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Exam 14: Financial Statement Analysis

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Question 1

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Buying inventory in large lots to take advantage of quantity discounts can be responsible for a high inventory turnover ratio.

A) True
B) False

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Question 2

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If a retailer sells a product whose contribution margin equals the gross margin percentage, the gross margin percentage will be unaffected by the transaction.

A) True
B) False

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A company could improve its acid-test ratio by selling some equipment it no longer needs for cash.

As the accounts receivable turnover ratio decreases, the average collection period increases.

The company's return on equity for Year 2 is closest to:

Dilisio Corporation has provided the following data: Required: Compute the inventory turnover for this year:

Sand Company has an acid-test ratio of 0.8.Which of the following actions would improve the acid-test ratio?

The market price of Friden Company's common stock increased from $15 to $18.Earnings per share of common stock remained unchanged.The company's price-earnings ratio would:

The dividend payout ratio is equal to the dividend per share divided by the earnings per share.

The company's price-earnings ratio is closest to:

The company's operating cycle for Year 2 is closest to:

Data from Yochem Corporation's most recent balance sheet appear below: Required: Compute the company's acid-test (quick)ratio.Show your work!

Natcher Corporation's accounts receivable at the end of Year 2 was $126,000 and its accounts receivable at the end of Year 1 was $130,000.The company's inventory at the end of Year 2 was $127,000 and its inventory at the end of Year 1 was $120,000.Sales, all on account, amounted to $1,380,000 in Year 2.Cost of goods sold amounted to $800,000 in Year 2.The company's operating cycle for Year 2 is closest to:

The company's operating cycle for Year 2 is closest to:

Arkin Corporation's total current assets are $290,000, its noncurrent assets are $520,000, its total current liabilities are $210,000, its long-term liabilities are $420,000, and its stockholders' equity is $180,000. Required: Compute the company's working capital.Show your work!

The inventory turnover for Year 2 is closest to:

The company's inventory turnover for Year 2 is closest to:

Data from Estrin Corporation's most recent balance sheet and income statement appear below: The average sale period for this year is closest to:

Valdovinos Corporation has provided the following data: The company's net profit margin percentage is closest to:

The company's debt-to-equity ratio at the end of Year 2 is closest to: