Question 1

1. The stockholders' equity to debt ratio is a measure of the corporation's:

   	A.	ability to stimulate the growth of business debt.
   	B.	ability to generate profit.
   	C.	long-term solvency.
   	D.	ability to do all of the other answers.

2 points

Question 2

1. Ratios are simply a way of expressing data as logical relationships within or between financial statements.

   True

   False

2 points

Question 3

1. Public corporations must publish annual financial reports.

   True

   False

2 points

Question 4

1. The following selected data are taken from the Blake Company's accounts:

   Sales in 2012	$714,000
   Cost of goods sold in 2012	432,000
   Accounts receivable, 12/31/12	484,000
   Accounts receivable, 1/1/12	440,000
   Inventory, 1/1/12	260,000
   Inventory, 12/31/12	140,000

   The inventory turnover rate is:

   	A.	1.66
   	B.	2.16
   	C.	3.57
   	D.	1.35

2 points

Question 5

1. The current ratio is computed as total assets divided by total liabilities.

   True

   False

2 points

Question 6

1. The two elements used in determining the rate of return on operating assets are:

   	A.	net operating income and operating assets.
   	B.	net income and turnover of operating assets.
   	C.	net operating income and turnover of operating assets.
   	D.	net income and operating assets.

2 points

Question 7

1. The information gained from an analysis of financial statements has its greatest value in assisting the user in making predictions.

   True

   False

2 points

Question 8

1. Trend percentages are basically a type of:

   	A.	horizontal analysis.
   	B.	vertical analysis.
   	C.	ratio analysis.
   	D.	All of the above answers are incorrect.

2 points

Question 9

1. Expressing the change in net sales from one period to the next in both absolute and percentage terms is an example of horizontal analysis.

   True

   False

2 points

Question 10

1. Earnings per share of common stock is a measure of the per share:

   	A.	profit after taxes.
   	B.	dividend distribution.
   	C.	earnings available to common stockholders.
   	D.	profit before interest and taxes.

2 points

Question 11

1. Outside parties use financial statement analysis for:

   	A.	assessing the results of past management performance.
   	B.	assisting in decisions on investing.
   	C.	assisting in decisions on extending credit.
   	D.	All of the above answers are correct.

2 points

Question 12

1. In evaluating a company, the financial analyst must be alert to the economic climate in which that company operates, the general economic conditions in the country, regional conditions, and conditions in the industry and related industries.

   True

   False

2 points

Question 13

1. The gross margin amounts for Blue Co. were $40,000, $44,000, and $50,000, respectively, for the years 2010 through 2012. If 2010 is the base year for a trend analysis, the appropriate percentages for 2011 and 2012 are:

   	A.	110% and 125%.
   	B.	220% and 250%.
   	C.	10% and 25%.
   	D.	22% and 25%.

2 points

Question 14

1. A company that has favorable financial leverage is using debt or preferred stock to magnify the earnings per share on common stock.

   True

   False

2 points

Question 15

1. One of the most well-known and often-used liquidity ratios is the current ratio.

   True

   False

2 points

Question 16

1. The stockholders' equity to debt ratio is a measure of the corporation's profitability.

   True

   False

2 points

Question 17

1. Trend percentages emphasize changes that have occurred over a period of time.

   True

   False

2 points

Question 18

1. In conducting vertical analysis of an income statement, what element is expressed as 100% so that all others are relative to it?

   	A.	Net sales
   	B.	Gross margin
   	C.	Cost of goods sold
   	D.	Net income

2 points

Question 19

1. The times interest earned ratio reflects the ability of a company to make interest payments.

   True

   False

2 points

Question 20

1. Horizontal analysis and trend percentages are quite similar forms of financial statement analysis.

   True

   False

2 points

Question 21

1. Common-size statements show only period-to-period percentage changes in financial statement items.

   True

   False

2 points

Question 22

1. You are given the following information:

   Income before interest and taxes	$600,000
   Less: Interest expense	(45,000)
   Balance	$555,000
   Less: Taxes (at 40% rate)	(222,000)
   Income after taxes	$333,000
   Less: Preferred dividends	(15,000)
   Income available to common stockholders	$318,000

   The number of times interest was earned is:

   	A.	13.33
   	B.	33.33
   	C.	12.33
   	D.	7.40

2 points

Question 23

1. According to the Grafton Furniture Profit video,which is not one of the 4types of accent chairs Marcus asks Stephan to design?

   	California
   	Florida
   	Midwest
   	Southwest
   	East Coast

2 points

Question 24

1. According to the Grafton Furniture Profit video,what is the approximate gross profit percentage for Grafton furniture when Marcus initially arrives and reviews the financials?

   	70%
   	90%
   	50%
   	25%

2 points

Question 25

1. According to the Grafton Furniture Profit video,when initially surveying the business processes,Marcus discusses the Work-in-Process (WIP) Master List with the employees and determines that:

   	All the WIPson the Master list are at zero.
   	The company keeps adequate WIP records.
   	The company does not have a master list.
   	The company initially sets all projects at 50%complete.

2 points

Question 26

1. According to the Grafton Furniture Profit video,what is the name of the new Quick-ship line of 4chairsthat Marcus pitches to the largest retail buying consumer group in the country?

   	Ready-to-buy
   	American Dream
   	Californian
   	Cuban

2 points

Question 27

1. According to the Grafton Furniture Profit video,in order to prevent future quality issues,Marcus gives Stephan what to mark furniture that meets quality standards and is ready to ship?

   	Green ribbons
   	Approval stamp
   	Pink slips
   	Yellow dots

2 points

Question 28

1. According to the Grafton Furniture Profit video,what is the actual retail price for a Quick ship line,ready-to-buy chair that Grafton quotes a large,nationwide retailer?

   	$495
   	$250
   	$1,700
   	$1,000

2 points

Question 29

1. According to the Grafton Furniture Profit video,how much revenue did Grafton furniture do last year?

   	$1 million
   	$2,448,000
   	$1.5million
   	$500,000

2 points

Question 30

1. According to the Grafton Furniture Profit video,how much profit margin leakage was Grafton furniture experiencing because of inefficiencies like mistakes, do-overs, and poor workflow?

   	20%
   	30%
   	50%
   	70%

2 points

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