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QUESTION 21 Metz Vets The company's accountant prepared this reminder for his intern: Cash - CL + LTL + CS + RE-NCCA - LTA where: CL = Current liabilities LTL = Long-term liabilities CS = Common stock RE=Retained earnings NCCA = Noncash current assets LTA = Long-term assets Refer to Metz Vets. Which of the following activities results in a cash inflow? Increases in noncash current assets (NCCA) Decreases in current liabilities (CL) Increases in common stock (CS) Decreases in retained earnings (RE) QUESTION 22 Rio Imports Information from the financial statements are provided below: Current Liabilities Long-Term Liabilities Stockholders' Equity Net Cash Flows from Operating Activities Interest and Principal Payments Net Sales Net Income Interest Expense Income Taxes Dividends Paid to Common Stockholders 2015 $460,000 240,000 840,000 160,000 24,000 950,000 180,000 17.000 32.000 30,000 2014 $320,000 640,000 1,080,000 102.000 16,000 900,000 144,000 23,000 29,000 60.000 Refer to Rio Imports. The debt-to-equity ratio for 2015 is an indicator that the company's ability to meet current interest payments to creditors is increasing, increasing slightly from 2014 to 2015. an indicator that for every $1 of capital that has been provided by stockholders, creditors provided $0.83. an indicator that the company's reliance on stockholders for funding increased from 2014 to 2015. QUESTION 23 2 points Rags to Riches Selected data from the financial statements are provided below: Accounts Receivable Inventory Total Assets Net Sales Cost of Goods Sold 2015 $ 120,000 24,000 900,000 760,000 320,000 2014 $ 76,000 32,000 760,000 540,000 420,000 Refer to Rags to Riches. Which of the following would result from a vertical analysis of the company's income statement? The accounts receivable turnover ratio is 7.76 in 2015. Gross profit is 57.9% of net sales for 2015. Cost of goods sold decreased $50,000 or 23.8% during 2015. Net sales is 84.4% of total assets for 2015. QUESTION 25 The following items were reported by Morris Plumbing Company: Accounts receivable, December 31, 2014 Accounts receivable, December 31, 2013 Sales for 2014 $ 250,000 225,000 1,000,000 What amount would be reported in the operating activities section of the statement of cash flows for Collections from Customers under the direct method, assuming that all sales are on credit? $975,000 $1,025,000 $1,225,000 $1,250,000 QUESTION 26 A banker is analyzing a company which operates in the automotive industry. Which of the following will likely be the banker's most important consideration in determining whether the company should receive a loan? The automotive industry suffers from political pressures concerning environmental regulation of products. Inflation has been consistently high for several years. The company has state-of-the-art automated equipment which enhances the efficiency of its operating process. A company reported the following amounts in its financial statements: Average inventory Cost of goods sold 2015 $ 100,000 2,000,000 2014 $ 60,000 1,500,000 From 2014 to 2015, the company's efficiency in managing inventory was declining, because the inventory turnover ratio is decreasing, improving, because the inventory turnover ratio is increasing. declining, because the inventory turnover ratio is increasing, improving, because the inventory turnover ratio is decreasing QUESTION 28 Which of the following ratios is least useful in evaluating a company's ability to pay its current obligations when they come due? current ratio quick ratio cash ratio return on assets ratio