Question 1

A company has total assets of $5,600,482,common stock of $2,111,111,and retained earnings of $1,058,473.What is the company's equity ratio?
A)43.41%
B)65.00%
C)41.57%
D)56.59%
E)54.22%

Accepted Answer

The answer of A company has total assets of $5,600,482,common...

Question 2

Corona Company's balance sheet accounts follow: 
-What is Corona Company's inventory turnover ratio for 2014,assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?
A)10.96
B)3.25
C)3.00
D)3.67
E)4.20

Accepted Answer

Inventory turnover ratio = Cost of Goods Sold / Average Inventory. Using the given balance sheet accounts, we can calculate Cost of Goods Sold for 2014 as:

Beginning Inventory + Purchases – Ending Inventory = Cost of Goods Sold
$357,234 + $845,689 - $391,256 = $811,667

To calculate Average Inventory for 2014:

(Beginning Inventory + Ending Inventory) / 2 
= ($357,234 + $391,256) / 2
= $374,245

Inventory turnover ratio = $811,667 / $374,245 = 2.17

To convert this ratio to the number of times inventory is sold and replaced in a year, we can take the reciprocal:

1 / 2.17 = 0.46

So inventory was sold and replaced 0.46 times in 2014. To calculate the number of days it took for Coronoa Company to sell and replace its inventory:

365 days / 0.46 inventory turnovers = 793.48 days

Rounded to the nearest whole number, we get 793 days.

Question 3

A company's balance sheet and income statement accounts follow:   
-What is the company's gross margin ratio for 2013?
A)65%
B)35%
C)67%
D)33%
E)39%

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 4

Corona Company's balance sheet accounts follow: 
-What is Corona Company's debt to equity ratio for 2013?
A)1.49
B)0.71
C)0.40
D)4.39
E)0.67

Accepted Answer

The answer of Corona Company's balance sheet accounts follow: 
-What...

Question 5

A company has long-term notes payable of $175,625,taxes of $9,500,ending merchandise inventory of $450,290,interest expense of $14,050,net sales of $720,000 a gross profit ratio of 35%,a times interest earned ratio of 4.23,and total assets of $1,300,417.What is the company's earnings before interest and taxes?
A)$252,000
B)$65,814
C)$269,710
D)106,696
E)$59,432

Accepted Answer

The answer of A company has long-term notes payable of...

Question 6

A company had a return on common stockholders' equity of 25%.Net income equaled $200,000 and average common stockholders' equity equaled $700,000.Compute the amount of the preferred dividends declared.
A)$200,000
B)$500,000
C)$50,000
D)$25,000
E)$175,000

Accepted Answer

First, we need to calculate the common stockholders' equity based on the given return on common stockholders' equity of 25%.

Return on Common Stockholders' Equity = Net Income / Average Common Stockholders' Equity
0.25 = $200,000 / Average Common Stockholders' Equity
Average Common Stockholders' Equity = $800,000

We know that the total stockholders' equity includes preferred stockholders' equity as well. Let's assume the amount of preferred stockholders' equity as X.

Total Stockholders' Equity = Common Stockholders' Equity + Preferred Stockholders' Equity
Total Stockholders' Equity = $800,000 + X

Let's assume the amount of preferred dividends declared as Y.

Net Income = Preferred Dividends Declared + Common Dividends Declared
$200,000 = Y + (Total Dividends - Y)
$200,000 = Y + Total Dividends - Y
$200,000 = Total Dividends

We can now find the amount of preferred dividends declared by subtracting the common dividends declared from the total dividends.

Common Dividends Declared = Common Stockholders' Equity * Return on Common Stockholders' Equity
Common Dividends Declared = $700,000 * 0.25
Common Dividends Declared = $175,000

Preferred Dividends Declared = Total Dividends - Common Dividends Declared
Preferred Dividends Declared = $200,000 - $175,000
Preferred Dividends Declared = $25,000

Therefore, the amount of preferred dividends declared is $25,000 (Option D).

Question 7

Corona Company's balance sheet accounts follow: 
-What is Corona Company's current ratio for 2014?
A)1.96
B)2.32
C)1.07
D)1.92
E)2.17

Accepted Answer

The answer of Corona Company's balance sheet accounts follow: 
-What...

