Which of the following is NOT true of common-size financial statements?

Each income statement item is standardized by dividing it by total assets.

Income statement accounts are represented as percentages of net sales.

Balance sheet accounts are represented as percentages of total assets.

Common-sizing allows for easier comparisons between firms that are of different sizes.

1. Which one of the following statements is FALSE?

   The accounts receivables turnover ratio measures how quickly the firm collects its credit sales.

   One ratio that measures the efficiency of a firm's collection policy is days sales outstanding (DSO).

   The more days that it takes a firm to collect on its receivables, the more efficient the firm is.

   Days sales outstanding is a measure of the time a firm takes to convert its receivables into cash.

Match the financial ratio to its equation.

- A. B. C. D. E. F. G. H. I. J.	Current ratio Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Inventory turnover Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Day's sales outstanding (DSO) Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Fixed asset turnover Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Total debt ratio Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Times interest earned Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Return on assets (ROA) Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Return on equity (ROE) Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	P/E ratio Read Answer Items for Question 6
- A. B. C. D. E. F. G. H. I. J.	Gross profit margin Read Answer Items for Question 6

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1. Flying Penguins Corporation has total current assets of $12,125,000, current liabilities of $5,500,000, and a quick ratio of 0.75. How much inventory does it have?

Norwood Corporation currently has accounts receivable of $1,500,000 on net sales of $7,300,000. What are its days sales outstanding (DSO)?

Lambda Corporation has current liabilities of $450,000, a quick ratio of 1.8, inventory turnover of 5.0 and a current ratio of 3.5. What is the cost of goods sold for Lambda Corporation?

Rockwell Jewelers management announced that the company had net income of $7,631,400 for this year. The company has 2,543,800 shares outstanding, and the year-end stock price is $60.00. What is Rockwells P/E ratio?