7.

Question 7

Company A has the following information from its financial statements:

Which of the following statements is correct?

1 point

Return on Sales ratio is constant.

Other expenses is fixed costs.

COGS is a variable cost.

COGS is a fixed cost.

8.

Question 8

Company A has the following information from its financial statements:

Which of the following statements is correct?

1 point

Cash Flow from Operating Activities has gone from negative in Year 1 to positive in Years 2 and 3. This trend is a desirable one because companies should strive for a positive Cash Flow from Operating Activities.

Cash Flow from Investing Activities has gone from negative in Years 1 and 2 to positive in Year 3. This trend is a desirable one because companies should strive for a positive Cash Flow from Investing Activities.

Cash Flow from Financing Activities has gone from positive in Years 1 and 2 to negative in Year 3. This suggests the company is having difficulty obtaining financing.

In Year 1, cash flow from operating activities was a net cash outflow, suggesting that Net Income of Year 1 was negative.

9.

Question 9

Company A has the following information excerpted from its financial statements:

Which of the following statements is correct?

1 point

Revenue grew by a larger percentage from Year 1 to Year 2 than from Year 2 to Year 3.

Gross margin remained constant from year 1 to 2, but gross margin ratio decreased from Year 1 to Year 2.

Return on sales ratio increased from Year 1 to Year 2.

The Debt/Assets ratio increased from Year 1 to Year 2.

10.

Question 10

Company A has the following information excerpted from its financial statements:

Which of the following statements is correct?

1 point

Assuming the median of return on sales ratio of 5% within the company's industry can be used as an industry benchmark from Year 1 through Year 3. The company's return on sales ratio is higher than the industry from Year 1 through Year 3.

Assuming the median of gross margin ratio of 30% within the company's industry can be used as an industry benchmark from Year 1 through Year 3. The company's gross margin ratio is higher than the industry from Year 1 through Year 3.

The company did not take out any loans in Year 2.

Assuming the median of debt/assets ratio of 36% within the company's industry can be used as an industry benchmark from Year 1 through Year 3. The company's debt/assets ratio in Year 1 is higher than the industry.

11.

Question 11

Company A has the following information excerpted from its financial statements:

Assume the cash balance on Dec. 31 Year 2 is 15,000, what is the cash balance at the end of Year 3?

1 point

$10,500

$16,000

$14,000

$19,500

12.

Question 12

Company A has the following information excerpted from its financial statements:

Suppose the company has only two liability accounts as of Dec. 31, Year 2: Accounts Payable and Loan Payable. Which of the following statements is correct?

1 point

The balance in Loan Payable as of Dec. 31 Year 2 is $9,240.

The balance in Loan Payable as of Dec. 31 Year 1 is $2,840.

The balance in Loan Payable as of Dec. 31 Year 1 is $9,240.

The balance in Loan Payable as of Dec. 31 Year 3 is $10,000.