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Exam 13: Measuring and Evaluating Financial Performance

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Question 1

Multiple Choice

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Which of these are liquidity ratios?

A) Net profit margin
B) Receivables turnover
C) Fixed asset turnover
D) Times interest earned

E) A) and D)
F) B) and D)

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Question 2

Multiple Choice

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Assume that Charmin and Barker are two retailers selling different goods.Charmin reports a days to sell ratio of 6 days and Barker reports a days to sell ratio of 64 days.What types of merchandise are Charmin and Barker likely to sell,given their measures of days to sell?

A) Charmin sells clothing and Barker sells wine.
B) Charmin sells consumer electronics and Barker sells gasoline.
C) Charmin sells footwear and Barker sells consumer electronics.
D) Charmin sells groceries and Barker sells autos.

E) C) and D)
F) B) and D)

Correct Answer

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D

Question 3

Multiple Choice

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Webster,Inc.has the following information: What is the Price/Earnings ratio?

The general goal of horizontal analyses is to identify significant trends.

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

Which of the following statements is not true?

Which of the following analysis techniques does not pertain to changes over time?

The following information is taken from the financial statements of Clybourn Company for the current year: On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Roscoe Company's comparative balance sheet show total assets of $693,000 and $630,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

In which of the following company attributes would a long-term bond holder be most interested?

Often loan agreements require the borrower to comply with certain requirements,such as maintaining a particular current ratio or limiting future borrowing.To decide if a company has complied with its loan covenants,a creditor would look at the company's:

Which of the following actions would likely increase the Return on Equity (ROE) ?

Horizontal analysis:

Which of the following ratios is used to evaluate a company's liquidity?

To analyze changes in a company's net income over the last ten years,you should perform:

Southport Industries has current assets of $900,000 and a current ratio is 2.50.Assume that the company prepays rent for 9 months in the amount of $40,000.The current ratio after this transaction is closest to:

Which of the following is not a profitability ratio?

The following information is taken from the financial statements of B.Darin Company: Net sales revenue $ 900,000 Expenses 600,000 Net income 300,000 Net cash from operations 290,000 Assets,end of current year 600,000 Liabilities,end of current year 100,000 Stockholders' equity,end of current year 500,000 Assets,end of previous year 590,000 Stockholders' equity,end of previous year 490,000 Expenses include interest of $10,000 and income tax of $90,000.There was an average of 40,000 shares of common stock outstanding during the year and the market price of the stock is $15 per share at the end of the year.There was no preferred stock outstanding during the year. Required: Calculate the following ratios for the current year: Part a.Fixed asset turnover Part b.Return on equity (ROE) Part c.Earnings per share (EPS) Part d.Times interest earned Part e.Price/Earnings ratio Part f.Debt-to-assets ratio Part g.Net profit margin

Net revenue divided by average net fixed assets is the calculation for which of the following ratios?

Stockton Co.prepared its income statement containing the information below.Using vertical analysis,what percentages would apply to cost of sales,gross profit,and interest expense,respectively?