Question 1

Use the balance sheet of Maine, Inc. to calculate the current ratio for 2017 and 2018

Accepted Answer

The answer of Use the balance sheet of Maine, Inc....

Question 2

Coleman, Inc. provides the following data from its income statement for 2017:  Calculate the gross profit percentage. (Round your answer to two decimal places.)
A) 25.00%
B) 71.43%
C) 100.00%
D) 28.57%

Accepted Answer

The answer of Coleman, Inc. provides the following data from...

Question 3

Days' sales in inventory measures how quickly a company can collect its receivables.

Accepted Answer

Days' sales in inventory is a measure of how quickly a company can sell its inventory, not collect receivables.

Question 4

Use the balance sheet of Detroit, Inc. to calculate working capital for 2018 and 2017.

Accepted Answer

The answer of Use the balance sheet of Detroit, Inc....

Question 5

Pretty, Inc. provides the following data:   Calculate days' sales in inventory for 2017. (Round any intermediate calculations and your final answer to two decimal places.)
A) 53.68
B) 118.09
C) 47.10
D) 85.88

Accepted Answer

The answer of Pretty, Inc. provides the following data: ...

Question 6

The debt ratio is the ratio of total debt divided by total equity.

Accepted Answer

The debt ratio is calculated by dividing total liabilities (not just debt) by total assets, not by total equity.

Question 7

The inventory turnover ratio measures the average number of days that inventory is held by a company.

Accepted Answer

The inventory turnover ratio measures the number of times inventory is sold and replaced during a specific period, not the number of days it is held. It is calculated as cost of goods sold divided by average inventory.

Question 8

Newbury Office Supply reported the following gross profit percentages: 2014: 37.5%; 2015: 36.2%; 2016: 20.8%. The industry average is 35%. What are some possible reasons for the decline in 2016?

Accepted Answer

The answer of Newbury Office Supply reported the following gross...

Question 9

An accounts receivable turnover that is too high may indicate that credit is too tight, causing the loss of sales to good customers.

Accepted Answer

A high accounts receivable turnover ratio indicates that a company collects its outstanding credit sales quickly. However, if the ratio is excessively high, it may suggest that the company's credit policies are too strict, potentially leading to lost sales opportunities with creditworthy customers who might require more lenient terms.

Question 10

The asset turnover ratio is a way to evaluate how well a company can pay its short-term liabilities.

Accepted Answer

The asset turnover ratio is actually a way to evaluate how efficiently a company is using its assets to generate revenue. It is calculated by dividing net sales by total assets. It does not directly relate to the company's ability to pay short-term liabilities.

Question 11

e-Shop, Inc. has net sales on account of $1,600,000. The average net accounts receivable are $620,000. Calculate the days' sales in receivables. (Round any intermediate calculations and your final answer to two decimal places.)
A) 313.90 days
B) 365.00 days
C) 141.47 days
D) 2.58 days

Accepted Answer

Days' sales in receivables = (Average net accounts receivable / Net sales on account) x 365

= ($620,000 / $1,600,000) x 365

= 141.47 days

Therefore, the best choice is C.

Question 12

Days' sales in receivables measures the return on average receivables.

Accepted Answer

Days' sales in receivables measures the average number of days it takes for a company to collect payment on its accounts receivable, not the return on those receivables.

Question 13

Seidner, Inc. provides the following data:   Calculate the asset turnover ratio for 2017. (Round your answer to two decimal places.)
A) 4.70 times
B) 1.10 times
C) 0.68 times
D) 2.20 times

Accepted Answer

The answer of Seidner, Inc. provides the following data: ...

Question 14

Wilson, Inc. provides the following data:   Calculate accounts receivable turnover ratio form 2017. (Round your answer to two decimal places.)
A) 4.80 times
B) 3.85 times
C) 2.82 times
D) 2.22 times

Accepted Answer

The answer of Wilson, Inc. provides the following data: ...

Question 15

A high times-interest-earned ratio indicates difficulty in paying interest expense.

Accepted Answer

A high times-interest-earned ratio indicates that a company has sufficient earnings to cover the interest expenses, suggesting that they can easily pay their interest payments.

Question 16

Which of the following items is a measure of a company's ability to collect receivables?
A) inventory turnover ratio
B) current ratio
C) days' sales in receivables
D) account receivable balance

Accepted Answer

Days' sales in receivables measures the average number of days it takes a company to collect its accounts receivable. This ratio informs investors how efficiently a company can collect its outstanding receivables.

Question 17

Zebra, Inc. cost of goods sold for the year is $2,300,000, and the average merchandise inventory for the year is $130,000. Calculate the inventory turnover ratio of the company. (Round your answer to two decimal places.)
A) 5.65 times
B) 17.69 times
C) 8.85 times
D) 9.43 times

Accepted Answer

B)Inventory turnover ratio = Cost of Goods Sold / Average Merchandise Inventory =
$2,300,000 / 130,000 = 17.69 times

Question 18

Extracts from the balance sheet of Michigan, Inc. are as follows:  Compute the acid-test ratio.

Accepted Answer

The answer of Extracts from the balance sheet of Michigan,...

Question 19

Use the following to calculate the inventory turnover ratio for the year 2017.

Accepted Answer

The answer of Use the following to calculate the inventory...

Question 20

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

Accepted Answer

The gross profit percentage is a measure of how much profit a company makes after deducting the cost of goods sold from its total revenue. It does not directly indicate a company's ability to pay off its short-term liabilities. Other financial ratios, such as the current ratio and quick ratio, are better indicators of a company's liquidity and ability to pay off its debts in the short term.

Quiz 17: Financial Statement Analysis

Use the balance sheet of Maine, Inc. to calculate the current ratio for 2017 and 2018

Coleman, Inc. provides the following data from its income statement for 2017: Calculate the gross profit percentage. (Round your answer to two decimal places.)

Days' sales in inventory measures how quickly a company can collect its receivables.

Use the balance sheet of Detroit, Inc. to calculate working capital for 2018 and 2017.

Pretty, Inc. provides the following data: Calculate days' sales in inventory for 2017. (Round any intermediate calculations and your final answer to two decimal places.)

The debt ratio is the ratio of total debt divided by total equity.

The inventory turnover ratio measures the average number of days that inventory is held by a company.

Newbury Office Supply reported the following gross profit percentages: 2014: 37.5%; 2015: 36.2%; 2016: 20.8%. The industry average is 35%. What are some possible reasons for the decline in 2016?

An accounts receivable turnover that is too high may indicate that credit is too tight, causing the loss of sales to good customers.

The asset turnover ratio is a way to evaluate how well a company can pay its short-term liabilities.

e-Shop, Inc. has net sales on account of $1,600,000. The average net accounts receivable are $620,000. Calculate the days' sales in receivables. (Round any intermediate calculations and your final answer to two decimal places.)

Days' sales in receivables measures the return on average receivables.

Seidner, Inc. provides the following data: Calculate the asset turnover ratio for 2017. (Round your answer to two decimal places.)

Wilson, Inc. provides the following data: Calculate accounts receivable turnover ratio form 2017. (Round your answer to two decimal places.)

A high times-interest-earned ratio indicates difficulty in paying interest expense.

Which of the following items is a measure of a company's ability to collect receivables?

Zebra, Inc. cost of goods sold for the year is $2,300,000, and the average merchandise inventory for the year is $130,000. Calculate the inventory turnover ratio of the company. (Round your answer to two decimal places.)

Extracts from the balance sheet of Michigan, Inc. are as follows: Compute the acid-test ratio.

Use the following to calculate the inventory turnover ratio for the year 2017.

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.