Question 1

Beginning inventory was $28,000 and ending inventory was $22,000. Cost of goods sold was $190,000 and net sales were $360,000. Inventory turnover for the year was closest to:

Accepted Answer

The answer of Beginning inventory was $28,000 and ending inventory...

Question 2

Mickey Corporation has total current assets equal to $80,000 and working capital of $20,000. Minnie Company has the same amount of working capital, but it has total current assets of $300,000. The company with the better working capital position is:

Accepted Answer

The answer of Mickey Corporation has total current assets equal...

Question 3

Economic value added may be computed as:

Accepted Answer

Economic value added (EVA) is calculated as net income plus interest expense minus the capital charge, which represents the cost of capital employed.

Question 4

Compute the times interest earned ratio given the following data:

Accepted Answer

The answer of Compute the times interest earned ratio given...

Question 5

Assume a company has working capital equal to $23,000 and total current liabilities equal to $75,000. The current ratio:

Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Given working capital (current assets - current liabilities) is $23,000 and current liabilities are $75,000, current assets are $98,000. Thus, the current ratio is $98,000 / $75,000 = 1.31.

Question 6

A vertical analysis is primarily concerned with:

Accepted Answer

Vertical analysis involves expressing each item in a financial statement as a percentage of a base amount, which is typically the total assets for a balance sheet or total sales for an income statement.

Question 7

Compute the return on sales given the following data:

Accepted Answer

The answer of Compute the return on sales given the...

Question 8

When preparing a trend analysis, a trend percent is computed as:

Accepted Answer

The answer of When preparing a trend analysis, a trend...

Question 9

Earnings per share of common stock measures the market value of one share of common stock.

Accepted Answer

Earnings per share of common stock is a financial ratio that measures the net income earned per share of common stock outstanding. It does not directly measure the market value of a share of common stock.

Question 10

When using common- size financial statement to evaluate the operating results of two different companies, the gross margin of Company A is expressed as a percentage of:

Accepted Answer

The gross margin of Company A in a common-size financial statement is expressed as a percentage of Company A's sales, allowing for comparison between companies regardless of size.

Question 11

The dividend yield for young, growth- oriented companies is generally high in order to attract potential investors.

Accepted Answer

Young, growth-oriented companies typically reinvest earnings into the business rather than paying high dividends, resulting in a low dividend yield.

Question 12

To be truly useful, financial ratios should be tracked over multiple accounting periods.

Accepted Answer

Tracking financial ratios over multiple periods allows for trend analysis, helping to identify patterns, improvements, or deteriorations in a company's financial health.

Question 13

Capital charge is computed as:

Accepted Answer

Capital charge is calculated by multiplying the total capital (notes payable, loans payable, long-term debt, and stockholders' equity) by the cost of capital.

Question 14

Working capital is defined as:

Accepted Answer

Working capital is calculated as current assets minus current liabilities, representing the short-term liquidity of a company.

Question 15

The debt ratio is an indicator of a company's:

Accepted Answer

The debt ratio measures the percentage of a company's assets that are financed with debt.

Question 16

The following data represent selected information from the comparative income statement and balance sheet for Duenke Company for the years ended December 31, 2009 and 2008: * 10,000 shares of common stock have been issued and outstanding since the company was established. They had a market value of $90 per share on December 31, 2008, and they were selling for $91.50 on December 31, 2009.
 Using 360 days in the year, Duenke Company's days' sales in receivables for the year ended December 31, 2009, was:

Accepted Answer

The answer of The following data represent selected information from...

Question 17

If the ending inventory balance was overstated on the financial statements and the beginning inventory balance was understated, but all other items were properly reported, the calculated inventory turnover ratio would be:

Accepted Answer

The answer of If the ending inventory balance was overstated...

Question 18

Of the items listed below, the one most helpful in the comparison of different size companies is:

Accepted Answer

Common-size financial statements express each item as a percentage of a base amount, allowing for easy comparison between companies of different sizes.

Question 19

Analyzing the statement of cash flows may help analysts determine the financial health of a company. Which of the following signs below is NOT an indicator of a financially healthy company?

Accepted Answer

A financially healthy company typically generates cash from its operations, not uses it. If operations are a major use of cash, it may indicate underlying financial issues.

Question 20

Common- size financial statements represent a form of:

Accepted Answer

Common-size financial statements express each line item as a percentage of a base figure, which is a form of vertical analysis.

Quiz 13: Financial Statement Analysis