# Quiz 13: Analyzing Financial Statements

Business

Q 1Q 1

A company has a receivables turnover ratio of 12. The average gross accounts receivable during the period is $360,000. What is the amount of net credit sales for the period?
A) $432,000.
B) $3,000,000.
C) $4,320,000.
D) Cannot be determined from the information given.

Free

Multiple Choice

C

Q 2Q 2

All of the following ratios are investor measures of profitability except
A) payout ratio.
B) return on assets.
C) price-earnings ratio.
D) dividend yield.

Free

Multiple Choice

B

Q 3Q 3

A liquidity ratio measures the
A) number of times interest is earned.
B) short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
C) ability of the company to survive over a long period of time.
D) earnings or operating success of a company over a period of time.

Free

Multiple Choice

B

Q 4Q 4

A general rule to use in assessing the average collection period is that it
A) should not greatly exceed the discount period.
B) should not exceed 30 days.
C) can be any length as long as the customer continues to buy merchandise.
D) should not greatly exceed the credit term period.

Free

Multiple Choice

Q 5Q 5

Strait Company has outstanding shares as follows: 16,000 common shares and 5,000 preferred shares. What is the number of shares that should be used in the denominator to compute earnings per share?
A) 5,000
B) 16,000
C) 21,000
D) 11,000

Free

Multiple Choice

Q 6Q 6

At the end of 20B, Storage Company reported 15,000 outstanding common shares. Total liabilities were $440,000 and total assets were $860,000. The company had no preferred shares. What was the book value per share of common share?
A) $28.00
B) $13.90
C) $14.00
D) $29.00

Free

Multiple Choice

Q 7Q 7

The records of ZZZZ Better Corporation include the following: What is the return on equity?
A) 16%
B) 6%
C) 13%
D) 24%

Free

Multiple Choice

Q 8Q 8

Profit margin is calculated by dividing
A) sales by cost of goods sold.
B) net earnings by net sales.
C) net earnings by shareholders' equity.
D) gross profit by net sales.

Free

Multiple Choice

Q 9Q 9

Calculate C Co's current ratio for 2012 and 2011 respectively.
A) .60 and .70
B) .54 and .59
C) .63 and .72
D) .66 and .74

Free

Multiple Choice

Q 10Q 10

Which of the following ratios is not a test of solvency?
A) Debt to equity ratio.
B) Cash coverage ratio.
C) Times interest earned ratio.
D) Earnings per share ratio.

Free

Multiple Choice

Q 11Q 11

In 2012, C Co's gross profit ratio was 70.4% and their profit margin was 18.8%. In 2012, P Co's gross profit ratio was 58.3% and their profit margin was 8.9%. Which of the following is false?
A) C Co looks to be a better investment than P Co.
B) The major reason for P Co's lower profit margin is that their selling, general and administrative expenses were double the percentage of sales compared to C Co's percentage.
C) C Co's cost of goods sold was a lower percentage of sales than P Co's.
D) In 2012, C Co's profit margin was 111.2% greater than P Co's which would contribute to a higher return on total investment.

Free

Multiple Choice

Q 12Q 12

A common measure of profitability is the
A) return on common shareholders' equity ratio.
B) current ratio.
C) debt to total assets ratio.
D) cash current debt coverage ratio.

Free

Multiple Choice

Q 13Q 13

Some of the ratios that are used to determine a company's short-term debt paying ability are
A) current ratio, receivables turnover, and inventory turnover.
B) times interest earned, current ratio, and inventory turnover.
C) asset turnover, times interest earned, current ratio, and receivables turnover.
D) times interest earned, inventory turnover, current ratio, and receivables turnover.

Free

Multiple Choice

Q 14Q 14

The ratio that is calculated by dividing cash dividends declared on common shares by net earnings is called the:
A) dividend yield ratio.
B) payout ratio.
C) common dividend ratio.
D) earnings per share ratio.

