%. What causes the difference in these two returns?

Selected data from the financial statements are presented below: -Refer to Rapid Sign Corporation. What is the total payout ratio for 2020?

Because of its relationship to dividends and market price, which of the following ratios is most important to investors?

Recovery Solutions, Inc.Comparative financial statements are provided below: -Refer to Recovery Solutions, Inc. Calculate the current ratio, quick ratio, and cash ratio for 2021. If you were a banker, would you lend money to this company under a short-term note payable?