Question 1

Which of the following is a profitability measure?

Accepted Answer

A)  Net income/Net sales
B)  Total assets/Total stockholders' equity
C)  Total liabilities/Total stockholders' equity
D)  Cost of goods sold/Average inventoryE) B) and D)
F) A) and D)

Question 2

During the current accounting period,revenue from credit sales is $671,000.The accounts receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period.Which of the following statements is true?

Accepted Answer

A)  The receivables turnover ratio is 12.9.
B)  On average,it takes 12.9 days to collect payment from credit customers.
C)  The receivables turnover ratio is 28.3.
D)  On average,the company sells its inventory every 28.3 days.E) All of the above
F) None of the above

Question 3

In a common size balance sheet,each item on the balance sheet is expressed as a percentage of:

Accepted Answer

A)  Total assets.
B)  Total liabilities.
C)  Net income.
D)  Total stockholders' equity.E) None of the above
F) B) and C)

Question 4

Which of the following is closest to the company's debt-to-assets ratio for 2014?

Accepted Answer

A)  0.39
B)  0.61
C)  0.35
D)  0E) All of the above
F) None of the above

Question 5

A company had current assets of $550,000 and a current ratio of 2.0.The current assets consist of Cash of $50,000,Short-term investments of $150,000,Accounts receivable of $50,000,and Inventory of $300,000.Which of the following is closest to the company's quick ratio?

Accepted Answer

A)  2.0
B)  1.82
C)  0.53
D)  0.91E) B) and C)
F) A) and D)

Question 6

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to

Accepted Answer

A)  2.39.
B)  2.61.
C)  2.5.
D)  2.81.E) A) and D)
F) C) and D)

Question 7

Which type of analysis could reveal that a company is relying heavily on debt financing?

Accepted Answer

A)  Common size statements.
B)  Horizontal analysis.
C)  The asset turnover ratio.
D)  Trend analysis.E) All of the above
F) C) and D)

Question 8

Net income was $418,600 in 2014 and $364,000 in 2013.The year-to-year percentage change in net income is closest to:

Accepted Answer

A)  15%.
B)  55%.
C)  87%.
D)  13%.E) B) and D)
F) B) and C)

Question 9

A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

Accepted Answer

A)  37.50.
B)  64.29.
C)  2.40.
D)  2.0.E) None of the above
F) All of the above

Question 10

Vertical analysis is the comparison of a company's financial information over time.Vertical analysis focuses on important relationships within the same financial statement.

Accepted Answer

A) True 
 B)False

Question 11

If you wish to examine how one aspect of a business is doing relative to other aspects of the business at the current time,you are most likely to use:

Accepted Answer

A)  time-series analysis.
B)  ratio analysis.
C)  horizontal analysis.
D)  cross-sectional analysis.E) None of the above
F) A) and D)

Question 12

The following information is available for a company for the current year: Use the information above to answer the following question.Which of the following is closest to the company's accounts receivable turnover ratio for the current year?

Accepted Answer

A)  10.62
B)  4.0
C)  4.3
D)  6.31E) A) and D)
F) A) and C)

Question 13

Use the information above to answer the following question.Which of the following is closest to the company's current ratio for 2015?

Accepted Answer

A)  2.22
B)  2.26
C)  2.57
D)  6.0E) None of the above
F) A) and B)

Question 14

Which of the following is not a profitability ratio?

Accepted Answer

A)  Return on equity (RO
E)  .
B)  Earnings per share.
C)  Asset turnover.
D)  Days to sell.E) A) and D)
F) C) and D)

Question 15

A company's sales in 2013 are $200,000 and in 2014 sales are $285,000.The percentage change is:

Accepted Answer

A)  42.5%.
B)  70%.
C)  29.8%.
D)  130%.E) B) and D)
F) C) and D)

Question 16

Horizontal analysis is the comparison of a company's financial information to a base amount.Horizontal analysis is a comparison of a company's financial information over time.

Accepted Answer

A) True 
 B)False

Question 17

In general,P/E ratios are fairly consistent across industries,regardless of the goods or services sold.Industry P/E ratios vary considerably.

Accepted Answer

A) True 
 B)False

Question 18

A company that has a current ratio less than one cannot cover:

Accepted Answer

A)  current liabilities with its current cash flow.
B)  current expenses with its current sales revenue.
C)  expenses with its current revenues.
D)  current liabilities with its current assets.E) All of the above
F) A) and D)

Question 19

Which of the following is calculated by dividing net sales by average total assets?

Accepted Answer

A)  Net profit margin.
B)  Fixed asset turnover.
C)  Asset turnover ratio.
D)  Current ratio.E) All of the above
F) A) and D)

Question 20

Which of the following statements regarding trend analysis is true?

Accepted Answer

A)  Time-series analysis is an example of trend analysis.
B)  Trend data are always in dollars.
C)  Trend analysis is also known as vertical analysis.
D)  Common-size analysis is an example of trend analysis.E) None of the above
F) All of the above

Exam 13: Measuring and Evaluating Financial Performance

Horizontal analysis is the comparison of a company's financial information to a base amount.Horizontal analysis is a comparison of a company's financial information over time.

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In general,P/E ratios are fairly consistent across industries,regardless of the goods or services sold.Industry P/E ratios vary considerably.

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Use the information above to answer the following question.Which of the following is closest to the company's current ratio for 2015?

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A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to

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In a common size balance sheet,each item on the balance sheet is expressed as a percentage of:

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A company had current assets of $550,000 and a current ratio of 2.0.The current assets consist of Cash of $50,000,Short-term investments of $150,000,Accounts receivable of $50,000,and Inventory of $300,000.Which of the following is closest to the company's quick ratio?

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If you wish to examine how one aspect of a business is doing relative to other aspects of the business at the current time,you are most likely to use:

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Vertical analysis is the comparison of a company's financial information over time.Vertical analysis focuses on important relationships within the same financial statement.

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Net income was $418,600 in 2014 and $364,000 in 2013.The year-to-year percentage change in net income is closest to:

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Which of the following is calculated by dividing net sales by average total assets?

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Which of the following statements regarding trend analysis is true?

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Which type of analysis could reveal that a company is relying heavily on debt financing?

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The following information is available for a company for the current year: Use the information above to answer the following question.Which of the following is closest to the company's accounts receivable turnover ratio for the current year?

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Which of the following is closest to the company's debt-to-assets ratio for 2014?

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A company that has a current ratio less than one cannot cover:

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Which of the following is not a profitability ratio?

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Which of the following is a profitability measure?

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A company's sales in 2013 are $200,000 and in 2014 sales are $285,000.The percentage change is:

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A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

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During the current accounting period,revenue from credit sales is $671,000.The accounts receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period.Which of the following statements is true?

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