Free

Multiple Choice

Q 15Q 15

The inventory turnover ratio is calculated by dividing
A) cost of goods sold by the ending inventory.
B) cost of goods sold by the average inventory.
C) average inventory by cost of goods sold.
D) cost of goods sold by the beginning inventory.

Free

Multiple Choice

Q 16Q 16

Calculate C Co's financial leverage and identify whether it was positive or negative.
A) 15.2% positive
B) 14.1% positive
C) 17.8% negative
D) 19.9% negative

Free

Multiple Choice

Q 17Q 17

Calculate C Co's debt to equity ratio for 2012 and 2011 respectively.
A) .79 and .78
B) .56 and .56
C) .66 and .66
D) 1.27 and 1.28

Free

Multiple Choice

Q 18Q 18

Matt Company paid out $2.30 in dividends per share during 20B. The market price of the share on December 31, 20B was $21.00 per share. There were 15,000 shares of share outstanding for the entire year. What was the dividend yield as of December 31, 20B?
A) 10.95%
B) 913.04%
C) 16.43%
D) 9.13%

Free

Multiple Choice

Q 19Q 19

A company has an average inventory on hand of $40,000 and its average days in inventory are 26.4 days. What is the cost of goods sold?
A) $553,030.
B) $1,056,000.
C) $486,667.
D) $480,000.

Free

Multiple Choice

Q 20Q 20

Financial leverage will always be which of the following?
A) Positive, negative, or zero.
B) Positive.
C) Either positive or negative.
D) Negative.

Free

Multiple Choice

Q 21Q 21

A company that is leveraged is one that
A) contains equity financing.
B) has a high current ratio.
C) contains debt financing.
D) has a high earnings per share.

Free

Multiple Choice

Q 22Q 22

Which of the following statements is true?
A) Liquidity focuses on the ability of a company to pay their long- and short-term debts.
B) The inventory turnover ratio is an important solvency test for retail companies.
C) Tests of profitability focus on measuring the adequacy of profit.
D) The debt to equity ratio is a measure of liquidity.

Free

Multiple Choice

Q 23Q 23

In 2012, C Co's receivables turnover ratio and days' sales in receivables was 11.43 times and 31.9 days. In 2012, P Co's receivables turnover ratio and days' sales in receivables was 9.71 times and 37.6 days. Which of the following statements is false?
A) P Co's lower turnover ratio has an inverse relationship to its days' sales tied up in receivables.
B) C Co's management has done a better job of managing their receivables.
C) C Co appears to be more profitable than P Co.
D) The higher turnover ratio for C Co hurts their liquidity.

Free

Multiple Choice

Q 24Q 24

In 2012, C Co's return on owners' equity (ROE) was 45.1%, and return on assets (ROA) was 19.6%. In 2012, P Co's return on owners' equity (ROE) was 29.9% while return on assets was 9.3%. Which of the following statements is false?
A) C Co. is considerably more liquid than P Co.
B) P Co's ROE was 222% greater than their ROA while C Co's ROE was only 130% greater than their ROA. This difference is caused by P Co's higher use of debt financing to leverage their assets.
C) C Co provided higher positive financial leverage for their shareholders compared to P Co.
D) P Co's return on assets (ROA) was less than half of C Co's ROA.

Free

Multiple Choice

Q 25Q 25

If a company has a current ratio of 1.3:1, what respective effects will the borrowing of cash by short-term debt and collection of trade receivables have on the ratio?
A)
B)
C)
D)

Free

Multiple Choice

Q 26Q 26

If the average collection period is 45 days, what is the receivables turnover?
A) 18.0 times
B) 12.0 times
C) 8.1 times
D) None of these

Free

Multiple Choice

Q 27Q 27

Calculate P Co's price earnings ratios for 2012 and 2011 respectively.
A) 29.7% and 26.5%
B) 3.2% and 3.9%
C) 29.7 and 26.5 times
D) 30.9 and 25.5 times

