Question 1

Cost of goods sold divided by average inventory is the formula for which of these analytical measures?

Accepted Answer

A)   Number of day's sales in inventory
B)   Return on investment
C)   Inventory turnover
D)   Debt to assets ratioE) A) and C)
F) B) and C)

Question 2

The Martin Company reported net income of $15,000 on gross sales of $80,000. The company has average total assets of $135,000, of which $102,000 is property, plant and equipment. What is the company's return on investment? (Round your final answer to 1 decimal place.)

Accepted Answer

A)   18.8%
B)   11.1%
C)   14.7%
D)   12.5%E) A) and B)
F) C) and D)

Question 3

Which of the following statements about financial statements is incorrect?

Accepted Answer

A)   The net margin ratio is a profitability ratio.
B)   The current ratio is a liquidity ratio.
C)   The debt to assets ratio is a liquidity ratio.
D)   The dividend yield is a stock market ratio.E) A) and D)
F) B) and D)

Question 4

When debt is used to finance the purchase of assets, the term or time span of the debt should always be shorter than the lifespan of the assets.

Accepted Answer

A) True 
 B)False

Question 5

As of December 31, Year 1, Gant Corporation had a current ratio of 1.29, quick ratio of 1.05, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. On January 1, Year 2, Gant purchased merchandise on account for $4,000. Which of the following statements is correct?

Accepted Answer

A)   Gant's current ratio will decrease.
B)   Gant's quick ratio will increase.
C)   Gant's working capital will increase.
D)   Gant's quick ratio will increase and its current ratio will decrease.E) A) and C)
F) C) and D)

Question 6

An analysis procedure that uses percentages to compare each of the parts of an individual statement to a key dollar amount from the financial statements is:

Accepted Answer

A)   Ratio analysis.
B)   Contribution analysis.
C)   Horizontal analysis.
D)   Vertical analysis.E) A) and B)
F) None of the above

Question 7

Starwood Corporation has current assets of $200,000, total current liabilities of $750,000 net credit sales of $1,300,000, beginning accounts receivable of $65,000 and ending accounts receivable of $69,000. What is Starwood's accounts receivable turnover?

Accepted Answer

A)   21.8 times
B)   19.4 times
C)   22.4 times
D)   5.8 timesE) A) and B)
F) C) and D)

Question 8

The study of an individual item or account over several periods in the same financial year or over many years is known as:

Accepted Answer

A)   Liquidity analysis
B)   Ratio analysis
C)   Vertical analysis
D)   Horizontal analysisE) All of the above
F) A) and B)

Exam 9: Financial Statement Analysis

Correct Answer
verified

When debt is used to finance the purchase of assets, the term or time span of the debt should always be shorter than the lifespan of the assets.

Correct Answer
verified

Which of the following statements about financial statements is incorrect?

Correct Answer
verified

Cost of goods sold divided by average inventory is the formula for which of these analytical measures?

Correct Answer
verified

The study of an individual item or account over several periods in the same financial year or over many years is known as:

Correct Answer
verified

The Martin Company reported net income of $15,000 on gross sales of $80,000. The company has average total assets of $135,000, of which $102,000 is property, plant and equipment. What is the company's return on investment? (Round your final answer to 1 decimal place.)

Correct Answer
verified

An analysis procedure that uses percentages to compare each of the parts of an individual statement to a key dollar amount from the financial statements is:

Correct Answer
verified

Starwood Corporation has current assets of $200,000, total current liabilities of $750,000 net credit sales of $1,300,000, beginning accounts receivable of $65,000 and ending accounts receivable of $69,000. What is Starwood's accounts receivable turnover?

Correct Answer
verified

Exam 9: Financial Statement Analysis

Correct AnswerverifiedShow Answer

When debt is used to finance the purchase of assets, the term or time span of the debt should always be shorter than the lifespan of the assets.

Correct AnswerverifiedShow Answer

Which of the following statements about financial statements is incorrect?

Correct AnswerverifiedShow Answer

Cost of goods sold divided by average inventory is the formula for which of these analytical measures?

Correct AnswerverifiedShow Answer

The study of an individual item or account over several periods in the same financial year or over many years is known as:

Correct AnswerverifiedShow Answer

The Martin Company reported net income of $15,000 on gross sales of $80,000. The company has average total assets of $135,000, of which $102,000 is property, plant and equipment. What is the company's return on investment? (Round your final answer to 1 decimal place.)

Correct AnswerverifiedShow Answer

An analysis procedure that uses percentages to compare each of the parts of an individual statement to a key dollar amount from the financial statements is:

Correct AnswerverifiedShow Answer

Starwood Corporation has current assets of $200,000, total current liabilities of $750,000 net credit sales of $1,300,000, beginning accounts receivable of $65,000 and ending accounts receivable of $69,000. What is Starwood's accounts receivable turnover?

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Correct Answer
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verified

Correct Answer
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