Question 1

A ratio that may be used to evaluate solvency is the:

Accepted Answer

A)   Asset turnover ratio
B)   Quick ratio
C)   Current ratio
D)   Times interest earned ratioE) None of the above
F) B) 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) A) and D)
F) All of the above

Question 3

Trend analysis is a form of horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 4

Compute the net profit margin for the current year.

Accepted Answer

A)   33.33%
B)   44.45%
C)   32.22%
D)   43.33%E) None of the above
F) A) and B)

Question 5

Compute the quality of income ratio.

Accepted Answer

A)   2.57
B)   4.09
C)   16.4
D)   2.13E) A) and B)
F) C) and D)

Question 6

The ratio that measures the percentage of different sources of financing is the:

Accepted Answer

A)   Current ratio.
B)   Times interest earned ratio.
C)   Debt to assets ratio.
D)   Price/earnings ratio.E) A) and B)
F) A) and C)

Question 7

The income statements for 2011 and 2010 for Purrfect Pets, Inc.are presented below:

Accepted Answer

Purrfect Pets had 1,588,000, 1,662,000 a...

Question 8

A company has a debt to assets ratio of .45 and a return on equity ratio of 10%. If the company then issues common stock, which of the following is a true statement?

Accepted Answer

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) B) and D)
F) A) and B)

Question 9

A current ratio of less than one is not so much of a concern when the company has a:

Accepted Answer

A)   low fixed asset turnover ratio.
B)   high days to collect number.
C)   high inventory turnover ratio.
D)   high debt-to-equity ratio.E) B) and C)
F) A) and D)

Question 10

Compute the return on equity (ROE)  ratio for the current year.

Accepted Answer

A)   60.61%
B)   151%
C)   50.42%
D)   80.81%E) All of the above
F) C) and D)

Question 11

Compute the debt to assets ratio for the current year.

Accepted Answer

A)   20
B)   67
C)   17
D)   33E) C) and D)
F) A) and B)

Question 12

Which of the following is calculated by dividing net sales by average accounts receivable?

Accepted Answer

A)   Days to sell ratio
B)   Current ratio
C)   Profit margin
D)   Accounts receivable turnover ratioE) C) and D)
F) B) and D)

Question 13

Which of the following measures would assist in assessing the profitability of a company?

Accepted Answer

A)   Debt-to-assets ratio
B)   Fixed asset turnover ratio
C)   Receivables turnover ratio
D)   Current ratioE) A) and B)
F) All of the above

Question 14

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:

Accepted Answer

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

Question 15

Solvency ratio data are primarily concerned with the ability of a company to:

Accepted Answer

A)   produce profits.
B)   handle its debt.
C)   manage its cash flow.
D)   provide income for stockholders.E) None of the above
F) C) and D)

Question 16

What is the company's inventory turnover ratio for the current year?

Accepted Answer

A)   4.61
B)   3.44
C)   21.69
D)   13.76E) None of the above
F) B) and C)

Question 17

Which of the following nonfinancial factors is most likely to be a cause of a going- concern problem?

Accepted Answer

A)   Hiring a new CEO.
B)   Loss of a key patent.
C)   Announcing a new stock issue.
D)   Replacing an old product line.E) C) and D)
F) A) and B)

Question 18

Compute the quality of income ratio for the current year.

Accepted Answer

A)   1.38
B)   0.97
C)   1.03
D)   0.73E) A) and D)
F) A) and C)

Question 19

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 ratioE) A) and C)
F) A) and B)

Question 20

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

Exam 13: Measuring and Evaluating Financial Performance

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?

Correct AnswerverifiedShow Answer

Compute the quality of income ratio for the current year.

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:

Correct AnswerverifiedShow Answer

A current ratio of less than one is not so much of a concern when the company has a:

Correct AnswerverifiedShow Answer

A company has a debt to assets ratio of .45 and a return on equity ratio of 10%. If the company then issues common stock, which of the following is a true statement?

Correct AnswerverifiedShow Answer

Trend analysis is a form of horizontal analysis.

Correct AnswerverifiedShow Answer

Compute the quality of income ratio.

Correct AnswerverifiedShow Answer

A ratio that may be used to evaluate solvency is the:

Correct AnswerverifiedShow Answer

The ratio that measures the percentage of different sources of financing is the:

Correct AnswerverifiedShow Answer

Compute the net profit margin for the current year.

Correct AnswerverifiedShow Answer

Solvency ratio data are primarily concerned with the ability of a company to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the company's inventory turnover ratio for the current year?

Correct AnswerverifiedShow Answer

Compute the return on equity (ROE) ratio for the current year.

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Which of the following nonfinancial factors is most likely to be a cause of a going- concern problem?

Correct AnswerverifiedShow Answer

The income statements for 2011 and 2010 for Purrfect Pets, Inc.are presented below:

Correct AnswerverifiedPurrfect Pets had 1,588,000, 1,662,000 a...View AnswerShow Answer

Which of the following is calculated by dividing net sales by average accounts receivable?

Correct AnswerverifiedShow Answer

Which of the following measures would assist in assessing the profitability of a company?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Compute the debt to assets ratio for the current year.

Correct AnswerverifiedShow Answer

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Purrfect Pets had 1,588,000, 1,662,000 a...
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