Free

Multiple Choice

Q 28Q 28

May Company's return on equity was 21% and the financial leverage ratio was 13% (positive). What was the return on assets?
A) 34%
B) 21%
C) 13%
D) 8%

Free

Multiple Choice

Free

Multiple Choice

Q 30Q 30

Calculate P Co's book value per share in 2012 and 2011 respectively.
A) 4.21 and cannot compute 2012's book value
B) 4.21 and 4.42
C) 4.14 and 4.49
D) 4.14 and cannot compute 2012's book value

Free

Multiple Choice

Q 31Q 31

Box Company reported the following data at the end of 20B: What was the average number of days to collect receivables during 20B?
A) 16.2
B) 21.9
C) 36.5
D) 14.3

Free

Multiple Choice

Q 32Q 32

When are ratios most useful for analysis?
A) When compared with both historical ratios of the same company and ratios for other companies in the industry.
B) When compared with historical ratios of the same company.
C) When used alone.
D) When compared with ratios for other companies in the industry.

Free

Multiple Choice

Free

Multiple Choice

Q 34Q 34

Which of the following regarding book value per common share is true?
A) It is not widely used in assessing the future dividend potential of the corporation.
B) It is a good measure of management performance.
C) It is a measure of liquidity.
D) It is usually greater than the market value per share.

Free

Multiple Choice

Q 35Q 35

Net sales are $2,700,000, beginning total assets are $750,000, and the asset turnover is 3.0. What is the ending total asset balance?
A) $1,050,000.
B) $900,000.
C) $600,000.
D) $1,125,000.

Free

Multiple Choice

Q 36Q 36

A successful grocery store would probably have
A) zero profit margin.
B) low volume.
C) a high inventory turnover.
D) a low inventory turnover.

Free

Multiple Choice

Q 37Q 37

Nunn Company reported the following data: What was the current ratio?
A) 0.75 to 1
B) 0.5 to 1
C) 1.5 to 1
D) 2.5 to 1

Free

Multiple Choice

Q 38Q 38

Calculate C Co's times interest earned ratio for 2012 and 2011 respectively.
A) 12.33 and 19.77
B) 11.82 and 17.93
C) 11.33 and 18.77
D) 7.21 and 12.75

Free

Multiple Choice

Q 39Q 39

Hayes Company had an average age of accounts receivable of 25 days and net credit sales of $31,000. Assume a 365 day year. What was the amount of the average net receivables?
A) $5,760
B) $1,152
C) $2,123
D) $4,000

Free

Multiple Choice

Q 40Q 40

If the components of price/earnings ratio are inverted, the resulting percent is referred to as which of the following?
A) Capitalization rate.
B) Dividend yield ratio.
C) Multiple.
D) Book value per share.

Free

Multiple Choice

Q 41Q 41

Calculate C Co's gross profit ratio for 2012 and 2011 respectively.
A) 40.6% and 45.7%
B) 30.3% and 29.6%
C) 20.1% and 26.4%
D) 69.7% and 70.4%

Free

Multiple Choice

Q 42Q 42

A quality of earnings ratio higher than one is an indicator of which of the following?
A) That a company has too many fixed assets.
B) That fixed assets are the company's most important resources.
C) A company's high debt position.
D) That a company has cash generated by operations higher than the amount of profit.

Free

Multiple Choice

Q 43Q 43

Short-term creditors are usually most interested in assessing
A) solvency.
B) marketability.
C) liquidity.
D) profitability.

Free

Multiple Choice

Free

Multiple Choice

Q 45Q 45

Calculate C Co's receivables turnover ratio and the days' sales in receivables for 2012.
A) 11.15 times and 32.7 days
B) 11.43 times and 31.9 days
C) 3.47 times and 105.2 days
D) 11.02 times and 33.1 days

Free

Multiple Choice

Q 46Q 46

Beta Limited had a current ratio of 0.8:1 before borrowing $50,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Beta's current ratio?
A) The ratio decreased.
B) The ratio increased.
C) The ratio remained unchanged.
D) Cannot be determined.

