Question
Q1. The following is an example of: Year Increase(Decrease) 2018 2017 Amount % Cash $ 300,000 $ 800,000 $ (500,000 ) (62.5 ) Accounts receivable
Q1.
The following is an example of:
Year | Increase(Decrease) | ||||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||||
Cash | $ | 300,000 | $ | 800,000 | $ | (500,000 | ) | (62.5 | ) | ||||||||
Accounts receivable | 500,000 | 200,000 | 300,000 | 150.0 | |||||||||||||
Inventory | 800,000 | 700,000 | 100,000 | 14.3 | |||||||||||||
Equipment | 1,200,000 | 900,000 | 300,000 | 33.3 | |||||||||||||
Total assets | $ | 2,800,000 | $ | 2,600,000 | $ | 200,000 | 7.7 | ||||||||||
Multiple Choice
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Ratio analysis.
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Vertical analysis.
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Horizontal analysis.
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Diagonal analysis.
Q2.
The times interest earned ratio is classified as an indicator of a company's:
Multiple Choice
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Liquidity.
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Profitability.
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Solvency.
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Long-term survival.
Q3.
A partial balance sheet for Captain D's Sportswear is shown below. (dollars in thousands)
Assets: | Liabilities: | ||||||
Cash | $ | 64 | Accounts payable | $ | 249 | ||
Accounts receivable (net) | 176 | Other liabilities | 84 | ||||
Investments | 57 | Total current liabilities | 333 | ||||
Inventory | 202 | Long-term liabilities | 114 | ||||
Prepaid rent | 28 | Total liabilities | 447 | ||||
Total current assets | 527 | Stockholders' equity: | |||||
Property & Equipment, (net) | 260 | Common stock | 158 | ||||
Retained earnings | 182 | ||||||
Total stockholders equity | 340 | ||||||
Total assets | $ | 787 | Total liabilities and equity | $ | 787 | ||
The current ratio is: (Round your answer to 2 decimal places.)
Multiple Choice
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2.61.
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1.18.
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0.67.
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1.58.
Q4.
Excerpts from Stealth Company's December 31, 2021 and 2020, financial statements are presented below:
2021 | 2020 | |||
Accounts receivable | $ | 29,500 | $ | 45,000 |
Inventory | 28,000 | 39,000 | ||
Net sales (all credit) | 199,000 | 199,000 | ||
Cost of goods sold | 122,000 | 114,000 | ||
Total assets | 428,000 | 419,000 | ||
Total stockholders' equity | 248,000 | 230,000 | ||
Net income | 36,500 | 39,000 | ||
Stealth Company's 2021 receivables turnover ratio is:
Multiple Choice
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4.14 times.
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5.34 times.
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14.51 times.
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6.75 times.
Q5.
Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are presented below:
2021 | 2020 | ||||
Accounts receivable | $ | 87,000 | $ | 78,000 | |
Inventory | 85,000 | 71,000 | |||
Net sales | 460,000 | 382,000 | |||
Cost of goods sold | 255,000 | 222,000 | |||
Total assets | 820,000 | 755,000 | |||
Total stockholders' equity | 485,000 | 435,000 | |||
Net income | 76,000 | 59,000 | |||
TPX Company's 2021 return on equity is: (Round your answer to 1 decimal place.)
Multiple Choice
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3.3%.
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15.7%.
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16.5%.
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1.6%.
Q6.
Ronaldo Soccer Shop's income statement reports sales of $100,000; cost of goods sold of $46,000, operating expenses of $34,000, interest expense of $15,000, income tax expense of $2,000, and net income of $3,000. If you were to perform a vertical analysis of this income statement, you would divide each of these income statement line items by:
Multiple Choice
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$100,000
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$46,000
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$34,000
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$3,000
Q7.
To calculate a year-to-year percentage change in any financial statement line item such as sales, you should take the current year's amount, subtract the prior year's amount, then divide by ______, and finally multiply the result by 100.
Multiple Choice
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net income
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total assets
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the current year's amount
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the prior year's amount
Q8.
Richard's Sporting Goods reports net income of $100,000, net sales of $500,000, and average assets of $1,000,000. The profit margin is:
Multiple Choice
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10%.
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20%.
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50%.
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5 times.
Q9.
Below is information related to two companies:
Company 1 | Company 2 | ||||||
Return on assets | 8.2 | % | 6.3 | % | |||
Debt to equity | 67.2 | % | 53.4 | % | |||
Based on the ratios above, what is generally true about these two companies?
Multiple Choice
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Company 1 has lower profitability and higher risk.
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Company 1 has higher profitability and higher risk.
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Company 1 has lower profitability and lower risk.
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Company 1 has higher profitability and lower risk.
Q10.
Quality of earnings refers to:
Multiple Choice
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Positive net income.
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Ability of reported earnings to reflect the companys true earnings.
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An increasing trend in profitability.
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All of the other answer choices are correct.
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