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Exam 9: Managerial Accounting

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Question 91

Multiple Choice

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A common measure of profitability is the

A) current ratio.
B) times interest earned.
C) return on common stockholders' equity.
D) debt to assets.

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Question 92

Multiple Choice

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If Year 1 equals $750 Year 2 equals $840 and Year 3 equals $900 the percentage to be assigned for Year 3 in a trend analysis assuming that Year 1 is the base year is

A) 120%.
B) 112%.
C) 83%.
D) 107%.

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Question 93

Multiple Choice

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Return on assets is most closely related to

Vertical analysis is useful in making comparisons of companies of different sizes.

A high accounts receivable turnover indicates

In a common size financial statement which of the following is given a percentage of 100 percent?

Which of the following items appears on the income statement before income before income taxes?

Other comprehensive income is reported on the statement of comprehensive income immediately

Both profit margin and asset turnover affect a company's return on assets.

Companies report most changes in accounting principle currently.

Ed's Drive-In had $175000 of current assets and $80000 of current liabilities before borrowing $60000 from the bank with a 3-month note payable.What effect did the borrowing transaction have on Ed's Drive-In's current ratio?

Junebag Corporation reported net income $24000; net sales $400000; and average assets $600000 for 2021.What is the 2021 profit margin?

In horizontal or trend analysis each item is expressed as a(n)

Tito Corporation had net income of $2000000 and paid dividends to common stockholders of $300000 in 2021.The weighted average number of shares outstanding in 2021 was 400000 shares.Tito Corporation's common stock is selling for $50 per share on the NASDAQ.Tito Corporation's payout ratio for 2021 is

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Long-term creditors are usually most interested in evaluating

In the vertical analysis of a balance sheet the base for current liabilities is total liabilities.

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. $\begin{array}{lr}\text { Assets } & \\\text { Cash and short-term investments } & \$ 5,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Inventory } & 25,000 \\\text { Property, plant and equipment } & 210,000 \\\text { Total Assets } & \$ 310,000\\\\{\text { Liabilities and Stockholders' Equity }} \\\text { Current liabilities } & \$ 60,000 \\\text { Long-term liabilities } & 95,000 \\\text { Stockholders' equity-common } & 155,000 \\\text { Total Liabilities and Stockholders' Equity } & \$ 310,000\\\\{\text { Income Statement }} \\\text { Sales revenue } & \$ 116,000\\\text { Grost of goods sold } & 66,000 \\\text { gross ,argin } & 50,000 \\\text { Operating expenses } & 30,000 \\\text { Net income } & \$ 20,000\\\\\text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Dividends per share on common stock } & 50 \\\text { Cash provided by operations } & \$ 35,000\\\end{array}$ What is the inventory turnover for this company?

The current ratio is

Which measure(s) is(are) useful in evaluating the efficiency in managing inventories? 1. Inventory turnover 2. Days in inventory