Question 1

Sonie had average accounts receivable of $87 million and net sales of $864 million. Its accounts receivable turnover was:

Accepted Answer

A)   12.8.
B)   10.3.
C)   9.9.
D)   36.1.
E)   9.1.F) B) and C)
G) None of the above

Question 2

Standards for comparison for interpreting financial statement analysis include: intracompany, credit standing, and industry.

Accepted Answer

A) True 
 B)False

Question 3

Jolly Co. had net sales of $111,500 and accounts receivable of $12,700. Its days' sales uncollected was:

Accepted Answer

A)   46.6.
B)   11.7.
C)   23.3.
D)   41.6.
E)   42.5.F) B) and E)
G) A) and E)

Question 4

Chilliton's gross profit was $183,750. Its net sales were $247,800. Its gross profit ratio was:

Accepted Answer

A)   4.2%.
B)   $431,550.
C)   13.4%.
D)   74.1%.
E)   $64,050.F) A) and B)
G) A) and C) D

Question 5

TSN had $12,000 in accounts receivable and $320,000 in net sales for the period. Its days' sales uncollected was 13.7 days.

Accepted Answer

A) True 
 B)False

Question 6

The number of days' sales uncollected:

Accepted Answer

A)   Measures a company's ability to pay its bills on time.
B)   Measures a company's debt to income.
C)   Is used to evaluate the liquidity of receivables.
D)   Is calculated by dividing accounts receivable by sales.
E)   Is calculated by dividing sales by accounts receivable.F) A) and B)
G) A) and C)

Question 7

Markham Corporation had profit of $1,330,000, net sales of $22,000,000 and average total assets of $5,783,000. Its return on total assets was:

Accepted Answer

A)   6.0%.
B)   26.3%.
C)   16.5%.
D)   23.0%.
E)   38.0%.F) None of the above
G) C) and D)

Question 8

Marble Corp. paid $.56 in common annual dividends per share. Its earnings per share was $5.20. The market price per share was $30.00. Its dividend yield was:

Accepted Answer

A)   7.1%.
B)   11.4%.
C)   8.75%.
D)   1.9%.
E)   14.0%.F) B) and D)
G) A) and C) D

Question 9

Profit margin is calculated by dividing revenues by profit.

Accepted Answer

A) True 
 B)False

Question 10

Chicago's Best has current assets of $100 million and current liabilities of $50 million. Its current ratio is .63 to 1.

Accepted Answer

A) True 
 B)False

Question 11

The merchandise turnover ratio:

Accepted Answer

A)   Is cost of goods sold divided by ending inventory.
B)   Is calculated by dividing merchandise inventory by cost of goods sold.
C)   Is calculated by dividing cost of goods sold by average merchandise inventory.
D)   Is ending inventory divided by cost of goods sold.
E)   Is cost of goods sold divided by ending inventory times 365.F) None of the above
G) A) and D)

Question 12

Brown Company has profit of $125,000. Its net sales were $1,739,000 and its average total assets were $2,750,000. Its profit margin was 7.2%.

Accepted Answer

A) True 
 B)False

Question 13

Chapter's had net sales of $26,125 million. Its cost of goods sold was $16,022 million. Its profit was $997 million. Its gross profit ratio was:

Accepted Answer

A)   67%.
B)   3.5%.
C)   149.3%.
D)   5.2%.
E)   38.6%.F) All of the above
G) A) and B)

Question 14

External users of accounting information are often directly involved in running a company.

Accepted Answer

A) True 
 B)False

Question 15

The times interest earned formula is calculated by multiplying income by the interest rate on a company's debt.

Accepted Answer

A) True 
 B)False

Question 16

Brown Company has profit of $125,000. Its net sales were $1,739,000 and its average total assets were $2,750,000. Its total asset turnover was 4.5%.

Accepted Answer

A) True 
 B)False

Question 17

In periods of low income, bonds can increase return on equity because of less equity investment.

Accepted Answer

A) True 
 B)False

Question 18

Standards for comparison of performance are necessary when making judgments about a company's performance.

Accepted Answer

A) True 
 B)False  True

Question 19

Return on equity increases when the expected rate of return from new assets is greater than the interest rate on the bonds issued to finance the assets.

Accepted Answer

A) True 
 B)False

Question 20

A high times interest earned ratio means that a company has a high risk from borrowing.

Accepted Answer

A) True 
 B)False

Exam 17: Analyzing Financial Statements

Sonie had average accounts receivable of $87 million and net sales of $864 million. Its accounts receivable turnover was:

Correct AnswerverifiedShow Answer

Standards for comparison for interpreting financial statement analysis include: intracompany, credit standing, and industry.

Correct AnswerverifiedShow Answer

Jolly Co. had net sales of $111,500 and accounts receivable of $12,700. Its days' sales uncollected was:

Correct AnswerverifiedShow Answer

Chilliton's gross profit was $183,750. Its net sales were $247,800. Its gross profit ratio was:

Correct AnswerverifiedD

TSN had $12,000 in accounts receivable and $320,000 in net sales for the period. Its days' sales uncollected was 13.7 days.

Correct AnswerverifiedShow Answer

The number of days' sales uncollected:

Correct AnswerverifiedShow Answer

Markham Corporation had profit of $1,330,000, net sales of $22,000,000 and average total assets of $5,783,000. Its return on total assets was:

Correct AnswerverifiedShow Answer

Marble Corp. paid $.56 in common annual dividends per share. Its earnings per share was $5.20. The market price per share was $30.00. Its dividend yield was:

Correct AnswerverifiedD

Profit margin is calculated by dividing revenues by profit.

Correct AnswerverifiedShow Answer

Chicago's Best has current assets of $100 million and current liabilities of $50 million. Its current ratio is .63 to 1.

Correct AnswerverifiedShow Answer

The merchandise turnover ratio:

Correct AnswerverifiedShow Answer

Brown Company has profit of $125,000. Its net sales were $1,739,000 and its average total assets were $2,750,000. Its profit margin was 7.2%.

Correct AnswerverifiedShow Answer

Chapter's had net sales of $26,125 million. Its cost of goods sold was $16,022 million. Its profit was $997 million. Its gross profit ratio was:

Correct AnswerverifiedShow Answer

External users of accounting information are often directly involved in running a company.

Correct AnswerverifiedShow Answer

The times interest earned formula is calculated by multiplying income by the interest rate on a company's debt.

Correct AnswerverifiedShow Answer

Brown Company has profit of $125,000. Its net sales were $1,739,000 and its average total assets were $2,750,000. Its total asset turnover was 4.5%.

Correct AnswerverifiedShow Answer

In periods of low income, bonds can increase return on equity because of less equity investment.

Correct AnswerverifiedShow Answer

Standards for comparison of performance are necessary when making judgments about a company's performance.

Correct AnswerverifiedTrue

Return on equity increases when the expected rate of return from new assets is greater than the interest rate on the bonds issued to finance the assets.

Correct AnswerverifiedShow Answer

A high times interest earned ratio means that a company has a high risk from borrowing.

Correct AnswerverifiedShow Answer

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