Question 1

The book value of a firm's total assets is $550,000 and it has pledged $500,000 of those assets to secure a loan of $450,000.The firm's total liabilities are $425,000.The pledged assets to secured liabilities is
A)1.1
B)1.3
C)1.4
D)1.7
E)2.2

Accepted Answer

The pledged assets to secured liabilities ratio is calculated by dividing the pledged assets ($500,000) by the secured liabilities ($450,000), which equals 1.1.

Question 2

Chapter's had net sales of $26,125 million.Its cost of goods sold was $16,022 million.Its profit was $997 million.Its gross profit ratio was
A)3.5%
B)67%
C)38.6%
D)5.2%
E)149.3%

Accepted Answer

Gross profit is calculated as net sales minus cost of goods sold.

Gross profit = $26,125 million - $16,022 million = $10,103 million

Gross profit ratio is calculated by dividing gross profit by net sales and expressing it as a percentage.

Gross profit ratio = (Gross profit ÷ Net sales) x 100%

Gross profit ratio = ($10,103 million ÷ $26,125 million) x 100% = 38.6%

Therefore, the answer is choice C.

Question 3

Music City had profit of $43,000,net sales of $380,500 and average total assets of $220,000.Its profit margin and total asset turnover were respectively
A)11.3%; 1.73
B)11.3%; 11.3
C)1.73%; 19.5
D)11.3%; 19.5
E)19.5%; 11.3

Accepted Answer

Profit margin = (Net profit / Net sales) x 100%
= (43,000 / 380,500) x 100%
= 11.3%

Total asset turnover = Net sales / Average total assets
= 380,500 / 220,000
= 1.73

Therefore, the correct answer is A) 11.3%; 1.73.

Question 4

Macie's quick assets were $5 million.Its current assets were $11 million.Its current liabilities were $8 million.The acid-test ratio is
A).62
B).50
C)1.5
D).68
E)1.38

Accepted Answer

The answer of Macie's quick assets were $5 million.Its current...

Question 5

BuyUS Inc.plans to issue 7%,$400,000,10-year bonds in order to finance an expansion.The expansion is expected to increase income before interest expense from $100,000 to $175,000.BuyUS has $1,000,000 in average common equity.Calculate the expected return on common shareholders' equity.(ignore income taxes)
A)7.0%
B)14.7%
C)20.0%
D)43.8%
E)57.1%

Accepted Answer

The expected return on common shareholders' equity is calculated by dividing the net income by the average common equity. The net income increase due to the expansion is $75,000 ($175,000 - $100,000). However, we must subtract the interest expense on the new bonds, which is $28,000 (7% of $400,000). Therefore, the increase in net income is $47,000 ($75,000 - $28,000). The return on common shareholders' equity is then $47,000 / $1,000,000 = 4.7%. Adding this to the original return (10% of $100,000 = $10,000; $10,000 / $1,000,000 = 1%), the total expected return is 5.7%. However, the calculation seems to have been misunderstood in the explanation. Correctly, the increase in income is directly from $100,000 to $175,000, and after subtracting the interest expense, the net income is $147,000 ($175,000 - $28,000). The return on equity is then $147,000 / $1,000,000 = 14.7%.

Question 6

Blaise Corporation has profit of $187,000,net sales of $1,496,000 and average total assets of $1,040,000.Its return on total assets was
A)18.0%
B)144.0%
C)12.5%
D)556.1%
E)69.5%

Accepted Answer

Return on total assets = Profit / Average total assets= 187,000 / 1,040,000= 18.0%

Question 7

Hornish Co.had net sales of $5,265 million and accounts receivable of $225 million.Its days' sales uncollected was
A)2.98
B)15.6
C)19.4
D)81.8
E)65.2

Accepted Answer

Days' Sales Uncollected = (Accounts Receivable / Net Sales) * Number of Days in Period
= (225 million / 5,265 million) * 365 days
= 15.6 days

Question 8

Snow Sales Ltd.'s net sales were $856,600.Its cost of goods sold was $226,810.Its profit was $33,750.Its gross profit ratio was
A)73.5%
B)3.9%
C)14.9%
D)35%
E)285.7%

Accepted Answer

The gross profit ratio is calculated by subtracting the cost of goods sold from net sales, dividing the result by net sales, and then multiplying by 100 to get a percentage. Gross profit = Net sales - Cost of goods sold = $856,600 - $226,810 = $629,790. Gross profit ratio = ($629,790 / $856,600) * 100 = 73.5%.

