1. Manero Company included the following information in its annual report:

	20X3				20X2				20X1
Sales	$	178,400			$	162,500			$	155,500
Cost of goods sold		115,000				102,500				100,000
Operating expenses		50,000				50,000				45,000
Operating income		13,400				10,000				10,500

In a trend income statement for 20X1, where 20X1 is the base year, sales are expressed as

Multiple Choice

• 84.4%

• 92.6%

• 100.0%

• 150.5%

2. Which of the following does not reflect disclosures in financial statements?

Multiple Choice

• Related party transactions must be disclosed.

• GAAP disclosure by segment is required only for some companies.

• GAAP limits how much a company can disclose in their financial statements.

• Management may disclose more than GAAP requires.

3. Which of the following financial ratios is not a component of the Z-score model?

Multiple Choice

• Working capital/total assets.

• Sales/total assets.

• Common stock/total assets.

• Retained earnings/total assets.

4. Condensed financial data are presented below for the Phoenix Corporation:

	20X2				20X1
Accounts receivable	$	267,500			$	230,000
Inventory		312,500				257,500
Total current assets		670,000				565,000
Intangible assets		50,000				60,000
Total assets		825,000				695,000
Current liabilities		252,500				200,000
Long-term liabilities		77,500				75,000
Sales		1,640,000
Cost of goods sold		982,500
Interest expense		10,000
Income tax expense		77,500
Net income		127,500
Cash flow from operations		71,000
Cash flow from investing activities		(6,000	)
Cash flow from financing activities		(62,500	)
Tax rate		30	%

If there is no preferred stock, the return on common equity for 20X2 is (rounded):

Multiple Choice

• 25.8%

• 27.9%

• 41.4%

• 43.4%

5. Condensed financial data are presented below for the Phoenix Corporation:

	20X2				20X1
Accounts receivable	$	267,500			$	230,000
Inventory		312,500				257,500
Total current assets		670,000				565,000
Intangible assets		50,000				60,000
Total assets		825,000				695,000
Current liabilities		252,500				200,000
Long-term liabilities		77,500				75,000
Sales		1,640,000
Cost of goods sold		982,500
Interest expense		10,000
Income tax expense		77,500
Net income		127,500
Cash flow from operations		71,000
Cash flow from investing activities		(6,000	)
Cash flow from financing activities		(62,500	)
Tax rate		30	%

The days receivable outstanding for 20X2 is (rounded):

Multiple Choice

• 51 days.

• 55 days.

• 60 days.

• 183 days.