Free

Multiple Choice

Q 47Q 47

Calculate C Co's profit margin ratio for 2012 and 2011 respectively. 47)
A) 12.3% and 18.8%
B) 20.1% and 26.4%
C) 69.7% and 70.4%
D) 19.3% and 27.6%

Free

Multiple Choice

Q 48Q 48

Calculate P Co's dividend payout for 2012 and 2011 respectively.
A) 39.3% and 33.8%
B) 3.5% and 3.6%
C) 38.6% and 34.5%
D) 1.3% and 1.3%

Free

Multiple Choice

Q 49Q 49

A company with $60,000 in current assets and $40,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will
A) remain the same and decrease, respectively.
B) increase and remain the same, respectively.
C) both increase.
D) both decrease.

Free

Multiple Choice

Q 50Q 50

If trade receivables are collected quickly, it may indicate which of the following?
A) Credit is often granted to poor credit risks.
B) The trade receivables turnover is low.
C) The company is becoming more profitable.
D) The company's credit policies may be overly stringent.

Free

Multiple Choice

Q 51Q 51

Teel Company's working capital was $40,000 and total current liabilities were 1/4 of that amount. What was the current (working capital) ratio?
A) 1 to 1
B) 7 to 1
C) 5 to 1
D) 3 to 1

Free

Multiple Choice

Q 52Q 52

Calculate P Co's dividend yield for 2012 and 2011 respectively.
A) 39.3% and 33.8%
B) 38.6% and 34.5%
C) 3.5% and 3.6%
D) 1.3% and 1.3%

Free

Multiple Choice

Q 53Q 53

Which of the following accounting ratios considers the importance of cash flows relating to required interest payments?
A) receivables turnover
B) cash coverage ratio
C) debt/equity ratio
D) times interest earned ratio

Free

Multiple Choice

Q 54Q 54

The Able Company had profit of $47,500 and earnings per share of $3.17 during 20B. On December 31, 20B, the shares had a market price of $18.50 per share. What is Able's price/earnings ratio?
A) 25.70
B) 5.84
C) 0.17
D) 8.11

Free

Multiple Choice

Q 55Q 55

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?
A) Asset turnover
B) Receivables turnover
C) Dividend yield
D) Current ratio

Free

Multiple Choice

Q 56Q 56

Perot Company had profit before interest and taxes of $120,000. Interest expense for the period was $17,000 and income taxes amounted to $28,500. The average shareholders' equity was $680,000. What is Perot's return on equity?
A) 13.46%
B) 17.65%
C) 15.15%
D) 10.96%

Free

Multiple Choice

Q 57Q 57

In 2012, C Co's total liabilities were $10,742 million and shareholders' equity was $8,403 million. In 2012, P Co's total liabilities were $16,259 million and their shareholders' equity was $6,401 million. Which of the following statements is false?
A) C Co's debt to equity ratio was 1.28 and P Co's was 2.54.
B) C Co has only about 56.1% of its assets financed by debt while P Co has about 71.8% of assets financed by debt.
C) C Co is more profitable than P Co.
D) P Co is a much higher leveraged company providing greater financial risk for investors but potential higher return on owners' investment to its shareholders.

Free

Multiple Choice

Q 58Q 58

A supplier to a company would be most interested in the
A) profit margin ratio.
B) asset turnover ratio.
C) free cash flow.
D) current ratio.

Free

Multiple Choice

Q 59Q 59

Which of the following ratios usually is not considered to be a test of profitability?
A) Current ratio.
B) Earnings per share.
C) Net profit margin.
D) Return on assets.

