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Exam 9: Analyzing Financial Statements

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Question 51

Multiple Choice

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Ratios that measure solvency include

A) Pledged assets to secured liabilities
B) Current ratio
C) Times interest earned
D) Total asset turnover
E) Both pledged assets to secured liabilities and times interest earned

F) B) and D)
G) A) and D)

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Question 52

Multiple Choice

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The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the

A) Dividend payout ratio
B) Dividend yield
C) Price-earnings ratio
D) Current yield
E) Earnings per share

F) D) and E)
G) A) and E)

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Question 53

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Explain the gross margin ratio and discuss its use as an indicator of profitability.

The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings,dividends,and opportunities.

Calculate percentages of increase and decrease for the following items (round to nearest percentage):

Using the following information,calculate the gross profit ratio for each of the following situations:

What is the purpose of the days' sales uncollected ratio?

Wonka Co.had cost of goods sold of $4,000 million,beginning inventory of $2,500 million and ending inventory of $1,500 million.The days' sales in inventory is

Describe vertical financial statement analysis.

The larger the times interest earned ratio,the greater the risk a company incurs.

Macie's quick assets were $5 million.Its current assets were $11 million.Its current liabilities were $8 million.The acid-test ratio is

Calculate the percentages of increase and decrease for the following items (round to nearest percentage): $\begin{array}{|l|r|r|}\hline & \mathbf{2 0 2 1} & \mathbf{2 0 2 0} \\\hline \text { Cash } & \$ 80,000 & \$ 90,000 \\\hline \text { Accounts Receivable } & 156,000 & 85,000 \\\hline \text { Merchandise inventory } & 435,000 & 375,000 \\\hline \text { Equipment } & 1,420,500 & 1,450,000 \\\hline \text { Bonds payable } & 410,000 & 520,000 \\\hline \text { Retained earnings } & 295,000 & 285,000\\\hline\end{array}$

Selected balances from Kundun Corporation's records are as follows: Use the information presented above to calculate the following for year 2: (A)Merchandise turnover.(B)Days' sales in inventory.(C)Profit margin.(D)Return on total assets.

Which of the following statements is false when describing the debt ratio?

Dividend yield measures

The book value of assets is an accurate measure of current market values.

Accounts receivable turnover is calculated by

The book value of a firm's total assets is $550,000 and it has pledged $500,000 of those assets to secure a loan of $450,000.The firm's total liabilities are $425,000.The pledged assets to secured liabilities is

Classic Winery had profit of $39,500,net sales of $285,000,and average total assets of $185,700.Its profit margin and total asset turnover were

The following information refers to Annie's Attic and competitors in the antiques business.