Question 1

The ratio that measures how many times a company replenishes its inventory in a year is the:

Accepted Answer

A)   Asset turnover ratio.
B)   Accounts receivable turnover ratio.
C)   Inventory turnover ratio.
D)   Days to collect ratio.E) B) and C)
F) B) and D)

Question 2

Compute the quick ratio.

Accepted Answer

A)   2.0
B)   1.82
C)   .53
D)   91E) C) and D)
F) All of the above

Question 3

A condensed balance sheet for Flynn Company is presented below

Accepted Answer

Prepare a vertical a...

Question 4

Which of the following ratios is used to evaluate solvency?

Accepted Answer

A)   Earnings per share.
B)   Fixed asset turnover.
C)   Debt-to-assets.
D)   Quick ratio.E) All of the above
F) C) and D)

Question 5

Special items such as gains or losses relating to changes in the value of certain balance sheet accounts are reported below the net income line on the income statement.

Accepted Answer

A) True 
 B)False

Question 6

Trend data can be measured in dollar amounts or percentages.

Accepted Answer

A) True 
 B)False

Question 7

Company X has net sales revenue of $436,000, cost of goods sold of $343,000, and all other expenses of $90,000. What is the times interest earned ratio, if interest expense is $10,000 and income tax expense is
$1,000?

Accepted Answer

A)   1.4
B)   .33
C)   1.3
D)   .40E) None of the above
F) A) and B)

Question 8

A current ratio of 2.5 means that for every dollar of:

Accepted Answer

A)   accounts payable, there is $2.50 of cash.
B)   current liabilities, there is $2.50 of current assets.
C)   current assets, there is $2.50 of current liabilities.
D)   total liabilities, there is $2.50 of current liabilities.E) All of the above
F) None of the above

Question 9

The higher the times interest earned ratio, the greater the risk of nonpayment of interest.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following ratios is used to evaluate a company's efficiency in using its assets?

Accepted Answer

A)   Current ratio.
B)   Debt to assets ratio.
C)   Return on equity ratio.
D)   Asset turnover ratio.E) All of the above
F) A) and B)

Question 11

A share of stock sells for $20. The company has $64 million in earnings and 200 million outstanding shares. The P/E ratio for the company is:

Accepted Answer

A)   62.5.
B)   200.
C)   0.31.
D)   6.4.E) B) and C)
F) All of the above

Question 12

The going-concern assumption is also known as the continuity assumption.

Accepted Answer

A) True 
 B)False

Question 13

A company's sales in 2010 are $200,000 and in 2011 sales are $285,000. The percentage change is:

Accepted Answer

A)   42.5%
B)   70%
C)   29.8%
D)   130%E) A) and D)
F) None of the above

Question 14

Although the inventory turnover ratio is an important analytical tool for many companies, it would be most crucial for a company that

Accepted Answer

A)   provides legal services.
B)   sells cell phones and electronic organizers.
C)   manufactures steel.
D)   sells paint.E) B) and C)
F) None of the above

Question 15

A company that has a current ratio less than one cannot cover

Accepted Answer

A)   current liabilities with its current cash flow.
B)   current expenses with its current sales revenue.
C)   expenses with its current revenues.
D)   current liabilities with its current assets.E) None of the above
F) A) and C)

Question 16

To evaluate a company's performance, standards of comparison are required.

Accepted Answer

A) True 
 B)False

Question 17

Compute the asset turnover ratio for the current year.

Accepted Answer

A)   0.50
B)   1.51
C)   1.80
D)   2.00E) None of the above
F) B) and D)

Question 18

What is the fixed asset turnover ratio?

Accepted Answer

A)   2.65
B)   1.72
C)   4.25
D)   3.80E) C) and D)
F) A) and B)

Question 19

What is the company's accounts receivable turnover ratio for the current year?

Accepted Answer

A)   10.62
B)   4.0
C)   4.3
D)   6.31E) None of the above
F) A) and C)

Question 20

The asset turnover ratio is a profitability ratio.

Accepted Answer

A) True 
 B)False

Exam 13: Measuring and Evaluating Financial Performance

What is the fixed asset turnover ratio?

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A company's sales in 2010 are $200,000 and in 2011 sales are $285,000. The percentage change is:

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A share of stock sells for $20. The company has $64 million in earnings and 200 million outstanding shares. The P/E ratio for the company is:

Correct AnswerverifiedShow Answer

Company X has net sales revenue of $436,000, cost of goods sold of $343,000, and all other expenses of $90,000. What is the times interest earned ratio, if interest expense is $10,000 and income tax expense is $1,000?

Correct AnswerverifiedShow Answer

A company that has a current ratio less than one cannot cover

Correct AnswerverifiedShow Answer

Which of the following ratios is used to evaluate solvency?

Correct AnswerverifiedShow Answer

The ratio that measures how many times a company replenishes its inventory in a year is the:

Correct AnswerverifiedShow Answer

Although the inventory turnover ratio is an important analytical tool for many companies, it would be most crucial for a company that

Correct AnswerverifiedShow Answer

To evaluate a company's performance, standards of comparison are required.

Correct AnswerverifiedShow Answer

Trend data can be measured in dollar amounts or percentages.

Correct AnswerverifiedShow Answer

A condensed balance sheet for Flynn Company is presented below

Correct AnswerverifiedPrepare a vertical a...View AnswerShow Answer

The higher the times interest earned ratio, the greater the risk of nonpayment of interest.

Correct AnswerverifiedShow Answer

A current ratio of 2.5 means that for every dollar of:

Correct AnswerverifiedShow Answer

The going-concern assumption is also known as the continuity assumption.

Correct AnswerverifiedShow Answer

Compute the asset turnover ratio for the current year.

Correct AnswerverifiedShow Answer

Special items such as gains or losses relating to changes in the value of certain balance sheet accounts are reported below the net income line on the income statement.

Correct AnswerverifiedShow Answer

What is the company's accounts receivable turnover ratio for the current year?

Correct AnswerverifiedShow Answer

The asset turnover ratio is a profitability ratio.

Correct AnswerverifiedShow Answer

Compute the quick ratio.

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Which of the following ratios is used to evaluate a company's efficiency in using its assets?

Correct AnswerverifiedShow Answer

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Prepare a vertical a...
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