Cornerstones of Managerial Accounting Study Set 5

Business

Quiz 16 :

Financial Statement Analysis

Quiz 16 :

Financial Statement Analysis

Question Type
search
arrow
small pizza restaurant, founded and owned by the Martinelli sisters, would be expected to have which of the following?
Free
Multiple Choice
Answer:

Answer:

The correct answer for the given statement is D)
Small pizza restaurant should have high inventory turnover and low gross margin as by doing this they have very low inventory and sell much more quantities which is good for company and also earn more as there quantity supply is in effective manner, this will results to good reputation to the company and for future growth.

Tags
Choose question tag
close menu
arrow
loan agreement between a bank and a customer specified that the debt ratio could not exceed 60%. Explain the purpose of this restrictive agreement.
Free
Essay
Answer:

Answer:

State the purpose of restrictive loan agreement:
Debt ratio indicates ratio of total liabilities with respect of total assets. There is limit to have debt ratio like here its states that debt ratio should be not more than 60% which indicates that company should have maximum of $60 liabilities with respect to $ 100 of total assets.
When it increases more than this then it's not good for company and also for bank as it faces problems while receiving that amount back, so restrictive is only to avoid bankruptcy and that person easily submits its loan amount easily.

Tags
Choose question tag
close menu
arrow
manager decided to acquire some expensive equipment through the use of an operating lease even though a capital budgeting analysis showed that it was more profitable to buy than to lease. However, the purchase alternative would have required the issuance of some bonds. Offer some reasons that would explain the manager's choice.
Free
Essay
Answer:

Answer:

State the reason to select operating lease rather than capital lease:
By using lease as a mode of payment is better for company. As here company issues bonds for payment of some expensive products. By doing so company transfers its burden to future years and irrespective of bear at single point it will bear that for number of years and secondly by issuing bonds the company saves its flow of cash which again is good thing for company as its managing its liquidity position of a company.

Tags
Choose question tag
close menu
arrow
are liquidity ratios? Leverage ratios? Profitability ratios?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
and Torrie Jones are a retired couple looking for income. They are currently rebalancing their portfolio of stocks to include more with high dividends. Fred and Torrie will be most interested in which of the following?
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
high inventory turnover ratio provides evidence that a company is having problems with stockouts and disgruntled customers. Do you agree? Explain.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
after-tax cost of interest expense is used in calculating which of the following?
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
the two major types of financial statement analysis discussed in this chapter.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Pedee Company's inventory turnover in days is 80 days. Which of the following actions could help to improve that ratio?
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
examining Luke Company's current period income statement, you notice that Research and Development expenses are 62% of sales revenue. Luke has most likely provided
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
measures of the ability of a company to meet its current obligations are called
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
Suppose that the accounts receivable turnover ratio of a company is low when compared with other firms within its industry. How would this information be useful to the managers of a company?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Etchey Company shows that 46% of its assets are financed by creditors. Which of the following shows this result?
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
Profitability ratios are used by which of the following groups?
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
Identify two types of standards used in ratio analysis. Explain why it is desirable to use both types.1. Name the two major types of financial statement analysis discussed in this chapter.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Fractions or percentages computed by dividing one account or line-item amount by another are called
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
advantage of common-size analysis is that
Multiple Choice
Answer:
Tags
Choose question tag
close menu
arrow
is horizontal analysis? Vertical analysis? Should both horizontal and vertical analyses be done? Why?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
information does the quick ratio supply that the current ratio does not?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Explain how creditors, investors, and managers can use common-size analysis as an aid in decision making.
Essay
Answer:
Tags
Choose question tag
close menu
Showing 1 - 20 of 67