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Which of the following ratios is a solvency ratio?


A) Net profit margin ratio
B) Current ratio
C) Fixed asset turnover ratio
D) Debt-to-assets ratio

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

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A decrease in receivables turnover ratio is indicative of:


A) an increase in sales revenue.
B) slower-selling inventory.
C) an increase in accounts receivable.
D) a decline in cost of goods sold.

E) A) and C)
F) C) and D)

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Choose the appropriate letter match each financial performance ratios with the appropriate category. Ratio 1.___ Debt-to-assets ratio 2.___ Receivables turnover ratio 3.___ Fixed asset turnover ratio 4.___ Current ratio 5.___ Return on equity 6.___ Price earnings ratio 7.___ Times interest earned ratio 8.___ Quick ratio 9.___ Inventory turnover ratio 10.___ Earnings per share Category P - Profitability L - Liquidity S - Solvency

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1.S
2.L
3....

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Thomas,Inc.has the following information: Thomas,Inc.has the following information: What is the Price/Earnings ratio? A) 2.2 B) 4.0 C) 6.7 D) 20.0 What is the Price/Earnings ratio?


A) 2.2
B) 4.0
C) 6.7
D) 20.0

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

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Company X has net sales revenue of $1,250,000,cost of goods sold of $760,000,and all other expenses of $290,000.The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000.The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000. Required: Compute the return on equity (ROE)ratio.

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blured image
Average stockholders' equity = (Beginn...

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A condensed balance sheet for Liu Company is presented below: A condensed balance sheet for Liu Company is presented below: Required: Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent. Part b.Interpret your analysis.Identify significant items.Comment on key relationships. Required: Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent. Part b.Interpret your analysis.Identify significant items.Comment on key relationships.

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Part a
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Part b
Liu Company's most sign...

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The higher the times interest earned ratio,the greater the risk of nonpayment of interest.

A) True
B) False

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The following information is taken from the financial statements of a company for the current year: The following information is taken from the financial statements of a company for the current year: -Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to: A) 24%. B) 76%. C) 60%. D) 31%. -Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to:


A) 24%.
B) 76%.
C) 60%.
D) 31%.

E) All of the above
F) B) and D)

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If earnings per share (EPS)decreases,it must mean that the company's net income has fallen.

A) True
B) False

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Which of the following statements about the Price/Earnings ratio is not correct?


A) The Price/Earnings ratio indicates how much investors are willing to pay for a share of a company's stock as a multiple of current earnings.
B) A high Price/Earnings ratio may mean that investors have pushed the price of the stock up in anticipation of higher future net income.
C) If EPS decreases and there is no change in the market price of the stock, the Price/Earnings ratio will decrease.
D) If the market price of the stock increases and there is no change in EPS, the Price/Earnings ratio will increase.

E) A) and B)
F) B) and C)

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The comparative financial statements of B.Darin include the following data: The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.The gross profit percentage for the current year is closest to: A) 42%. B) 13.5%. C) 57.7%. D) 21.15%. -Use the information above to answer the following question.The gross profit percentage for the current year is closest to:


A) 42%.
B) 13.5%.
C) 57.7%.
D) 21.15%.

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

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An increase in the gross profit percentage indicates that:


A) cost of goods sold as a percentage of sales has decreased.
B) cost of goods sold as a percentage of sales has increased.
C) operating expenses as a percentage of sales have increased.
D) operating expenses as a percentage of sales have decreased.

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

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Which of the following is a liquidity ratio?


A) Inventory turnover
B) Price/Earnings ratio
C) Net profit margin
D) Times interest earned

E) C) and D)
F) All of the above

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Which of the following would improve a current ratio that is now 1.2?


A) Selling long-term assets for cash
B) Purchasing land for cash
C) Buying equipment in exchange for a two-year note
D) Purchasing inventory on account

E) C) and D)
F) A) and D)

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Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The gross profit percentage is closest to:


A) 32%.
B) 56%.
C) 86%.
D) 14%.

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

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The following information pertains to the CJ Company: The following information pertains to the CJ Company: What would be reported next to Interest Expense on a common sized income statement? A) 12.7% B) 1.7% C) 0.6% D) 0.9% What would be reported next to Interest Expense on a common sized income statement?


A) 12.7%
B) 1.7%
C) 0.6%
D) 0.9%

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

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Solvency ratio data are primarily concerned with the ability of a company to:


A) produce profits.
B) maintain long-term survival and repay its debt.
C) manage its cash flow.
D) provide income for stockholders.

E) A) and D)
F) C) and D)

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How competitors calculate depreciation is most likely to affect comparisons between competitors if property,plant and equipment:


A) makes up a large percentage of assets and average useful lives are fairly different.
B) makes up a small percentage of assets and assets are financed in a different way.
C) makes up a small percentage of assets and average useful lives are fairly similar.
D) is primarily leased in the industry, not purchased.

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

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To perform a vertical analysis of an income statement,you would divide each line item on the statement by:


A) sales.
B) cost of goods sold.
C) operating expenses.
D) net income.

E) B) and C)
F) A) and B)

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The full disclosure principle refers to:


A) Financial reports should disclose only material transactions related to a company's business activities.
B) Financial reports should disclose every transaction related to a company's business activities.
C) Financial reports should present all information needed to properly interpret results of a company's business activities.
D) Financial reports should disclose all future transactions related to a company's business activities.

E) None of the above
F) All of the above

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