Free

Multiple Choice

Q 60Q 60

Bailey Corporation reported the following information for 20A: Bailey's debt/equity ratio was
A) 1.25 or 125 %.
B) 1.0 or 100%.
C) .33 or 33%.
D) 3.0 or 300%.

Free

Multiple Choice

Q 61Q 61

Which of the following is an important measure of the average movement of goods "on and off the shelf" of a company?
A) Profit margin.
B) Gross inventory ratio.
C) Price/earnings ratio.
D) Inventory turnover ratio.

Free

Multiple Choice

Q 62Q 62

The records of Twain Company include the following: What is the financial leverage percentage (rounded to the nearest percent)?
A) 9%
B) 4%
C) 5%
D) 7%

Free

Multiple Choice

Q 63Q 63

Lyceum Co. reported profit of $8.3 million, interest expense of $.5 million and they are in a 30% tax rate bracket. Their average total assets are $65.8 million and average shareholders' equity is $48.6 million. What is Lyceum's financial leverage advantage or disadvantage?
A) 3.7%
B) 4.0%
C) 4.7%
D) 3.9%

Free

Multiple Choice

Free

Multiple Choice

Q 65Q 65

Calculate C Co's inventory turnover ratio and the days' sales in inventory for 2012.
A) 6.11 times and 59.7 days
B) 5.89 times and 62.0 days
C) 18.41 times and 19.8 days
D) 5.58 times and 65.4 days

Free

Multiple Choice

Q 66Q 66

Calculate C Co's quick ratio for 2012 and 2011 respectively.
A) .55 and .64
B) .37 and .40
C) .56 and .54
D) .30 and .32

Free

Multiple Choice

Q 67Q 67

Solvency is of most interest to:
A) long-term creditors.
B) short-term creditors.
C) customers.
D) competitors.

Free

Multiple Choice

Q 68Q 68

An aircraft company would most likely have
A) a low inventory turnover.
B) a low profit margin.
C) a high inventory turnover.
D) high volume.

Free

Multiple Choice

Q 69Q 69

Match the ratio computation with the ratio.
Ratio Computation
A. Profit ÷ Net sales revenue
B. Net credit sales ÷ Average net receivables
C. Return on equity - Return on assets
D. Sales revenue ÷ Total operating expenses
E. Total liabilities ÷ Shareholders' Equity
F. Market price per share ÷ EPS
G. Profit ÷ Average shareholders' equity
H. Creditors' equity ÷ Total equities
I. Income tax expense ÷ Pretax income
J. Quick assets ÷ Current liabilities
K. Sales revenue ÷ Total assets
L. Dividends per share ÷ Market price per share
M. Shareholders' equity ÷ Total equities
N. Cost of goods sold ÷ Average inventory
O. (Income + After-tax interest expense) ÷ Total assets
P. Current assets ÷ Current liabilities
Q. Profit ÷ Average number of shares of common share outstanding
R. (Cash + Cash equivalents) ÷ Current liabilities
S. Cash Flows from Operating Activities ÷ Profit
T. (Profit + Interest + Income Tax Expense) ÷ Interest Expense
U. Net Sales Revenue ÷ Net Fixed Assets
V. Cash Flows from Operating Activities (before interest and tax expense) ÷ Interest Paid
W. Not given above.
Ratio Designation
____ 1. Return on equity
____ 2. Return on assets
____ 3. Financial leverage
____ 4. EPS
____ 5. Profit margin
6. Current ratio
7. Quick ratio
8. Receivables turnover ratio
____ 9. Inventory turnover ratio
___ 10. Debt/equity ratio
___ 11. Owners' equity to total equities
12. Creditors' equity to total equities
___ 13. Price/earnings ratio
___ 14. Dividend yield ratio
___ 15. Book value per common share
___ 16. Cash coverage ratio
_ 17. Cash ratio
_ 18. Quality of earnings
19. Times interest earned
___ 20. Fixed asset turnover ratio

