Question 1

United Products began the year with an Accounts Receivable balance of $250,000,and had a year-end balance of $280,000.Credit sales of $800,000 generated a gross profit of $150,000.Calculate the receivables turnover ratio for the year.

Accepted Answer

The answer of United Products began the year with an...

Question 2

BC Training reports sales revenue of $2,200,000.Average inventory during the year was $200,000.The inventory turnover ratio for the year is 8.0.What amount of gross profit would the company report in its income statement?
$\begin{array}{|l|c|l|}
\hline \text { Inventory turnover ratio } & \frac{\text { COGS* }}{\$ 200,000} & =8.0 \text { times } \
\hline
\end{array}$
*COGS = $200,000 x 8.0 = $1,600,000.

Accepted Answer

The answer of BC Training reports sales revenue of $2,200,000.Average...

Question 3

Explain the difference between conservative and aggressive accounting practices.Provide an example of a conservative accounting practice and explain why this practice is conservative.Provide an example of an aggressive accounting practice and explain why this practice is aggressive.

Accepted Answer

The answer of Explain the difference between conservative and aggressive...

Question 4

Explain why ratios that compare an income statement account with a balance sheet account should express the balance sheet account as an average of the beginning and ending balances.

Accepted Answer

The answer of Explain why ratios that compare an income...

Question 5

Paul Pierce Enterprises reports net income of $800,000,average total assets of $2,400,000,and average total liabilities of $400,000.Calculate the return on asset and return on equity ratios.

Accepted Answer

The answer of Paul Pierce Enterprises reports net income of...

Question 6

If a company's sales are $648,000 in 2012,and this represents an 8% increase over sales in 2011,what were sales in 2011?

Accepted Answer

The answer of If a company's sales are $648,000 in...

Question 7

Barry's BBQ had sales revenue for the year of $200 million and net income of $20 million.Total assets were $70 million at the beginning of the year,and $80 million at the end of the year.Calculate Barry's return on assets,profit margin,and asset turnover ratios.

Accepted Answer

The answer of Barry's BBQ had sales revenue for the...

Question 8

Sideline Sports Products reports a return on assets of 6%,and a return on equity of 10%.Why do these two ratios differ?

Accepted Answer

The answer of Sideline Sports Products reports a return on...

Question 9

LeBron's Kids Camps has a current ratio of 0.75 to 1,based on current assets of $3 million and current liabilities of $4 million.How,if at all,will a $500,000 cash purchase of inventory affect the current ratio? How,if at all,will a $500,000 purchase of inventory on account affect the current ratio?

Accepted Answer

The answer of LeBron's Kids Camps has a current ratio...

Question 10

The following income statement and balance sheets for Laser World are provided:
 $$\begin{array} { | c | }
\hline\text { Laser World } \
\text { Income Statement }\
\text { For the year-ended December 31, 2012 }\ 
\hline { \begin{array} {lr } 
\text { Sales revenue } & \$ 2,200,000 \
\text { Cost of goods sold } & 1,500,000 \
\text { Gross profit } & 700,000\\text { Expenses: }\
\text { Operating expenses } & 350,000 \
\text { Depreciation expense } & 70,000 \
\text { Loss on sale of land } & 5,000 \
\text { Interest expense } & 25,000 \
\text { Income tax expense } & 60,000\
\text { Total expenses }&510,000\\text { Net income }&\$190,000\
\end{array} } \\hline
\end{array}$$ 
 
Earnings per share for the year-ended December 31,2012,is $1.90.The closing stock price on December 31,2012,is $30.40.
Calculate the following profitability ratios for 2012:
$\begin{array}{ll}
\text { 1. Gross profit ratio } & \text { 4. Asset turnover } \
\text { 2. Return on assets } & \text { 5. Return on equity } \
\text { 3. Profit margin } & \text { 6. Price-earnings ratio }
\end{array}$

Accepted Answer

The answer of The following income statement and balance sheets...

Question 11

Define earnings persistence.How does earnings persistence relate to the reporting of discontinued operations and extraordinary items?

Accepted Answer

The answer of Define earnings persistence.How does earnings persistence relate...

Question 12

Explain the difference between vertical and horizontal analysis.

Accepted Answer

The answer of Explain the difference between vertical and horizontal...

Question 13

The following income statement and balance sheets for Laser World are provided:
 $$\begin{array} { | c | }
\hline\text { Laser World } \
\text { Income Statement }\
\text { For the year-ended December 31, 2012 }\ 
\hline { \begin{array} {lr } 
\text { Sales revenue } & \$ 2,200,000 \
\text { Cost of goods sold } & 1,500,000 \
\text { Gross profit } & 700,000\\text { Expenses: }\
\text { Operating expenses } & 350,000 \
\text { Depreciation expense } & 70,000 \
\text { Loss on sale of land } & 5,000 \
\text { Interest expense } & 25,000 \
\text { Income tax expense } & 60,000\
\text { Total expenses }&510,000\\text { Net income }&\$190,000\
\end{array} } \\hline
\end{array}$$ 
 
Assuming that all sales were on account,calculate the following risk ratios for 2012:
$\begin{array}{ll}
\text { 1. Receivables turnover ratio } & \text { 5. Current ratio } \
\text { 2. Average collection period } & \text { 6. Acid-test ratio } \
\text { 3. Inventory turnover ratio } & \text { 7. Debt to equity ratio } \
\text { 4. Average days in inventory } & \text { 8. Times interest earned ratio }
\end{array}$

Accepted Answer

The answer of The following income statement and balance sheets...

Question 14

Perform a horizontal analysis on the following information providing both the dollar amount and percentage change:
 $\begin{array}{lrr}&2013&2012\
\text { Cash } & \$ 500,000 & \$ 200,000 \
\text { Accounts receivable } & 900,000 & 800,000 \
\text { Inventory } & 700,000 & 500,000 \
\text { Long-term assets } & 2.200 .000 & 2.500 .000\
\text { Total assets }&\$4,300,000&\$4,000,000\
\end{array}$

Accepted Answer

The answer of Perform a horizontal analysis on the following...

Question 15

Assume a company's sales are $1.6 million in 2011,$1.8 million in 2012,and $1.7 million in 2013.What is the percentage change from 2011 to 2012? What is the percentage change from 2012 to 2013? Be sure to indicate whether the percentage change is an increase or a decrease.

Accepted Answer

The answer of Assume a company's sales are $1.6 million...

Question 16

United Products began the year with an Inventory balance of $180,000,and had a year-end balance of $200,000.Sales of $800,000 generated a gross profit of $150,000.Calculate the inventory turnover ratio for the year.

Accepted Answer