Question
1) Concord Limited reported the following on its income statement: Profit before income taxes $550000 Income tax expense 147000 Profit $403000 An analysis of the
1)
Concord Limited reported the following on its income statement:
Profit before income taxes | $550000 | |
Income tax expense | 147000 | |
Profit | $403000 |
An analysis of the income statement revealed that interest expense was $44000. Concords interest coverage ratio was
| 9.2 times. |
| 13.5 times. |
| 12.5 times. |
| 10.2 times |
2)
Dieter Incorporated has provided you with the following selected information from 2020 and 2021:
2021 | 2020 | |||
---|---|---|---|---|
Interest expense | $15,500 | $10,700 | ||
Income tax expense | 18,000 | 22,000 | ||
Profit | 68,000 | 60,000 | ||
Total assets | 523,000 | 497,000 | ||
Total liabilities | 285,000 | 234,000 |
Which of the following best interprets Dieters debt to total assets ratio analysis?
| Debt to total asset ratio has weakened compared to prior year, increasing from 47.1% to 54.5%. |
| Debt to total asset ratio has weakened compared to prior year, decreasing from 2.1 to 1.8. |
| Debt to total asset ratio has improved compared to prior year, increasing from 47.1% to 54.5%. |
| Debt to total asset ratio has improved compared to prior year, decreasing from 2.1 to 1.8. |
3)
Fantastic Cleaning Products Ltd. has provided you with the following selected information from 2020 and 2021:
2021 | 2020 | |||
---|---|---|---|---|
Sales | $785,000 | $740,000 | ||
Sales returns and allowances | 55,200 | 52,000 | ||
Cost of goods sold | 358,000 | 305,000 | ||
Profit | 86,800 | 128,000 |
Using a vertical trend analysis with net sales as a base, which of the following most accurately depicts the information stated above?
| Cost of goods sold as a percentage of net sales increased by 5 percentage points. |
| Profit as a percentage of net sales increased by 6.7 percentage points. |
| Profit as a percentage of net sales did not change significantly from 2020. |
| Cost of goods sold as a percentage of net sales remained consistent from 2020. |
4)
Raji Upholstery Inc. reported revenue of $250,000 in 2021 and $222,500 in 2020. The horizontal percentage change from 2020 to 2021 is
| 12.4%. |
| 112.4%. |
| 111.0%. |
| 11.0%. |
5)
An intercompany comparative analysis is the process of
| comparing an item or financial relationship within a company in the current year with one or more prior years. |
| comparing an item or financial relationship of one company with historical data compiled by one or more competing companies. |
| comparing an item or financial relationship of one company with the same item or relationship in one or more competing companies. |
| comparing an item or financial relationship within a company to the internally prepared master budget in order to highlight variances. |
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