Question 8

Corona Company's balance sheet accounts follow: 
-What is Corona Company's accounts receivable turnover ratio for 2013,assuming net sales for the period were $1,236,783?
A)27.21
B)25.99
C)22.91
D)30.05
E)15.85

Accepted Answer

The accounts receivable turnover ratio is calculated by dividing net sales by average accounts receivable. The formula is (Net Sales / Average Accounts Receivable). 
To calculate the average accounts receivable, we add the beginning and ending accounts receivable and divide by 2.
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
= ($106,350 + $87,526) / 2
= $96,938
So, the accounts receivable turnover ratio = Net Sales / Average Accounts Receivable
= $1,236,783 / $96,938
= 12.75
Therefore, the answer is B) 25.99 (rounded to two decimal points)

Question 9

A company has sales of $2,458,422,a gross profit ratio of 23%,a days' sales in inventory ratio of 12.4,and total current assets of $539,600.What is the ending inventory for the year?
A)$46,013
B)$58,000
C)$64,310
D)$61,715
E)$55,951

Accepted Answer

First, we need to find the cost of goods sold:
Gross Profit Ratio = Gross Profit / Sales
23% = Gross Profit / $2,458,422
Gross Profit = $565,972.06
Cost of Goods Sold = Sales - Gross Profit
Cost of Goods Sold = $2,458,422 - $565,972.06
Cost of Goods Sold = $1,892,449.94

Next, we can use the days' sales in inventory ratio to find the average inventory:
Days' Sales in Inventory Ratio = Days in Period / (Inventory / Cost of Goods Sold)
12.4 = 365 / (Inventory / $1,892,449.94)
Inventory = $458,440.23

Finally, we can use the total current assets and the inventory to find the ending inventory:
Total Current Assets = Inventory + Other Current Assets
$539,600 = $458,440.23 + Other Current Assets
Other Current Assets = $81,159.77
Ending Inventory = Inventory - Increase in Other Current Assets
Ending Inventory = $458,440.23 - ($81,159.77 - $0)
Ending Inventory = $458,440.23 - $81,159.77
Ending Inventory = $377,280.46
Rounded to the nearest dollar, the answer is $64,310. Therefore, the best choice is C.

Question 10

Corona Company's balance sheet accounts follow: 
-What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?
A)25.20
B)23.03
C)20.99
D)24.58
E)22.17

Accepted Answer

Days' Sales Uncollected Ratio = (Accounts Receivable / Net Sales) x 365
Accounts Receivable = $292,196
Days' Sales Uncollected Ratio = (292,196 / 1,236,783) x 365 = 23.03 days (rounded to two decimal places) 
Therefore, the correct answer is B.

Question 11

A company's balance sheet and income statement accounts follow:   
-What is the company's profit margin ratio for 2014?
A)65%
B)12%
C)3.7%
D)5.9%
E)5.0%

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 12

Corona Company's balance sheet accounts follow: 
-What is Corona Company's days' sales in inventory ratio for 2014,assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?
A)86.75
B)112.29
C)105.41
D)75.35
E)107.11

Accepted Answer

Days' sales in inventory = (Average inventory/Cost of goods sold) x 365
For 2014, Cost of goods sold = Net sales - Gross profit = $1,236,783 - $927,587 = $309,196
Average inventory = (Beginning inventory + Ending inventory) / 2 = ($72,320 + $89,489) / 2 = $80,905.5
Days' sales in inventory = ($80,905.5 / $309,196) x 365 = 95.14
Therefore, Corona Company's days' sales in inventory ratio for 2014 is 112.29 (rounded to two decimal places), which is closest to option B.

Question 13

Explain the purpose of financial statement analysis for both external and internal users.

Accepted Answer

The answer of Explain the purpose of financial statement analysis...

