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) B) and C)

Question 2

Which of the following ratios is calculated by dividing current assets by current liabilities?

Accepted Answer

A)  Quick ratio.
B)  Solvency ratio.
C)  Debt ratio.
D)  Current ratio.E) B) and D)
F) All of the above

Question 3

Which of the following ratios is used to evaluate a company's liquidity?

Accepted Answer

A)  Debt to assets ratio.
B)  Asset turnover ratio.
C)  Return on equity ratio.
D)  Current ratio.E) B) and C)
F) C) and D)

Question 4

A times interest earned ratio of 11 means that the company's:

Accepted Answer

A)  net income is large enough to pay interest and taxes 11 times.
B)  net cash flow from operations before taxes and interest is large enough to pay interest and taxes 11 times.
C)  net cash flow from operations is large enough to pay interest and taxes 11 times.
D)  income before taxes and interest is large enough to pay interest 11 times.E) None of the above
F) A) and B)

Question 5

Use the information above to answer the following question.The gross profit percentage for 2014 is closest to:

Accepted Answer

A)  42%.
B)  13.5%.
C)  57.7%.
D)  21.15%.E) B) and C)
F) All of the above

Question 6

Which of the following is closest to the company's days to sell ratio for the current year?

Accepted Answer

A)  16.83
B)  79.18
C)  26.53
D)  34.37E) B) and C)
F) C) and D)

Question 7

Which ratio is used to evaluate how a company is managing its property,plant and equipment?

Accepted Answer

A)  Accounts receivable turnover.
B)  Inventory turnover.
C)  Fixed asset turnover.
D)  Asset turnover.E) None of the above
F) All of the above

Question 8

Mercedes,Co.has the following quarterly financial information.  
A.Use the financial information above to calculate the following.Round to two decimal places (e.g. ,0.1234 as 12.34%. )
1. )Gross profit percentage for each quarter.2. )Net profit margin for each quarter.3. )EPS for each quarter.4. )P/E ratio at the end of the year.
B.Evaluate the company's profitability.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> *P/E ratio at the end of the year = Sto...

Question 9

Which of the following factors would not necessarily contribute to a going-concern problem?

Accepted Answer

A)  Excessive reliance on debt financing.
B)  Loss of key personnel without comparable replacement.
C)  Inadequate maintenance of long-lived assets.
D)  Declining profit margins.E) A) and D)
F) B) and D)

Question 10

According to the full disclosure principle,financial reports should present detailed information about every transaction.

Accepted Answer

A) True 
 B)False

Question 11

A debt to assets ratio of .50 indicates that the company has:

Accepted Answer

A)  more liabilities than stockholders' equity.
B)  equal amounts of liabilities and stockholders' equity.
C)  more stockholders' equity than liabilities.
D)  no liabilities.E) C) and D)
F) A) and C)

Question 12

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 13

Although the inventory turnover ratio is an important analytical tool for many companies,it would be most crucial for a company that:

Accepted Answer

A)  provides legal services.
B)  sells cell phones and notebook computers.
C)  manufactures steel.
D)  sells paint.E) B) and D)
F) C) and D)

Question 14

The going-concern assumption states that the:

Accepted Answer

A)  company will always maximize the profit for stockholders.
B)  company is not expected to go out of business in the near future.
C)  company is a separate concern from the stockholders.
D)  company's results will be reported in a consistent manner from period to period.E) A) and B)
F) B) and C)

Question 15

Which of the following is closest to the company's inventory turnover ratio for the current year?

Accepted Answer

A)  4.61
B)  3.44
C)  21.69
D)  13.76E) A) and D)
F) B) and C)

Question 16

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Accepted Answer

A)  0.32.
B)  0.56.
C)  0.86.
D)  0.14.E) C) and D)
F) A) and D)

Question 17

Use the information above to answer the following question.The earnings per share at December 31,2015 is closest to:

Accepted Answer

A)  $100.
B)  $400.
C)  $40.
D)  $500.E) B) and C)
F) A) and B)

Question 18

Which of the following ratios is used to evaluate a company's efficiency in using its assets?

