Question 1

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 answers are correct.

Question 2

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

Accepted Answer

A)   Pledged assets to secured liabilities.
B)   Return on total assets.
C)   Debt ratio.
D)   Profit margin.
E)   Times secured liabilities earned.

Question 3

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.

Accepted Answer

$2.50/$25....

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The current ratio:

Accepted Answer

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.

Question 6

Days' sales in inventory:

Accepted Answer

A)   Focuses on ending inventory.
B)   Is a ratio that tells us how much inventory a firm has on hand in terms of days' sales.
C)   Is the number of days we can sell from inventory if no new items are purchased.
D)   Focuses on ending inventory and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales.
E)   All of these answers are correct. E

Question 7

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.

Accepted Answer

Profit margin,Year 1: $47,950/$363,250 =...

Question 8

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 9

Accounts receivable turnover is calculated by:

Accepted Answer

A)   Dividing net sales by average accounts receivable.
B)   Dividing net sales by average accounts receivable and multiplying by 365.
C)   Dividing average accounts receivable by net sales.
D)   Dividing average accounts receivable by net sales and multiplying by 365.
E)   Dividing net income by average accounts receivablE.

Question 10

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

Accepted Answer

A)   30%.
B)   $7,000.
C)   15%.
D)   $1,500.
E)   45%.

Question 11

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.

Accepted Answer

The answer of Select comparative financial data information for Russian...

Question 12

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?

Accepted Answer

(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.

Question 13

If the times interest earned ratio:

Accepted Answer

A)   Increases,risk increases.
B)   Is under 1.5,risk decreases.
C)   Is over 1.5,risk increases.
D)   Increases,risk decreases.
E)   Increases and/or is under 1.5,risk decreases.

Question 14

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

Accepted Answer

The answer of Comparative financial data for Assembly Corp are...

Question 15

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

Accepted Answer

The answer of Templeton Corporation has the following balance sheet:...

Question 16

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:

Accepted Answer

A)   Comparative statements.
B)   Common-size comparative statements.
C)   General-purpose financial statements.
D)   Base line statements.
E)   Index statements.

Question 17

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 18

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.

Accepted Answer

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

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

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%.

Accepted Answer

A) True 
 B)False

Exam 18: Analyzing Financial Statements

The number of days' sales uncollected:

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

Correct Answer
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Correct Answer
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$2.50/$25....
View Answer

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

Correct Answer
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The current ratio:

Correct Answer
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Days' sales in inventory:

Correct Answer
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E

Correct Answer
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Profit margin,Year 1: $47,950/$363,250 =...
View Answer

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

Correct Answer
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Accounts receivable turnover is calculated by:

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

Correct Answer
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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.

Correct Answer
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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?

If the times interest earned ratio:

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

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

Correct Answer
verified

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:

Correct Answer
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The debt ratio is used to:

Correct Answer
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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.

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

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.

Correct Answer
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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%.

Correct Answer
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Exam 18: Analyzing Financial Statements

The number of days' sales uncollected:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverified$2.50/$25....View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The current ratio:

Correct AnswerverifiedShow Answer

Days' sales in inventory:

Correct AnswerverifiedE

Correct AnswerverifiedProfit margin,Year 1: $47,950/$363,250 =...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Accounts receivable turnover is calculated by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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?

If the times interest earned ratio:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

The debt ratio is used to:

Correct AnswerverifiedShow Answer

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.

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

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.

Correct AnswerverifiedShow Answer

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%.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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$2.50/$25....
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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E

Correct Answer
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Profit margin,Year 1: $47,950/$363,250 =...
View Answer

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

Correct Answer
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Correct Answer
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