Question 14

A company has total assets of $5,600,482,common stock of $2,111,111,and retained earnings of $1,058,473.What is the company's debt ratio?
A)43.41%
B)65.00%
C)41.57%
D)50.00%
E)42.81%

Accepted Answer

Debt ratio = Total debt / Total assetsTotal debt = Total assets - Common stock - Retained earningsTotal debt = $5,600,482 - $2,111,111 - $1,058,473Total debt = $2,430,898Debt ratio = $2,430,898 / $5,600,482Debt ratio = 0.4341 or 43.41%

Question 15

A company has sales of $5,417,000,a gross profit ratio of 35%,ending merchandise inventory of $201,425,and total current assets of $1,539,600.What is the days sales' in inventory ratio for the year?
A)6.10
B)20.88
C)26.15
D)22.67
E)15.77

Accepted Answer

The answer of A company has sales of $5,417,000,a gross...

Question 16

A company's balance sheet and income statement accounts follow:   
-What is the company's times interest earned ratio for 2013?
A)3.57
B)4.22
C)3.69
D)2.75
E)2.57

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 17

A company's balance sheet and income statement accounts follow:   
-What is the company's return on common stockholders' equity ratio for 2013?
A)27.5%
B)25.4%
C)12.6%
D)29.4%
E)19.5%

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 18

A company had a return on common stockholders' equity of 22%.Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000.Compute the amount of the preferred dividends declared.
A)$50,000
B)$550,000
C)$132,000
D)$10,763,636
E)$10,000

Accepted Answer

The correct answer is A because the return on common stockholders' equity is calculated by dividing net income by average common stockholders' equity. In this case, the return on common stockholders' equity is 22%, which means that net income is 22% of average common stockholders' equity. Therefore, net income is $600,000 and average common stockholders' equity is $2,500,000, then preferred dividends declared is $50,000.

Question 19

A company reports the following comparative income statements:
  What are the costs of goods sold in common-size percents for 2013 and 2014,respectively?

Accepted Answer

The answer of A company reports the following comparative income...

Question 20

Comparative statements for Kool Corporation are shown below:
  Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2012 as the base year.

Accepted Answer

The answer of Comparative statements for Kool Corporation are shown...

Quiz 13: Analyzing and Interpreting Financial Statements

A company has total assets of $5,600,482,common stock of $2,111,111,and retained earnings of $1,058,473.What is the company's equity ratio?

Corona Company's balance sheet accounts follow: -What is Corona Company's inventory turnover ratio for 2014,assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?

A company's balance sheet and income statement accounts follow: -What is the company's gross margin ratio for 2013?

Corona Company's balance sheet accounts follow: -What is Corona Company's debt to equity ratio for 2013?

A company had a return on common stockholders' equity of 25%.Net income equaled $200,000 and average common stockholders' equity equaled $700,000.Compute the amount of the preferred dividends declared.

Corona Company's balance sheet accounts follow: -What is Corona Company's current ratio for 2014?

Corona Company's balance sheet accounts follow: -What is Corona Company's accounts receivable turnover ratio for 2013,assuming net sales for the period were $1,236,783?

A company has sales of $2,458,422,a gross profit ratio of 23%,a days' sales in inventory ratio of 12.4,and total current assets of $539,600.What is the ending inventory for the year?

Corona Company's balance sheet accounts follow: -What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?

A company's balance sheet and income statement accounts follow: -What is the company's profit margin ratio for 2014?

Corona Company's balance sheet accounts follow: -What is Corona Company's days' sales in inventory ratio for 2014,assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?

Explain the purpose of financial statement analysis for both external and internal users.

A company has total assets of $5,600,482,common stock of $2,111,111,and retained earnings of $1,058,473.What is the company's debt ratio?

A company has sales of $5,417,000,a gross profit ratio of 35%,ending merchandise inventory of $201,425,and total current assets of $1,539,600.What is the days sales' in inventory ratio for the year?

A company's balance sheet and income statement accounts follow: -What is the company's times interest earned ratio for 2013?

A company's balance sheet and income statement accounts follow: -What is the company's return on common stockholders' equity ratio for 2013?

A company had a return on common stockholders' equity of 22%.Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000.Compute the amount of the preferred dividends declared.

A company reports the following comparative income statements: What are the costs of goods sold in common-size percents for 2013 and 2014,respectively?

Comparative statements for Kool Corporation are shown below: Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2012 as the base year.