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Sheffield Company has $145,000 of inventory at the beginning of the year and $131,000 at the end of the year.Sales revenue is $1,972,800,cost of goods sold is $1,145,400,and net income is $248,400 for the year.On average,the number of days to sell inventory is approximately:


A) 203 days.
B) 44 days.
C) 61 days.
D) 26 days.

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

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Horizontal analysis involves:


A) Comparing individual financial statement line items with each other to understand the relationships between line items.
B) Comparing individual financial statement line items to some benchmark,typically similar competitors' financial statement line items.
C) Comparing individual financial statement line items over time.
D) Comparing individual financial statement line items that have been arranged horizontally from highest to lowest dollar amounts.

E) A) and B)
F) All of the above

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Melrose Manufacturing has net sales revenue of $624,000,cost of goods sold of $274,560,net income of $95,360,and preferred dividends of $8,000 during the current year.At the beginning of the year,402,400 shares of common stock were outstanding,and,at the end of the year,429,600 shares of common stock were outstanding.A total of 1,000 preferred shares were outstanding throughout the year.The company's earnings per share for the current year is closest to:


A) $1.50.
B) $0.84.
C) $0.21.
D) $0.87.

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

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Which of the following will not improve a company's gross profit percentage?


A) An increase in the sales price.
B) A decrease in the cost of inventory.
C) A decrease in the shipping cost for merchandise purchased.
D) Collecting cash from customers in advance.

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

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Financial statement analysis is useful for:


A) evaluating a company's success in meeting the challenges that it faces.
B) selecting the most appropriate accounting rules to follow.
C) determining the market price of a company's stock.
D) comparing US companies with foreign companies.

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

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The fixed asset turnover ratio is a profitability ratio.

A) True
B) False

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Which of the measures below is used to measure liquidity?


A) Current ratio
B) Debt-to-assets ratio
C) Price รท Earnings ratio
D) Times interest earned

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

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The income statements for Urban Outfits,Inc.are presented below: The income statements for Urban Outfits,Inc.are presented below:    Required: Part a.Prepare a horizontal analysis of the income statement above.Round to the nearest whole percent. Part b.Interpret your analysis.Comment on significant changes. Required: Part a.Prepare a horizontal analysis of the income statement above.Round to the nearest whole percent. Part b.Interpret your analysis.Comment on significant changes.

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Part a
Urban Outfits,Inc.
Income Stateme...

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Larabee Company's stock sells for $20 per share.The company has $160 million in earnings and 500 million outstanding shares.The Price/Earnings ratio for the company is closest to:


A) 62.5.
B) 200.
C) 0.31.
D) 6.4.

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

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Which of the following is calculated by dividing (net income less preferred dividends) by average common stockholders' equity?


A) Return on assets ratio
B) Return on equity ratio
C) Earnings per share
D) Net profit margin ratio

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

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Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?


A) Inventory turnover
B) Current ratio
C) Days to collect ratio
D) Days to sell ratio

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

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Which of the following could indicate bad news?


A) An increase in fixed asset turnover ratio.
B) A decrease in days to sell.
C) A decrease in EPS.
D) A decrease in the debt-to-assets ratio.

E) None of the above
F) All of the above

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Which balance sheet line item has the highest percentage increase from the prior year to the current year? Which balance sheet line item has the highest percentage increase from the prior year to the current year?   A) Inventory B) Cash C) Accounts receivable D) Prepaid insurance


A) Inventory
B) Cash
C) Accounts receivable
D) Prepaid insurance

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

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The debt-to-assets ratio is the:


A) ratio of current liabilities to current assets.
B) ratio of long term liabilities to fixed assets.
C) ratio of total liabilities to total assets.
D) proportion of short-term liabilities to total liabilities.

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

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Which of the following is a profitability ratio?


A) Return on equity
B) Times interest earned
C) Inventory turnover
D) Receivables turnover

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

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To perform a vertical analysis of an income statement,you would divide each line item on the statement by:


A) sales.
B) cost of goods sold.
C) operating expenses.
D) net income.

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

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The primary objective of external financial reporting is to:


A) enhance the ability of the company to acquire financial capital from external sources.
B) accurately provide financial results for tax purposes.
C) comply with external regulations and requirements of government and professional associations.
D) provide useful information to decision makers,especially investors and creditors.

E) A) and C)
F) All of the above

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The ratio that measures the company's ability to meet required interest payments is the:


A) Debt-to-equity ratio.
B) Current ratio.
C) Price/Earnings ratio.
D) Times interest earned ratio.

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

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

A) True
B) False

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The comparative financial statements of Seward,Inc.include the following data: The comparative financial statements of Seward,Inc.include the following data:   The fixed asset turnover ratio for the current year is closest to: A) 1.28. B) 1.24. C) 0.75. D) 1.64. The fixed asset turnover ratio for the current year is closest to:


A) 1.28.
B) 1.24.
C) 0.75.
D) 1.64.

E) A) and D)
F) All of the above

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