Free

Short Answer

Q 70Q 70

Indicate the proper category for each ratio.
Primary Category Test of:
A. Profitability
B. Liquidity
C. Solvency
D. Market
E. Miscellaneous ratio Ratio
____ 1. Earnings per share
2. Current ratio
____ 3. Debt/equity ratio
____ 4. Dividend yield ratio
5. Receivables turnover ratio
____ 6. Return on equity
____ 7. Price/earnings ratio
8. Creditors' equity to total equities
____ 9. Profit margin
___ 10. Inventory turnover ratio
___ 11. Owners' equity to total equities
12. Quick ratio
___ 13. Return on assets
___ 14. Financial leverage
___ 15. Book value per common share
_ 16. Quality of earnings
___ 17. Fixed asset turnover ratio
18. Cash coverage
_ 19. Cash ratio
20. Times interest earned

Free

Short Answer

Q 71Q 71

Match the characteristic that is reflected best by the indicators.
Characteristic
A. Solvency
B. Global performance
C. Market performance
D. Profitability
E. Liquidity Indicator
____ 1. Working capital
____ 2. Debt/equity ratio
____ 3. Earnings per share
____ 4. Return on assets
5. Current ratio
____ 6. Price/earnings ratio
____ 7. Financial leverage

Free

Short Answer

Q 72Q 72

The inventory turnover ratio is a measure of liquidity that focuses on efficient use of inventory.

Free

True False

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True False

Q 74Q 74

The inventory turnover ratio measures the number of times, on average, the inventory was sold during the period.

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True False

Q 75Q 75

Management's success at containing the effects of uncontrollable risks and managing in the face of uncertainties plays a role in analysts' predictions of the future economic health of a specific company.

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True False

Q 76Q 76

Since inventory is a significant current asset for most retail organizations, the inventory turnover ratio would be of significance to investors and analysts in terms of assessing liquidity.

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True False

Q 77Q 77

Return on assets (ROA) is usually viewed as a realistic measure of management's performance in using all of the resources available to the company regardless of how the assets are financed.

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True False

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True False

Q 79Q 79

Liquidity refers to the ability of a company to meet its currently maturing obligations, and solvency refers to the ability of a company to meet its long-term obligations on a continuing basis.

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True False

Q 80Q 80

A solvency ratio measures the earnings or operating success of a company for a given period of time.

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True False

Q 81Q 81

If an increase in ROA is the result of borrowing at high interest rates, investors could well interpret negative leverage as reflecting good news.

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True False

Q 82Q 82

The quick ratio of a company will always be less than or equal to the current ratio (working capital ratio).

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True False

Q 83Q 83

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

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True False

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True False

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True False

Q 86Q 86

The average days' supply in inventory is computed by dividing the days in the year by the ending balance of inventory.

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True False

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True False

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True False

Q 89Q 89

The cumulative effect of accounting changes are disclosed in the statement of shareholders' equity (or retained earnings).

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True False

Q 90Q 90

A current ratio of 1.2 to 1 indicates that a company's assets exceed its current liabilities.

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True False

Q 91Q 91

Solvency ratios are evaluated by comparing them over time for a single company or by comparing them with ratios for similar companies.

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True False

Q 92Q 92

The price-earnings ratio reflects investors' expectations about the future profitability of the company.

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True False

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True False

Q 94Q 94

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

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True False

Q 95Q 95

Financial leverage is positive when the return on equity (ROE) is higher than the return on assets (ROA).

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True False

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True False

Q 97Q 97

A primary objective of financial statements is to provide information to current and potential investors and creditors.

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True False

Q 98Q 98

In simple terms, a business strategy establishes the objectives a business is trying to achieve.

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True False

Q 99Q 99

Dividend yield measures earnings generated by each share, based on the market price per share.

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True False

Q 100Q 100

The return on assets ratio will be greater than the rate of return on common shareholders' equity if the company has been successful in trading on the equity.

