QUESTION 1
The accounts receivable turnover ratio measures (select the best answer):
A. how rapidly a company pays its obligations.
B. how rapidly the accounts receivable are collected.
C. how rapidly uncollectible accounts are written off.
D. The other answers are all incorrect.
QUESTION 2
Trend percentages:
A. are used to compare financial information over time to a base year.
B. are applied to an income statement to obtain a percentage comparison of each element to net sales.
C. are especially useful in examining trends when base year amounts are negative or zero.
D. point out which items in a base year statement need further investigation.
QUESTION 3
The following selected data are taken from the Blake Company's accounts:
|
Sales in 2012
|
$714,000
|
|
Cost of goods sold in 2012
|
432,000
|
|
Accounts receivable, 12/31/12
|
484,000
|
|
Accounts receivable, 1/1/12
|
440,000
|
|
Inventory, 1/1/12
|
260,000
|
|
Inventory, 12/31/12
|
140,000
|
The inventory turnover rate is:
A. 2.16
B. 1.35
C. 1.66
D. 3.57
QUESTION 4
Assuming relatively stable business conditions, a decline in the average number of day's sales in accounts receivable outstanding from one year to the next might indicate:
A. a stiffening of the company's credit policies.
B. a significant decrease in sales in the second year.
C. a longer discount period and a more distant due date were extended to customers in the second year.
D. that the second year's sales were made at lower prices than the first year's sales.
QUESTION 5
Horizontal analysis and trend percentages are quite similar forms of financial statement analysis.
True
False
QUESTION 6
The two elements used in determining the rate of return on operating assets are:
A. net income and turnover of operating assets.
B. net operating income and operating assets.
C. net income and operating assets.
D. net operating income and turnover of operating assets.
QUESTION 7
Percentages in financial analysis are useful for comparison purposes, but actual dollar amounts are often necessary to make financial judgments.
True
False
QUESTION 8
In evaluating a company, the financial analyst must be sure that any data and techniques being used are comparable.
True
False
QUESTION 9
Trend percentages are basically a type of:
A. horizontal analysis.
B. vertical analysis.
C. ratio analysis.
D. All of the above answers are incorrect.
QUESTION 10
The following data are from the Gold Company's August 31, 2013, balance sheet:
|
Accounts payable
|
$280,000
|
Accounts receivable
|
$390,000
|
|
Allowance for
|
Cash
|
48,000
|
|
uncollectible accounts
|
36,000
|
Merchandise inventory
|
800,000
|
|
Bonds payable
|
200,000
|
Prepaid expenses
|
30,000
|
|
Notes receivable
|
|
(due 9/30/13)
|
50,000
|
The acid-test ratio is:
A. 1.4:1
B. 4.6:1
C. 1.6:1
D. .94:1
QUESTION 11
Trend percentages are useful in budgeting for future periods.
True
False
QUESTION 12
Trend percentages emphasize changes that have occurred over a period of time.
True
False
QUESTION 13
Earnings per share of common stock is a measure of the per share:
A. profit after taxes.
B. earnings available to common stockholders.
C. profit before interest and taxes.
D. dividend distribution.
QUESTION 14
You are given the following information:
|
Income before interest and taxes
|
$600,000
|
|
Less: Interest expense
|
(45,000)
|
|
Balance
|
$555,000
|
|
Less: Taxes (at 40% rate)
|
(222,000)
|
|
Income after taxes
|
$333,000
|
|
Less: Preferred dividends
|
(15,000)
|
|
Income available to common stockholders
|
$318,000
|
The number of times interest was earned is:
A. 12.33
B. 13.33
C. 33.33
D. 7.40
QUESTION 15
Common-size statements show only period-to-period percentage changes in financial statement items.
True
False
QUESTION 16
The current ratio is computed as total assets divided by total liabilities.
True
False
QUESTION 17
You are given the following information:
|
Income before interest expense and taxes
|
$500,000
|
|
Less: Interest expense
|
40,000
|
|
Income before federal income taxes
|
$460,000
|
|
Less: Taxes (at 40% rate)
|
184,000
|
|
Net income
|
$276,000
|
|
Less: Preferred dividends
|
30,000
|
|
Earnings available for common stockholders
|
$246,000
|
The number of times the interest is earned is:
A. 4.6
B. 12.5
C. 11.5
D. 25.5
QUESTION 18
Comparative financial statements are statements in which figures for a single company are presented for each of two or more periods.
True
False
QUESTION 19
You are given the following information:
|
Income before interest and taxes
|
$1,400,000
|
|
Less: Interest expense
|
(200,000)
|
|
Balance
|
$1,200,000
|
|
Less: Taxes (at 40% rate)
|
(480,000)
|
|
Income after taxes
|
$ 720,000
|
|
Less: Preferred dividends
|
(180,000)
|
|
Income available to common stockholders
|
$ 540,000
|
The number of times interest was earned is:
A. 3.60 times
B. 6.00 times
C. 2.70 times
D. 7.00 times
QUESTION 20
In conducting vertical analysis of an income statement, what element is expressed as 100% so that all others are relative to it?
A. Cost of goods sold
B. Net sales
C. Gross margin
D. Net income
QUESTION 21
Expressing the change in net sales from one period to the next in both absolute and percentage terms is an example of horizontal analysis.
True
False
QUESTION 22
The stockholders' equity to debt ratio is a measure of the corporation's profitability.
True
False
QUESTION 23
According to the Grafton Furniture Profit video, Marcus states that "Efficiency is labor, labor is money, money is ________." The correct word to fill-in the blank is:
profit
net income
margin
awesome
QUESTION 24
According to the Grafton Furniture Profit video, how much does Marcus offer in exchange for 45% ownership in the business?
$1 million
$2,448,000
$1.5 million
$500,000
QUESTION 25
According to the Grafton Furniture Profit video, third generation businesses have what fail rate according to Marcus?
30%
70%
60%
90%
QUESTION 26
According to the Grafton Furniture Profit video, in order to prevent future quality issues, Marcus gives Stephan what to mark furniture that meets quality standards and is ready to ship?
Green ribbons
Approval stamp
Pink slips
Yellow dots
QUESTION 27
According to the Grafton Furniture Profit video, how much profit margin leakage was Grafton furniture experiencing because of inefficiencies like mistakes, do-overs, and poor workflow?
20%
30%
50%
70%
QUESTION 28
According to the Grafton Furniture Profit video, which is not one of the 4 types of accent chairs Marcus asks Stephan to design?
California
Florida
Midwest
Southwest
East Coast
QUESTION 29
According to the Grafton Furniture Profit video, how much revenue did Grafton furniture do last year?
$1 million
$2,448,000
$1.5 million
$500,000
QUESTION 30
According to the Grafton Furniture Profit video, how much does Marcus estimate that he spent to renovate Grafton furniture including the costs of the new roof, air conditioner, design center, and employee lunch room?
$150,000
$1,000,000
$500,000
$700,000