Question 9

Bob's Burgers has total assets of $425 million.Its total liabilities are $100 million.Its equity is $285 million.Calculate the debt ratio.
A)35.1%
B)23.5%
C)38.5%
D)28.5%
E)58.8%

Accepted Answer

The answer of Bob's Burgers has total assets of $425...

Question 10

Oyster Company's sales in 2020 ere $145,000.Sales in 2013 were $167,600.Using 2021 as the base year,the trend percentage for 2021 is
A)81.3%
B)100.0%
C)115.6%
D)147.6%
E)12.3%

Accepted Answer

Trend percentage = (Sales in 2020/Sales in 2013) x 100%
= (145,000/167,600) x 100%
= 86.5%
To find the sales in 2021, we need to use the trend percentage as follows:
Sales in 2021 = Sales in 2020 x Trend percentage
= 145,000 x 0.865
= 125,425
Therefore, the trend percentage for 2021 is (125,425/167,600) x 100% = 74.8%
So, the answer is not given in the options.

Question 11

FastForward had $3,000 of profit for October.Total revenues were $10,000.Calculate the profit margin
A)30%
B)$7,000
C)15%
D)$1,500
E)45%

Accepted Answer

The profit margin is calculated as (Profit / Total Revenues) * 100. So, ($3,000 / $10,000) * 100 = 30%.

Question 12

CompUS has pledged $275,000 worth of its assets.The total book value of its assets is $625,000.The firm's total liabilities are $750,000.The secured liabilities are $150,000.The pledged assets to secured liabilities is
A)1.2
B)1.8
C)2.3
D)2.7
E)5.0

Accepted Answer

Pledged assets = $275,000
Secured liabilities = $150,000
Therefore, pledged assets to secured liabilities ratio = $275,000/$150,000 = 1.8333
The closest option to this is B) 1.8.

Question 13

Markham Corporation had profit of $1,330,000,net sales of $22,000,000 and average total assets of $5,783,000.Its return on total assets was
A)6.0%
B)16.5%
C)23.0%
D)26.3%
E)38.0%

Accepted Answer

The answer of Markham Corporation had profit of $1,330,000,net sales...

Question 14

Vente had gross sales of $2,860 million and net sales of $2,730 million.Its average total assets for the period were $2,350 million.Vente's total asset turnover was
A).82
B)1.2
C)1.1
D).86
E)1.4

Accepted Answer

Total asset turnover is calculated as net sales divided by average total assets. For Vente, this is $2,730 million / $2,350 million = 1.162, which rounds to 1.2.

Question 15

Sonie had average accounts receivable of $87 million and net sales of $864 million.Its accounts receivable turnover was
A)10.3
B)9.9
C)36.1
D)9.1
E)12.8

Accepted Answer

The accounts receivable turnover is calculated by dividing net sales by average accounts receivable. So, $864 million / $87 million = 9.9.

Question 16

Fast-Tech Corp's common shares have a market value of $63.The corporation's profit is $1,350,000 and the total number of shares outstanding is 450,000.The price-earnings ratio is
A)20.9
B)4.2
C)21.0
D)24.0
E)6.8

Accepted Answer

Price-earnings ratio = Market value per share / Earnings per share
Earnings per share = Profit / Total number of shares outstanding
Earnings per share = $1,350,000 / 450,000 = $3
Price-earnings ratio = $63 / $3 = 21.0. Therefore, the answer is choice C.

