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Exam 13: Analyzing Financial Statements

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Question 41

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Bailey Corporation reported the following information for 20A: Bailey's debt/equity ratio was

A) 1.25 or 125 %.
B) 1.0 or 100%.
C) .33 or 33%.
D) 3.0 or 300%.

E) None of the above
F) A) and B)

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Question 42

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A liquidity ratio measures the

A) number of times interest is earned.
B) short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
C) ability of the company to survive over a long period of time.
D) earnings or operating success of a company over a period of time.

E) C) and D)
F) A) and B)

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Question 43

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The following financial data are available for Schultz Company: Compute the following ratios: 1. Return on equity 3. Price/earnings ratio 3. Dividend yield

Solvency is of most interest to:

The quick ratio of a company will always be less than or equal to the current ratio (working capital ratio).

Which of the following accounting ratios considers the importance of cash flows relating to required interest payments?

Calculate C Co's return on equity (ROE) for 2012.

The average days' supply in inventory is computed by dividing the days in the year by the ending balance of inventory.

Indicate the effect of each item on the ratios given below in the following manner: if an item would cause an increase in the ratio, place a check in the + column; if a decrease, place a check in - column and if no change, check the 0 column. Each item is independent of the others.

The ratio that is calculated by dividing cash dividends declared on common shares by net earnings is called the:

Howard Corporation reported a quick ratio of 1.75, current assets of $50,000 and a current (working capital) ratio of 2. (a) The total amount of quick assets was $ _. (b) What is another name for the quick ratio? ________ (c) Describe what type of assets are considered quick assets and give some examples. (d) How does the quick ratio compare to the current ratio?

Profit margin is calculated by dividing

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Which of the following ratios is not a test of solvency?

Calculate C Co's inventory turnover ratio and the days' sales in inventory for 2012.

At the end of 20C, Anderson Corporation reported a return on assets of 16%; net income of $42,000; total assets of $365,000, and total liabilities of $165,000. The financial leverage percent was _.

The Able Company had profit of $47,500 and earnings per share of $3.17 during 20B. On December 31, 20B, the shares had a market price of $18.50 per share. What is Able's price/earnings ratio?

Calculate C Co's receivables turnover ratio and the days' sales in receivables for 2012.

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

Match the characteristic that is reflected best by the indicators. Characteristic A. Solvency B. Global performance C. Market performance D. Profitability E. Liquidity Indicator ____ 1. Working capital ____ 2. Debt/equity ratio ____ 3. Earnings per share ____ 4. Return on assets 5. Current ratio ____ 6. Price/earnings ratio ____ 7. Financial leverage