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True False

Q 101Q 101

From a creditor's point of view, the higher the debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

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True False

Q 102Q 102

The only way an investor will get a return on shares while they own the shares is for the corporation to distribute a dividend.

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True False

Q 103Q 103

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

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True False

Q 104Q 104

An investor interested in purchasing a company's shares for their income potential would be more interested in the company's payout ratio than its price-earnings ratio.

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True False

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Essay

Q 106Q 106

Complete the following statement of earnings (both dollar amounts and component percents):

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Essay

Q 107Q 107

The following data were shown in the records of Morgan Company at the end of 20B:
Compute the following ratios
(a) Quick ratio:
(b) Current (working capital) ratio:
(c) Receivable turnover:
(d) Inventory turnover:
(e) Average age of receivables
(f) Average days' supply in inventory

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Essay

Q 108Q 108

Red Company reported total shareholders' equity of $500,000, which included a common share account balance of $200,000 (40,000 shares) at the end of 20B. Compute the book value per common share assuming the company had only common shares. The book value per common share was $ _.

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Short Answer

Q 109Q 109

Night Corporation gathered the following data at the end of the accounting period, December 31, 20D:

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Essay

Q 110Q 110

Slow Corporation reported the following data for the year ended December 31, 20C:
Compute the following ratios:

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Essay

Q 111Q 111

The following financial data are available for Schultz Company:
Compute the following ratios:
1. Return on equity
3. Price/earnings ratio
3. Dividend yield

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Essay

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Essay

Q 113Q 113

Custer Corporation reported the following information related to its common share (par $10) outstanding and profit:

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Essay

Q 114Q 114

The 20B financial statements of Companies A and B showed the following:
Part A: For each company, compute the items listed in the following tabulation.

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Essay

Q 115Q 115

The following data were available for Lorie Company:
Sales revenue, $225,000 (including 75,000 cash sales) Cost of goods sold, $175,000
Average inventory (per month), $20,000
Average monthly balance in trade receivables, $20,000
Assume a business year of 365 days and calculate the following:
(a) Inventory turnover ________
(b) Days' supply in inventory ________
(c) Receivables turnover ________
(d) Average number of days to collect receivables

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Essay

Q 116Q 116

The following data were reported by Jupiter Company at year-end:
Compute the following ratios for the Company
(a) Debt to equity ratio:
(b) Current (working capital) ratio:
(c) Quick ratio:
(d) Which, if any, of the above are liquidity ratios?
(e) Which, if any, of the above are profitability ratios?

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Essay

Q 117Q 117

At the end of 20B, Wild Corporation reported net income of $70,000, gross sales revenue of
$1,525,000, and sales returns of $125,000. The profit margin was %.

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Short Answer

Q 118Q 118

Ricon Company had the following data available from the statements of financial position and incom statements:

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Essay

Q 119Q 119

Indicate the effect of each item on the ratios given below in the following manner: if an item would cause an increase in the ratio, place a check in the + column; if a decrease, place a check in - column and if no change, check the 0 column. Each item is independent of the others.

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Essay

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Essay

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Essay

Q 122Q 122

The following return on investment ratios were computed for ET Company:
(a) Financial leverage percent for each year was:
(b) Explain briefly the stockholders' advantage or disadvantage each year: 20A:
20B:
20C:
20D:

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Q 123Q 123

At the end of 20C, Anderson Corporation reported a return on assets of 16%; net income of
$42,000; total assets of $365,000, and total liabilities of $165,000. The financial leverage percent was _.

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Q 124Q 124

Howard Corporation reported a quick ratio of 1.75, current assets of $50,000 and a current (working capital) ratio of 2.
(a) The total amount of quick assets was $ _.
(b) What is another name for the quick ratio? ________
(c) Describe what type of assets are considered quick assets and give some examples.
(d) How does the quick ratio compare to the current ratio?

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