Question 17

Wild Rose Corp paid $.65 in common annual dividends per share.Its earnings per share was $4.50.The market price per share was $38.00.Its dividend yield was
A)11.7%
B)1.7%
C)10.9%
D)21.4%
E)46.7%

Accepted Answer

Dividend yield = (Annual dividends per share / Market price per share) x 100% 
= ($.65 / $38.00) x 100% 
= 1.7% 
Therefore, the correct answer is B) 1.7%.

Question 18

Classic Winery had profit of $39,500,net sales of $285,000,and average total assets of $185,700.Its profit margin and total asset turnover were
A)13.9%; 21.3
B)13.9%; 1.53
C)21.3%; 13.9
D)1.53%; 21.3
E)1.53%; 1.53

Accepted Answer

Profit margin = (Net profit ÷ Net sales) × 100%
Profit margin = ($39,500 ÷ $285,000) × 100%
Profit margin = 13.9%

Total asset turnover = Net sales ÷ Average total assets
Total asset turnover = $285,000 ÷ $185,700
Total asset turnover = 1.53

Therefore, the answer is B) 13.9%; 1.53

Question 19

CrossSport had average total assets of $697,000.Its gross sales were $3,090,000 and its net sales were $2,000,000.CrossSport's total asset turnover was
A)2.87
B).82
C)1.2
D).64
E).34

Accepted Answer

The total asset turnover is calculated by dividing net sales by average total assets. So, for CrossSport, it's $2,000,000 / $697,000 = 2.87.

Question 20

Dairy King has total assets of $325 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.
A)38.6%
B)13.4%
C)34.9%
D)33.8%
E)14.9%

Accepted Answer

The answer of Dairy King has total assets of $325...

Quiz 9: Analyzing Financial Statements

The book value of a firm's total assets is $550,000 and it has pledged $500,000 of those assets to secure a loan of $450,000.The firm's total liabilities are $425,000.The pledged assets to secured liabilities is

Chapter's had net sales of $26,125 million.Its cost of goods sold was $16,022 million.Its profit was $997 million.Its gross profit ratio was

Music City had profit of $43,000,net sales of $380,500 and average total assets of $220,000.Its profit margin and total asset turnover were respectively

Macie's quick assets were $5 million.Its current assets were $11 million.Its current liabilities were $8 million.The acid-test ratio is

Blaise Corporation has profit of $187,000,net sales of $1,496,000 and average total assets of $1,040,000.Its return on total assets was

Hornish Co.had net sales of $5,265 million and accounts receivable of $225 million.Its days' sales uncollected was

Snow Sales Ltd.'s net sales were $856,600.Its cost of goods sold was $226,810.Its profit was $33,750.Its gross profit ratio was

Bob's Burgers has total assets of $425 million.Its total liabilities are $100 million.Its equity is $285 million.Calculate the debt ratio.

Oyster Company's sales in 2020 ere $145,000.Sales in 2013 were $167,600.Using 2021 as the base year,the trend percentage for 2021 is

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

CompUS has pledged $275,000 worth of its assets.The total book value of its assets is $625,000.The firm's total liabilities are $750,000.The secured liabilities are $150,000.The pledged assets to secured liabilities is

Markham Corporation had profit of $1,330,000,net sales of $22,000,000 and average total assets of $5,783,000.Its return on total assets was

Vente had gross sales of $2,860 million and net sales of $2,730 million.Its average total assets for the period were $2,350 million.Vente's total asset turnover was

Sonie had average accounts receivable of $87 million and net sales of $864 million.Its accounts receivable turnover was

Fast-Tech Corp's common shares have a market value of $63.The corporation's profit is $1,350,000 and the total number of shares outstanding is 450,000.The price-earnings ratio is

Wild Rose Corp paid $.65 in common annual dividends per share.Its earnings per share was $4.50.The market price per share was $38.00.Its dividend yield was

Classic Winery had profit of $39,500,net sales of $285,000,and average total assets of $185,700.Its profit margin and total asset turnover were

CrossSport had average total assets of $697,000.Its gross sales were $3,090,000 and its net sales were $2,000,000.CrossSport's total asset turnover was

Dairy King has total assets of $325 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.