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Exam 13: Measuring and Evaluating Financial Performance

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Question 41

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

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Question 42

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The higher the receivables turnover,the slower accounts receivable are being collected.

A) True
B) False

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Question 43

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

A company has $72,500 of inventory at the beginning of the year and $65,500 at the end of the year.Sales revenue is $986,400,cost of goods sold is $572,700,and net income is $124,200 for the year.The inventory turnover ratio is closest to:

Cotton Products,Inc.prepared its income statement containing the information below.Using vertical analysis,what percentages would apply to cost of sales,gross profit,and interest expense,respectively?

The fixed asset turnover ratio is a profitability ratio.

Which of the following analysis techniques does not pertain to changes over time?

Which of the following will increase earnings per share?

A times interest earned ratio of 11 means that the company's:

Which of the following is not a profitability ratio?

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

Mercedes,Co.has the following quarterly financial information. Required: Part a.Calculate the gross profit percentage for each quarter. Part b.Calculate the net profit margin for each quarter. Part c.Calculate the EPS for each quarter. Part d.Calculate the Price/Earnings ratio at the end of the year. Part e.Evaluate the company's profitability. Round all ratios to two decimal places.

The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.Which of the following would be shown on B.Darin's horizontal analysis when calculating percentage changes from the prior year to the current year?

Which of the following statements about trend analysis is correct?

A company has a debt-to-assets ratio of 0.45 and a return on equity ratio of 10%.If the company then issues additional shares of common stock for cash,which of the following is a correct statement?

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover.

Liquidity measures the ability of a company to meet its current financial obligations.

Which of the following ratios is used to evaluate a company's liquidity?

Kirk Furniture Company had net Accounts Receivable of $750,000 at the beginning of the year and $925,000 at the end of the year.Net Sales Revenue for 2010 was $6,500,000.What is the days to collect from customers?

The following information is available for a company for the current year: 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.