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Which of these are liquidity ratios?


A) Net profit margin
B) Receivables turnover
C) Fixed asset turnover
D) Times interest earned

E) B) and C)
F) A) and D)

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Financial statement analysis is useful for:


A) evaluating a company's success in meeting the challenges that it faces.
B) selecting the most appropriate accounting rules to follow.
C) determining the market price of a company's stock.
D) comparing US companies with foreign companies.

E) A) and B)
F) A) and C)

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Husain, Inc.'s income statement and other financial information for the current year is presented below. Husain, Inc.'s income statement and other financial information for the current year is presented below. Required: Part a. Perform vertical analysis of the income statement. (Round to the nearest whole percentage.) Part b. Calculate the debt-to-assets ratio. (Round to two decimal places.) Part c. Calculate the times interest earned ratio. (Round to two decimal places.) Part d. Evaluate the company's solvency. Husain, Inc.'s income statement and other financial information for the current year is presented below. Required: Part a. Perform vertical analysis of the income statement. (Round to the nearest whole percentage.) Part b. Calculate the debt-to-assets ratio. (Round to two decimal places.) Part c. Calculate the times interest earned ratio. (Round to two decimal places.) Part d. Evaluate the company's solvency. Required: Part a. Perform vertical analysis of the income statement. (Round to the nearest whole percentage.) Part b. Calculate the debt-to-assets ratio. (Round to two decimal places.) Part c. Calculate the times interest earned ratio. (Round to two decimal places.) Part d. Evaluate the company's solvency.

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Part a blured image Part b
Debt to Assets = Total li...

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Ratio analysis:


A) is required by GAAP as part of every company's income statement and balance sheet.
B) will always identify the best investment decision.
C) will tell you how a company will perform in the future.
D) allows you to evaluate how well a company has performed relative to other different-sized companies within the same industry.

E) None of the above
F) A) and D)

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An increase in the gross profit percentage indicates that:


A) cost of goods sold as a percentage of sales has decreased.
B) cost of goods sold as a percentage of sales has increased.
C) operating expenses as a percentage of sales have increased.
D) operating expenses as a percentage of sales have decreaseD.
Gross profit percentage = [(Net sales revenue - Cost of goods sold) ÷ Net sales revenue] × 100

E) All of the above
F) B) and C)

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Which of the following statements about liquidity and solvency ratios is correct?


A) Unlike solvency ratios, liquidity ratios relate to the company's long-run survival.
B) Both liquidity ratios and solvency ratios measure a company's ability to meet its financial obligations.
C) Liquidity ratios include the return on equity ratio and the times interest earned ratio.
D) Solvency ratios include the current ratio and the net profit margin ratio.

E) A) and D)
F) B) and C)

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Which income statement line item had the largest percentage increase from the prior year to the current year? Which income statement line item had the largest percentage increase from the prior year to the current year? A) Depreciation Expense B) Cost of Goods Sold C) Interest Expense D) Sales


A) Depreciation Expense
B) Cost of Goods Sold
C) Interest Expense
D) Sales

E) B) and C)
F) None of the above

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The following information is available for a company for the current year: The following information is available for a company for the current year: Required: Part a. Calculate the receivables turnover ratio for the current year. Part b. Calculate the days to collect for the current year. Part c. Calculate the inventory turnover ratio for the current year. Part d. Calculate the days to sell for the current year. Round all ratios to two decimal points. Required: Part a. Calculate the receivables turnover ratio for the current year. Part b. Calculate the days to collect for the current year. Part c. Calculate the inventory turnover ratio for the current year. Part d. Calculate the days to sell for the current year. Round all ratios to two decimal points.

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Part a
Receivables turnover ratio = Net ...

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Vesuvius Company has net sales revenue of $780,000, cost of goods sold of $343,200, net income of $119,200, and preferred dividends of $10,000 during the current year. At the beginning of the year, 503,000 shares of common stock were outstanding, and, at the end of the year, 537,000 shares of common stock were outstanding. A total of 1,000 preferred shares were outstanding throughout the year. The company's earnings per share for the current year is closest to:


A) $1.50.
B) $0.84.
C) $0.21.
D) $0.87.

