Question 1

Information from LMN's balance sheet at December 31,2014,is as follows in millions: Current assets:  Current liabilities:  What is the quick (acid-test)ratio?

Accepted Answer

Quick (acid-test) ratio = (Current assets - Inventories) / Current liabilities. Since the question does not provide information about the value of inventories, we assume it to be zero. Therefore, the formula becomes (Current Assets)/(Current Liabilities), which yields ($440 million)/($324 million) = 1.358 or approximately 1.36. Therefore, the correct answer is choice B.

Question 2

Assume the following facts for XYZ in 000's:  XYZ's return on owners' equity,return on total assets,and leverage percentages (rounded to the nearest percent)are: (Round percentage answers to nearest whole percent: Do not round intermediate calculations.)

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The answer of Assume the following facts for XYZ in...

Question 3

What are the possible decisions that can be made with the use of financial analysis?

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The answer of What are the possible decisions that can...

Question 4

You are given the following information about KER Corp.:  Required:
Calculate KER's quick ratio.

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The answer of You are given the following information about...

Question 5

The summarized and partial balance sheet of XYZ showed the following:  (a)Prepare a horizontal analysis.
(b)Prepare a vertical analysis for 20x11:

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The answer of The summarized and partial balance sheet of...

Question 6

Explain the differences between looking at a company as a new or prospective shareholder and as an existing shareholder?

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The answer of Explain the differences between looking at a...

Question 7

What is vertical analysis?

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The answer of What is vertical analysis?...

Question 8

JMR Company has a current ratio of 1.3:1.What does this tell you about the Company? What other information would you like to know?

Accepted Answer

The answer of JMR Company has a current ratio of...

Question 9

ABC's net accounts receivable were $1,000 at December 31,2013 and $1,200 at December 31,2014.Net cash sales for 2014 were $400.The accounts receivable turnover for 2014 was 5.0.What were ABC's total net sales for 2014?

Accepted Answer

The accounts receivable turnover ratio is calculated by dividing net credit sales by average accounts receivable. The average accounts receivable is calculated by adding the beginning and ending accounts receivable and dividing by 2. In this case, the average accounts receivable is ($1,000 + $1,200) / 2 = $1,100. The accounts receivable turnover ratio is 5.0, so net credit sales must be $1,100 * 5.0 = $5,500. Total net sales are net credit sales plus net cash sales, so total net sales are $5,500 + $400 = $5,900.

Question 10

Explain the differences between the types of audit reports.

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Question 11

What are some advantages to using ratio analysis? What are some of its limitations?

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The answer of What are some advantages to using ratio...

Question 12

It is important for the user to understand the financial statements in order to make an informed decision.A user must generally do all of the following except:

Accepted Answer

All of these choices are correct, as different users may have different needs and approaches to analyzing financial statements.

Question 13

Recording the payment (as distinguished from the declaration)of a cash dividend whose declaration was already recorded will:

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The answer of Recording the payment (as distinguished from the...

Question 14

The rule of thumb for the quick ratio is 1:1.When would a quick ratio below this threshold not necessarily be a concern for a company?

Accepted Answer

A quick ratio below the 1:1 threshold may not necessarily be a concern for a company if their cash flows are steady and reliable. This means that the company has enough cash to cover its short-term obligations, even if its quick ratio may be lower due to other factors such as high accounts receivable or inventory balances. However, it's still important to analyze the company's overall financial health and assess any potential risks or concerns.

Question 15

Ratios,like the accounts receivable turnover ratio,can be difficult to interpret.Explain some of the problems associated with this ratio.

Accepted Answer

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Question 16

If business conditions are stable,an increase in the number of accounts receivable turnover from one year to the next (based upon a company's accounts receivable at year-end)might indicate:

Accepted Answer

An increase in accounts receivable turnover means that the company is collecting its accounts receivable faster. This could be due to a number of factors, but one possible explanation is that the company has tightened its credit policies, which means that it is extending credit to customers who are more likely to pay on time.

Question 17

Selected information for HIJ in 000's is as follows:  HIJ's return on average common shareholders' equity,rounded to the nearest percentage point,for 2014 is: (Round percentage answer to nearest whole percent)

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The answer of Selected information for HIJ in 000's is...

Question 18

What is horizontal analysis?

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The answer of What is horizontal analysis?...

Question 19

When would a qualified audit opinion not necessarily be a concern to a company?

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Question 20

There is a section in every annual report that detail the accounting policies used by a company.Explain why this is important to users and what some of the limitations are.

Accepted Answer

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Quiz 11: Financial Instruments: Investments in Bonds and Equity Securities

Information from LMN's balance sheet at December 31,2014,is as follows in millions: Current assets: Current liabilities: What is the quick (acid-test) ratio?

Assume the following facts for XYZ in 000's: XYZ's return on owners' equity,return on total assets,and leverage percentages (rounded to the nearest percent) are: (Round percentage answers to nearest whole percent: Do not round intermediate calculations.)