Question 1

Which type of analysis could reveal that a company is relying heavily on debt financing?

Accepted Answer

A)   Common size statements
B)   Horizontal analysis
C)   The fixed asset turnover ratio
D)   Trend analysisE) All of the above
F) A) and B)

Question 2

The ratio that measures the percentage of financing from creditors is the:

Accepted Answer

A)   current ratio.
B)   times interest earned ratio.
C)   debt-to-assets ratio.
D)   Price/Earnings ratio.E) B) and C)
F) All of the above

Question 3

The comparative financial statements of B.Darin include the following data:
 
-Use the information above to answer the following question.The fixed asset turnover ratio for the current year is closest to:

Accepted Answer

A)   1.28.
B)   1.24.
C)   0.75.
D)   1.64.E) B) and C)
F) A) and D)

Question 4

Which of the following is a profitability ratio?

Accepted Answer

A)   Return on equity
B)   Times interest earned
C)   Inventory turnover
D)   Receivables turnoverE) A) and C)
F) All of the above

Question 5

A company's comparative balance sheet show total assets of $990,000 and $900,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

Accepted Answer

A)   10%.
B)   9%.
C)   5%.
D)   4%.E) A) and B)
F) None of the above

Question 6

Which of the following is calculated by dividing net income by revenues?

Accepted Answer

A)   Gross profit margin
B)   Current ratio
C)   Net profit margin
D)   Asset turnoverE) A) and C)
F) A) and D)

Question 7

A company's sales are $285,000 and $200,000 during the current and prior years,respectively.The percentage change is:

Accepted Answer

A)   42.5%.
B)   70%.
C)   29.8%.
D)   130%.E) All of the above
F) B) and C)

Question 8

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Accepted Answer

A)   Inventory turnover
B)   Current ratio
C)   Days to collect ratio
D)   Days to sell ratioE) None of the above
F) A) and D)

Question 9

Which events may indicate going-concern problems?

Accepted Answer

A)   An increase in research and development costs
B)   A decrease in barriers to expansion
C)   Additions of patents
D)   Loss of a key supplier or customerE) B) and C)
F) A) and B)

Question 10

Which of the following ratios is calculated by dividing net income by revenues?

Accepted Answer

A)   Return on equity ratio
B)   Net profit margin ratio
C)   Current ratio
D)   Fixed asset turnover ratioE) A) and C)
F) None of the above

Question 11

A company has $72,500 in inventory at the beginning of the accounting period and $65,500 at the end of the accounting period.Sales revenue is $986,400,cost of goods sold is $572,700,and net income is $124,200 for the accounting period.On average,the number of days to sell inventory is approximately:

Accepted Answer

A)   203.
B)   44.
C)   61.
D)   26.E) A) and B)
F) A) and C)

Question 12

Which of the measures below is used to measure liquidity?

Accepted Answer

A)   Current ratio
B)   Debt-to-assets ratio
C)   Price ÷ Earnings ratio
D)   Times interest earnedE) C) and D)
F) All of the above

Question 13

Vertical analysis:

Accepted Answer

A)   identifies the relative contribution made by each financial statement line item.
B)   identifies trends over time .
C)   provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars.
D)   involves comparing amounts across different financial statements.E) B) and D)
F) C) and D)

Question 14

Which of these is not one of the categories of ratio analysis?

Accepted Answer

A)   Profitability
B)   Liquidity
C)   Solvency
D)   ProbabilityE) All of the above
F) B) and D)

Question 15

Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?

Accepted Answer

A)   Excessive reliance on debt financing
B)   Loss of key personnel without comparable replacement
C)   Inadequate maintenance of long-lived assets
D)   Declining profit marginsE) C) and D)
F) B) and D)

Question 16

If net income is rising,but net sales revenue and the gross profit percentage remain the same,then:

Accepted Answer

A)   operating expenses are falling.
B)   operating expenses are rising.
C)   cost of goods sold is falling.
D)   cost of goods sold is rising.E) None of the above
F) All of the above

Question 17

A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

Accepted Answer

A)   37.50.
B)   64.29.
C)   2.40.
D)   2.0.E) B) and C)
F) A) and D)

Question 18

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?

Accepted Answer

A)   Company A collects its receivables faster than Company B.
B)   Company B collects its receivables faster than Company A.
C)   Company A makes more sales on account than Company B.
D)   Company B makes more sales on account than Company A.E) C) and D)
F) A) and D)

Question 19

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 20

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

Accepted Answer

A)   Fixed asset turnover
B)   Net profit margin
C)   Inventory turnover
D)   Earnings per shareE) A) and B)
F) C) and D)

Exam 13: Measuring and Evaluating Financial Performance

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

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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?

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Which events may indicate going-concern problems?

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Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

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Which of the following is a profitability ratio?

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The ratio that measures the percentage of financing from creditors is the:

Correct AnswerverifiedShow Answer

The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.The fixed asset turnover ratio for the current year is closest to:

Correct AnswerverifiedShow Answer

Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?

Correct AnswerverifiedShow Answer

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Correct AnswerverifiedShow Answer

A company's sales are $285,000 and $200,000 during the current and prior years,respectively.The percentage change is:

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If net income is rising,but net sales revenue and the gross profit percentage remain the same,then:

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Which of the measures below is used to measure liquidity?

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Which of the following is calculated by dividing net income by revenues?

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A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

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Which of these is not one of the categories of ratio analysis?

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Which type of analysis could reveal that a company is relying heavily on debt financing?

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Which of the following ratios is calculated by dividing net income by revenues?

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Vertical analysis:

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A company's comparative balance sheet show total assets of $990,000 and $900,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

Correct AnswerverifiedShow Answer

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