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Exam 13: Analyzing Financial Statements

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Question 61

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Financial statement analysis is very precise and does not involve judgment.

A) True
B) False

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Question 62

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The debt-to-equity ratio is a risk measure used by both investors and lenders.

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B) False

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Question 63

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A company that has a high level of inventory and other assets above its investment in property, plant, and equipment should calculate the total asset turnover ratio in addition to the fixed asset turnover ratio.

Which of the following transactions decreases earnings per share?

Which of the following transactions would increase the current ratio of a company if the ratio is currently greater than 1?

A company with a high amount of inventory will have a much lower fixed asset turnover ratio when compared to its total asset turnover ratio.

Lucas Company has provided the following information: • Cash flow from operating activities, $360,000 • Net income, $306,000 • Interest expense, $30,000 • Interest cash payments, $20,000 • Income tax payments, $240,000 • Income tax expense, $246,000 What was Lucas' cash coverage ratio?

Lucas Company has provided the following information: • Cash flow from operating activities, $360,000 • Net income, $306,000 • Interest expense, $30,000 • Interest cash payments, $20,000 • Income tax payments, $240,000 • Income tax expense, $246,000 What was Lucas' times interest earned ratio?

Lucas Company has provided the following information: • Cash flow from operating activities, $360,000 • Net income, $306,000 • Interest expense, $30,000 • Interest cash payments, $20,000 • Income tax payments, $240,000 • Income tax expense, $246,000 What was Lucas' quality of income ratio?

Agnes Company reported the following data: $\begin{array} { l r } \text { Quick assets } & \$ 55,000 \\\text { Current assets } & 150,000 \\\text { Total liabilities } & 300,000 \\\text { Average net receivables } & 12,600 \\\text { Beginning inventory } & 38,000 \\\text { Long-term liabilities } & 200,000 \\\text { Net credit sales } & 126,000 \\\text { Cost of goods sold } & 84,000 \\\text { Ending inventory } & 46,000\end{array}$ What was the average days' supply in inventory?