QUESTION 1 In a vertical analysis of the balance sheet the 100% amount is a. Current assets b. Working capital Total assets d. Total stockholders' equity QUESTION 2 In a vertical analysis of the income statement the 100% amount is 2. Net income b. Gross profit C Operating income d. Net sales QUESTION 3 To review the current market price of the stock, one should review the a. balance sheet. b. income statement. C. statement of cash flows. d. none of these; it is not on the financial statements. QUESTION 4 Which of the following is considered a liquidity analysis tool? a. gross profit ratio b. acid-test ratio c. dividend yield ratio d. return on assts ratio QUESTION 5 Which of the following formulas gives the inventory turnover ratio? a. Net credit sales/Average inventory b. Average inventory/Net credit sales C. Cost of goods sold/Average inventory d. Average inventory/Cost of goods sold QUESTION 6 Which of the following ratios is used to analyze a company's liquidity? a. Return on assets ratio b. Inventory turnover ratio C Earnings per share d. Asset turnover ratio QUESTION 7 Turnover ratios differ from the current and quick ratios in that they a. are based on working caiptal instead of cash. b. are based on a point of time instead of a period of time. Care activity ratios. d. measure the profitability of a company instead of its liquidity. QUESTION 8 The operating cycle of a manufacturer is the length of time between the a. purchase of raw materials and the sale of the goods. b. sale of the goods and the collection of any outstanding receivables from the sale of the product. purchase of raw materials and collection of any outstanding receivables from the sale of the product. d. purchase of raw materials and the production of goods. QUESTION 9 The acid-test ratio differs from the current ratio in that it a. represents the amount of cash on hand instead of the amount of working capital. b. excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible nonpayment. C. is a stricter test of a company's ability to pay its current debts as they are due. di signals the need to liquidate marketable securities when it drops below 5 to 1. QUESTION 10 Which profitability ratio requires the use of earnings per share and the current market price? a. Return on common stockholders' equity b. Dividend payout ratio C Dividend yield ratio d. Price/earnings ratio QUESTION 11 Which profitability ratio requires the use of earnings per share in its calculation? a. Pricelearnings ratio b. Return on common stockholders' equity C Dividend yield ratio d. Profit margin QUESTION 12 Which of the following profitability ratios is most useful in indicating the "quality" of a company's earnings? a. Price/earnings ratio b. Gross profit ratio C Dividend payout ratio d. Dividend yield ratio QUESTION 13 Which of the following is considered a profitability ratio? 2. Earnings per share b. Debt-to-equity ratio C. Acid-test ratio d. Inventory turnover ratio QUESTION 14 Return ratios are measures of the relationship between the a. income earned and the investment made in the company by the various groups. b.revenue earned and the total equity of the company. total equity of a company and its cash flows for the period. d. profitability and liquidity aspects of a company. QUESTION 15 A solvency measure that focuses specifically on the extent to which a company relies on outsiders for funds is: a. cash flow from operations to capital expenditures ratio. b. debt service coverage ratio. times interest earned ratio. d. debt to equity ratio. QUESTION 16 Which of the following solvency ratios is the best measure to determine the degree to which a company relies on outsiders for funds? O a. Debt-to-equity ratio b. Times interest earned ratio C. Debt service coverage ratio d. Cash flow from operations to capital expenditures ratio QUESTION 17 Select the term below that most properly satisifes each statement. - A comparison of financial statement items within a single period. A. total assets B. horizontal analysis C. vertical analysis D. net sales - A comparison of financial statement items over a period of time, - When using vertical analysis, accounts on the balance sheet should be stated as a percentage of this amount. When using vertical analysis, accounts on the income statement should be stated as a percentage of this amount. QUESTION 18 Indicate the type of each ratio listed below. - Profit margin ratio A. liquidity ratio B. solvency ratio C. profitability ratio - Price/earnings ratio QUESTION 19 Indicate the type of each ratio listed below. - Earnings per share A. liquidity ratio B. solvency ratio C. profitability ratio . Gross profit QUESTION 20 Indicate the type of each ratio listed below. - Times interest earned ratio A. liquidity ratio B. solvency ratio C. profitability ratio - Return on assets ratio QUESTION 21 Indicate the type of each ratio listed below. - Dividend payout ratio A. liquidity ratio B. solvency ratio C. profitability ratio - Inventory turnover ratio QUESTION 22 Indicate the type of each ratio listed below. . Current ratio A. liquidity ratio B. solvency ratio C. profitability ratio Debt-to-equity ratio QUESTION 23 Select the accounts or amounts that would be used in order to calculate the ratio. (Select all that apply.) Asset Turnover Ratio a. Market price per share b.Net Sales Gross profit d. Average total assets e. Interest expense, net of tax f. Net income 8. Total liabilities Oh. Total assets