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Exam 16: Financial Statement Analysis

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Question 71

True/False

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A company could improve its acid-test ratio by selling some equipment it no longer needs for cash.

A) True
B) False

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Question 72

Multiple Choice

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Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. (Round your intermediate calculations to 2 decimal places.) The average collection period for Year 2 is closest to:

A) 55.1 days
B) 0.9 days
C) 1.1 days
D) 57.8 days

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

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Question 73

Multiple Choice

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Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The acid-test (quick) ratio at the end of Year 2 is closest to:

Freiman Corporation's most recent balance sheet and income statement appear below: The acid-test (quick) ratio at the end of Year 2 is closest to:

Jester Corporation's most recent income statement appears below: The beginning balance of total assets was $230,000 and the ending balance was $223,000. The return on total assets is closest to:

Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1. Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1. The company's gross margin percentage for Year 2 is closest to:

Laverde Corporation has provided the following data: The company's total asset turnover for Year 2 is closest to:

Accounts receivable turnover will normally decrease as a result of:

Two-Rivers Incorporated (TRI) manufactures a variety of consumer products. The company's founders have run the company for thirty years and are now interested in retiring. Consequently, they are seeking a purchaser, and a group of investors is looking into the acquisition of Two-Rivers Incorporated (TRI). To evaluate its financial stability,Two-Rivers Incorporated(TRI) was requested to provide its latest financial statements and selected financial ratios. Summary information provided byTwo-Rivers Incorporated(TRI) is presented below. Required:a. Calculate the select financial ratios for the fiscal year Year 2.b. Interpret what each of these financial ratios means in terms of Two-Rivers Incorporated's(TRI's) financial stability and operating efficiency.

Tweedle Corporation's most recent balance sheet and income statement appear below: The times interest earned ratio for Year 2 is closest to:

Delfavero Corporation has provided the following data: The company's earnings per share for Year 2 is closest to:

Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The current ratio at the end of Year 2 is closest to:

All other things the same, if the company purchases equipment on credit, this transaction would have no impact on the company's book value per share.

When fixed costs are included in the cost of goods sold, the gross margin percentage should increase and decrease with sales volume.

Kaloi Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $3,500. The market price of common stock at the end of Year 2 was $7.46 per share.Required:a. What is the company's working capital at the end of Year 2?b. What is the company's current ratio at the end of Year 2?c. What is the company's acid-test (quick) ratio at the end of Year 2?d. What is the company's accounts receivable turnover for Year 2?e. What is the company's average collection period for Year 2?f. What is the company's inventory turnover for Year 2?g. What is the company's average sale period for Year 2?h. What is the company's operating cycle for Year 2?i. What is the company's total asset turnover for Year 2?j. What is the company's times interest earned ratio for Year 2?k. What is the company's debt-to-equity ratio at the end of Year 2?l. What is the company's equity multiplier at the end of Year 2?m. What is the company's net profit margin percentage for Year 2?n. What is the company's gross margin percentage for Year 2?o. What is the company's return on total assets for Year 2?p. What is the company's return on equity for Year 2?

Deacon Corporation has provided the following financial data from its balance sheet and income statement: The company's debt-to-equity ratio at the end of Year 2 is closest to:

Which of the following actions would improve a current ratio of 0.8?

Abdool Corporation has provided the following financial data: Required:a. What is the company's working capital at the end of Year 2?b. What is the company's current ratio at the end of Year 2?c. What is the company's acid-test (quick) ratio at the end of Year 2?d. What is the company's accounts receivable turnover for Year 2?e. What is the company's average collection period for Year 2?f. What is the company's inventory turnover for Year 2?g. What is the company's average sale period for Year 2?h. What is the company's operating cycle for Year 2?i. What is the company's total asset turnover for Year 2?

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.The company's average sale period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)

The acid-test ratio is usually greater than the current ratio.