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Which of the measures below is used to assess profitability?


A) Current ratio
B) Debt-to-assets ratio
C) Asset turnover
D) Receivables turnover

E) All of the above
F) B) and C)

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The following information is available for a company for the current year: Net Sales Revenue $ 345,000 Cost of Goods Sold 205,000 Average Accounts Receivable 32,500 Average Inventory 9,450 Average Net Fixed Assets 81,250 Average Total Assets 130,000 Required: Part a.Calculate the receivables turnover ratio for the current year. Part b.Calculate the days to collect for the current year. Part c.Calculate the inventory turnover ratio for the current year. Part d.Calculate the days to sell for the current year. Round all ratios to two decimal points.

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Part a
Receivables turnover ratio = Net ...

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Which of the following ratios is used to evaluate solvency?


A) Earnings per share (EPS)
B) Fixed asset turnover
C) Debt-to-assets
D) Current ratio

E) A) and C)
F) A) and B)

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Which of the following is calculated by dividing net revenue by average net fixed assets?


A) Net profit margin
B) Fixed asset turnover
C) Total asset turnover
D) Current ratio

E) B) and D)
F) All of the above

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Listed below are the current ratios of four different companies.Based on these current ratios,which company is in the most liquid position?


A) 2.0
B) 1.8
C) 2.5
D) 2.1

E) A) and B)
F) None of the above

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Dearborn Company has earnings per share of $2.40,it paid a dividend of $1.00 per share,and the market price of the company's stock is $90 per share.The price/earnings ratio is closest to:


A) 37.50.
B) 64.29.
C) 2.40.
D) 2.00.

E) None of the above
F) A) and D)

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If the debt-to-assets ratio is 0.73,it means that 73% of the company's financing has been provided by stockholders' equity.

A) True
B) False

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At the end of last year,Ace Company had total assets in the amount of $6,000,000 and total liabilities in the amount of $4,000,000.The company issued shares to new stockholders at the beginning of the current year for $1,000,000.As a direct result of this transaction,the:


A) debt-to-assets ratio will increase.
B) debt-to-assets ratio will decrease.
C) net profit margin ratio will increase.
D) net profit margin ratio will decrease.

E) A) and B)
F) All of the above

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Tilden Industries reported net sales revenue of $1,700,000 and paid no dividends during the current year.The following information is also available at the end of the current and prior years: Current Year Prior Year Total Current Assets $1,000,000 $ 900,000 Property,Plant,and Equipment,Net 1,700,000 1,400,000 Total Current Liabilities 450,000 390,000 Total Long-Term Liabilities 600,000 500,000 Common Stock,$5 Par 1,000,000 1,000,000 Paid-In Capital in Excess of Par 200,000 200,000 Retained Earnings 450,000 210,000 There was no preferred stock outstanding during the current year. Required: Part a.Calculate the return on equity for the current year. Part b.Calculate the debt-to-assets ratio for the current year. Part c.Calculate the fixed asset turnover ratio for the current year. Part d.Calculate the current ratio for the current year. Round all ratios to two decimal points.

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Part a
Average common stockholders' equi...

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Which of the following measures would assist in assessing the liquidity of a company?


A) Return on equity
B) Fixed asset turnover ratio
C) Receivables turnover ratio
D) Times interest earned

E) A) and C)
F) A) and B)

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Which of the following ratios is used to evaluate solvency?


A) Fixed asset turnover ratio
B) Days to sell ratio
C) Current ratio
D) Times interest earned

E) A) and D)
F) A) and C)

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A trend analysis to determine a year-to-year dollar amount change is calculated by subtracting the:


A) previous period amount from the current amount.
B) current period amount from the previous period amount.
C) current period amount from the previous period amount and then dividing the result by the previous period amount.
D) previous period amount from the current period amount and then dividing the result by the current period amount.

E) A) and D)
F) A) and C)

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Which of the following will increase earnings per share?


A) A ten percent increase in net income and a ten percent increase in the average number of shares of common stock outstanding
B) A ten percent decrease in net income and a ten percent increase in the average number of shares of common stock outstanding
C) A ten percent increase in net income and a ten percent decrease in the average number of shares of common stock outstanding
D) A ten percent decrease in net income and a ten percent decrease in the average number of shares of common stock outstanding

E) None of the above
F) A) and B)

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Which ratio is a test of liquidity?


A) Net profit margin
B) Inventory turnover
C) Times interest earned
D) Debt-to-assets

E) None of the above
F) B) and C)

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Cost of goods sold divided by average inventory is the calculation for which of the following ratios?


A) Net profit margin ratio
B) Current ratio
C) Inventory turnover ratio
D) Fixed asset turnover ratio

E) None of the above
F) B) and C)

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Willow Manufacturing had net Accounts Receivable of $600,000 at the beginning of the year and $740,000 at the end of the year.Net Sales Revenue for 2019 was $5,200,000.What is the days to collect from customers?


A) 60.00
B) 42.12
C) 51.94
D) 47.03

E) B) and C)
F) B) and D)

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Cleveland Co.'s price/earnings ratio is 15.3.Its closest competitor,Walt,Inc.has a Price/Earnings ratio of 9.4.Which of the following would not be a valid conclusion to draw from a comparison of the two companies' Price/Earnings ratios?


A) Cleveland Co.'s stock is overpriced.
B) Investors believe Cleveland Co.has a brighter future than Walt,Inc.
C) Cleveland has been more profitable than Walt,Inc.
D) The stock price of Cleveland Co.has been bid up due to rumors of a merger.

E) None of the above
F) B) and D)

Correct Answer

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Fullerton Co.has the following information from its accounting records: Fullerton Co.has the following information from its accounting records: If Fullerton uses cash of $10,000 to pay a current liability,its: A) current ratio increases and its debt-to-assets ratio increases. B) current ratio increases and its debt-to-assets ratio decreases. C) current ratio decreases and its debt-to-assets ratio increases. D) current ratio decreases and its debt-to-assets ratio decreases. If Fullerton uses cash of $10,000 to pay a current liability,its:


A) current ratio increases and its debt-to-assets ratio increases.
B) current ratio increases and its debt-to-assets ratio decreases.
C) current ratio decreases and its debt-to-assets ratio increases.
D) current ratio decreases and its debt-to-assets ratio decreases.

E) A) and B)
F) A) and C)

Correct Answer

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If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?


A) Liquidity
B) Market share
C) Profitability
D) Solvency

E) A) and D)
F) None of the above

Correct Answer

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Ratio analysis:


A) is required by GAAP as part of every company's income statement and balance sheet.
B) will always identify the best investment decision.
C) will tell you how a company will perform in the future.
D) allows you to evaluate how well a company has performed relative to other different-sized companies within the same industry.

E) A) and B)
F) A) and C)

Correct Answer

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