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Exam 13: Measuring and Evaluating Financial Performance

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Question 41

Multiple Choice

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Which of the following statements is true regarding the relationship of the debt-to-assets ratio and the debt-to-equity ratio?

A) Debt to assets is usually greater than debt to equity.
B) Debt to assets is usually less than debt to equity
C) Debt to assets is usually equal to debt to equity.
D) There is no constant relationship between these two ratios.

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

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Question 42

Multiple Choice

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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:

A) 1.8.
B) 8.3.
C) 6.0.
D) 14.3.

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

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Question 43

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Trend analysis is a form of horizontal analysis.Horizontal analysis is a comparison of the trends in a company's financial information over time.

If an analyst wanted to examine a company's long-run ability to survive,which of the following would best be considered?

Which of the following statements regarding the P/E ratio is not true?

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The gross profit percentage is closest to:

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

The asset turnover ratio is a profitability ratio.The asset turnover ratio is a profitability ratio that indicates the amount of sales revenue generated for each dollar invested in assets.

The following information is available for a company for the current year: Which of the following is closest to the company's days to collect ratio for the current year?

The primary objective of external financial reporting is:

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

Solvency ratio data are primarily concerned with the ability of a company to:

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Common size financial statements are not useful in analyzing companies of different size.Common size analysis provides information by expressing each financial statement amount as a percent of another amount on the same statement.These percentages allow for the comparison of financial statement items between companies of different size.

Which of the following is generally the most useful in analyzing companies of different size?

Which of the following is calculated by dividing net sales by average accounts receivable?

When evaluating its net profit margin for 2015,Coca Cola would most likely use all of the following benchmarks except:

The ratio that measures the percentage of financing from creditors is the:

If EPS (earnings per share)decreases,it must mean that the company's net income has fallen.A decrease in EPS could result from a decrease in net income,an increase in the average number of shares outstanding,or an increase in the average shares proportionally larger than an increase in net income.

The following information is taken from the financial statements of a company for the current year: Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to