E) B) and C)
F) B) and D)

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If net sales revenue for a retail chain has been relatively constant for the last four years, but the fixed asset turnover has been decreasing, what would be the most likely cause?


A) The number of stores has expanded.
B) Cost of Goods sold has been increasing.
C) Employee wages have been increasing.
D) The company has closed some of its stores.

E) None of the above
F) C) and D)

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The following information is taken from the financial statements of a company for the current year: The following information is taken from the financial statements of a company for the current year: On a common size income statement for this year, what is the percentage that would be shown next to the dollar amount of cost of goods sold? A) 76% B) 24% C) 31% D) 18% On a common size income statement for this year, what is the percentage that would be shown next to the dollar amount of cost of goods sold?


A) 76%
B) 24%
C) 31%
D) 18%

E) B) and C)
F) A) and D)

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

A) True
B) False

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The financial information below presents selected information from the financial statements of Pelican Company. Sales revenue during the current year was $13,700,300 and cost of goods sold was $8,905,195. All of Pelican's sales are made on account and are due within 30 days. The financial information below presents selected information from the financial statements of Pelican Company. Sales revenue during the current year was $13,700,300 and cost of goods sold was $8,905,195. All of Pelican's sales are made on account and are due within 30 days. Required: Part a. Current ratios as of the end of the current and prior year. Part b. Calculate the receivables turnover ratio for the current year. Part c. Calculate the days to collect for the current year. Part d. Calculate the inventory turnover ratio for the current year. Part d. Calculate the days to sell for the current year. Part e. Evaluate the company's liquidity position at the end of the current year. Cite any additional information not given in the problem that would be helpful in evaluating the company's liquidity. Round all ratios to two decimal places. Required: Part a. Current ratios as of the end of the current and prior year. Part b. Calculate the receivables turnover ratio for the current year. Part c. Calculate the days to collect for the current year. Part d. Calculate the inventory turnover ratio for the current year. Part d. Calculate the days to sell for the current year. Part e. Evaluate the company's liquidity position at the end of the current year. Cite any additional information not given in the problem that would be helpful in evaluating the company's liquidity. Round all ratios to two decimal places.

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Part a
Current ratio = Current assets ÷ ...

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To perform a vertical analysis of an income statement, you would divide each line item on the statement by:


A) sales.
B) cost of goods sold.
C) operating expenses.
D) net income.

E) None of the above
F) C) and D)

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Which of the following ratios is used to evaluate solvency?


A) Earnings per share (EPS)
B) Fixed asset turnover
C) Debt-to-assets
D) Current ratio

E) C) and D)
F) A) and D)

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A company provided the following information: A company provided the following information: There was no change in contributed capital and there were no dividends declared in the current year. Required: Calculate the return on equity ratio. There was no change in contributed capital and there were no dividends declared in the current year. Required: Calculate the return on equity ratio.

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Ending Retained Earnings = Beginning Ret...

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A company has a debt-to-assets ratio of 0.45 and a return on equity ratio of 10%. If the company then issues additional shares of common stock for cash, which of the following is a correct statement?


A) The debt-to-assets ratio will decrease and the return on equity ratio will decrease.
B) The debt-to-assets ratio will increase and the return on equity ratio will increase.
C) The debt-to-assets ratio will not change and the return on equity ratio will not change.
D) The debt-to-assets ratio will decrease and the return on equity ratio will increase.

E) All of the above
F) A) and B)

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Vertical analysis is the comparison of a company's financial information over time

A) True
B) False

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To analyze changes in a company's sales over the last five years, you should perform:


A) vertical analysis.
B) ratio analysis.
C) horizontal analysis.
D) cross-sectional analysis.

E) A) and C)
F) A) and B)

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Which of the following statements is not true?


A) Horizontal analyses help financial statement users recognize changes that unfold over time.
B) Vertical analyses focus on relationships between items on the same financial statement.
C) Ratio analyses focus on relationships between items on one or more of the financial statements.
D) Horizontal analyses help financial statement users recognize changes that occur between companies.

E) B) and D)
F) None of the above

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