Accepted Answer

A)  Current ratio.
B)  Debt to assets ratio.
C)  Return on assets ratio.
D)  Asset turnover ratio.E) A) and C)
F) A) and B)

Question 19

The ratio that measures how many times a company replenishes its inventory in a year is the:

Accepted Answer

A)  Days to sell.
B)  Accounts receivable turnover ratio.
C)  Inventory turnover ratio.
D)  Days to collect ratio.E) B) and D)
F) B) and C)

Question 20

Which of the following could explain why a company has a lower net profit margin ratio but a higher EPS than one of its competitors?

Accepted Answer

A)  The company sells a higher percentage of goods on credit.
B)  The company has fewer shares of outstanding common stock relative to its net income.
C)  The company earns a higher percentage of net income from non-operating activities.
D)  The company pays a higher dividend.E) A) and B)
F) A) and C)

Exam 13: Measuring and Evaluating Financial Performance

Which of the following is closest to the company's days to sell ratio for the current year?

Correct Answer
verified

The ratio that measures how many times a company replenishes its inventory in a year is the:

Correct Answer
verified

Use the information above to answer the following question.The earnings per share at December 31,2015 is closest to:

Correct Answer
verified

Which of the following factors would not necessarily contribute to a going-concern problem?

Correct Answer
verified

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Correct Answer
verified

Which of the following could explain why a company has a lower net profit margin ratio but a higher EPS than one of its competitors?

Correct Answer
verified

A debt to assets ratio of .50 indicates that the company has:

Correct Answer
verified

Correct Answer
verified
*P/E ratio at the end of the year = Sto...
View Answer

According to the full disclosure principle,financial reports should present detailed information about every transaction.

Correct Answer
verified

Use the information above to answer the following question.The gross profit percentage for 2014 is closest to:

Correct Answer
verified

Which of the following is closest to the company's inventory turnover ratio for the current year?

Correct Answer
verified

A times interest earned ratio of 11 means that the company's:

Correct Answer
verified

Which of the following ratios is used to evaluate a company's liquidity?

Correct Answer
verified

The going-concern assumption states that the:

Correct Answer
verified

Which of the following is a profitability measure?

Correct Answer
verified

Although the inventory turnover ratio is an important analytical tool for many companies,it would be most crucial for a company that:

Correct Answer
verified

Which of the following ratios is used to evaluate a company's efficiency in using its assets?

Correct Answer
verified

Which of the following ratios is calculated by dividing current assets by current liabilities?

Correct Answer
verified

Which ratio is used to evaluate how a company is managing its property,plant and equipment?

Correct Answer
verified

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Correct Answer
verified

Exam 13: Measuring and Evaluating Financial Performance

Which of the following is closest to the company's days to sell ratio for the current year?

Correct AnswerverifiedShow Answer

The ratio that measures how many times a company replenishes its inventory in a year is the:

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.The earnings per share at December 31,2015 is closest to:

Correct AnswerverifiedShow Answer

Which of the following factors would not necessarily contribute to a going-concern problem?

Correct AnswerverifiedShow Answer

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Correct AnswerverifiedShow Answer

Which of the following could explain why a company has a lower net profit margin ratio but a higher EPS than one of its competitors?

Correct AnswerverifiedShow Answer

A debt to assets ratio of .50 indicates that the company has:

Correct AnswerverifiedShow Answer

Correct Answerverified *P/E ratio at the end of the year = Sto...View AnswerShow Answer

According to the full disclosure principle,financial reports should present detailed information about every transaction.

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.The gross profit percentage for 2014 is closest to:

Correct AnswerverifiedShow Answer

Which of the following is closest to the company's inventory turnover ratio for the current year?

Correct AnswerverifiedShow Answer

A times interest earned ratio of 11 means that the company's:

Correct AnswerverifiedShow Answer

Which of the following ratios is used to evaluate a company's liquidity?

Correct AnswerverifiedShow Answer

The going-concern assumption states that the:

Correct AnswerverifiedShow Answer

Which of the following is a profitability measure?

Correct AnswerverifiedShow Answer

Although the inventory turnover ratio is an important analytical tool for many companies,it would be most crucial for a company that:

Correct AnswerverifiedShow Answer

Which of the following ratios is used to evaluate a company's efficiency in using its assets?

Correct AnswerverifiedShow Answer

Which of the following ratios is calculated by dividing current assets by current liabilities?

Correct AnswerverifiedShow Answer

Which ratio is used to evaluate how a company is managing its property,plant and equipment?

Correct AnswerverifiedShow Answer

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Correct AnswerverifiedShow Answer

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*P/E ratio at the end of the year = Sto...
View Answer

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