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116. Financial statement analysis: A. Is the application of analytical tools to general-purpose financial statements and related data for making business decisions and helps users to make better decisions. B. Lessens the need for expert judgment. C. Helps users to make better decisions. D. Is the application of analytical tools to general-purpose financial statements.
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86. Decision makers and other users of financial statements are especially interested in evaluating a company's ability to use its assets in generating sales. 87. Total asset turnover is calculated by dividing average total assets by net sales. 88. Houston Co. had net sales of $186,000 and average total assets of $173,000..
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  151. Lottery Corp had a market price of $56.50, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio was: A. 3.1. B. 45.2. C. 48.6. D. 49.3. E. 51.2 152. The debt ratio is used to: A. Measure the relationship of equity to debt. B. Describe the risk associated with a company's debts. C..
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  196. Total asset turnover is calculated by dividing: A. Gross sales by average total assets. B. Net sales by average total assets. C. Average total assets by gross sales. D. Average total assets by net sales. E. Net accounts receivables by total assets. 197. CrossSport had average total assets of $697,000. Its gross sales were $3,090,000.
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  166. The quick assets are: A. Cash, short-term investments, prepaid expenses. B. Cash, short-term investments, accounts receivable. C. Cash, inventory, accounts receivable. D. Cash, accounts receivable, prepaid expenses. E. Accounts receivable, inventory, prepaid expenses. 167. Macie's quick assets were $5 million. Its current assets were $11 million. Its current liabilities were $8 million. The acid-test ratio.
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  131. Analytical tools comparing a company's financial condition and performance across time are: A. Horizontal analysis. B. Vertical analysis. C. Ratio analysis. D. Financial analysis. E. Investment analysis. 132. Tools using key relationships among financial statement items are: A. Financial analysis. B. Horizontal analysis. C. Investment analysis. D. Ratio analysis. E. Vertical analysis. 133. Tools comparing a company's financial condition and performance.
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  191. Sonie had average accounts receivable of $87 million and net sales of $864 million. Its accounts receivable turnover was: A. 10.3. B. 9.9. C. 36.1. D. 9.1. E. 12.8. 192. Sonie's accounts receivable turnover was 5.7 for this year and 5.4 for last year. Aple's accounts receivable turnover was 6.8 for this year and 7.
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91. The times interest earned formula is calculated by multiplying income by the interest rate on a company's debt. 92. The times interest earned ratio is calculated by dividing income before interest and income taxes by interest expense. 93. When the times interest earned ratio falls below 1.5, the default rate on.
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76. The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and multiplying the answer by 365. 77. A company must have less than 30 days' sales uncollected in order to have enough liquidity. 78. TSN had $12,000 in accounts receivable and $320,000 in net sales for the.
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233. Z-Caliber had income before interest and income tax expense of $125,000. Its interest expense was $65,000. Calculate the times interest earned ratio. 234. Tri-World had income before interest and income tax expense of $129,000. Its interest expense was $67,000. Calculate the times interest earned ratio. 235. Polka Dot Inc. has 300,000.
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  161. Bobbytronics had $7,000,000 in net income for the year. Its sales were $11,200,000. Calculate the profit margin. A. 17.5%. B. 62.5%. C. $34 million. D. $4.2 million. E. 28%. 162. FastForward had $3,000 of net income for October. Total revenues were $10,000. Calculate the profit margin. A. 30%. B. $7,000. C. 15%. D. $1,500. E. 45%. 163. The current ratio: A. Is.
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225. In the current year, Pear Co. had total assets of $250,000 and liabilities of $100,000. Calculate the debt ratio. 226. Montgomery Marketing had assets of $275,000; liabilities of $175,000; and owner's equity of $100,000. Calculate the debt ratio. 227. Saucony's net income was $800,000; its net assets were $2,050,000; and its.
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51. The current ratio is calculated by dividing current liabilities by current assets. 52. Chicago's Best has current assets of $100 million and current liabilities of $50 million. Its current ratio is .63 to 1. 53. Maggis has current assets of $19,000 and current liabilities of $9,500. Its current ratio is 1.6.
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331. Accounts receivable turnover is calculated by dividing ______________ by __________________. 332. The formula for calculating total asset turnover is ___________________. 333. ______________________ is the annual amount of cash dividends per share distributed to common shareholders relative to the stock's market price. 334. Return on total assets is calculated by dividing _____________ by.
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  201. If the times interest earned ratio: A. Increases, risk increases. B. Is under 1.5, risk decreases. C. Is over 1.5, risk increases. D. Increases, risk decreases. E. Increases and/or is under 1.5, risk decreases. 202. CrossSports had interest expense of $12,000 and its income before interest and income taxes was $28,000. Its times interest earned.
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  211. Firms with an accounts payable turnover rate that is faster than the industry norm are: A. Paying creditors faster than the norm. B. Paying creditors faster than the norm and managing their payments to suppliers well. C. In financial difficulty. D. Managing their payments to suppliers well. E. Paying creditors faster than the norm.
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  206. The dividend yield is calculated by: A. Dividing cash dividends per share by earnings per share. B. Dividing earnings per share by cash dividends per share. C. Dividing cash dividends per share by the market price per share. D. Dividing the market price per share by cash dividends per share. E. Dividing cash dividends.
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  121. Financial reporting refers to: A. The communication of relevant financial information to decision makers. B. The application of analytical tools to general-purpose financial statements. C. Financial statements only. D. Ratio analysis. E. The application of analytical tools to general-purpose financial statements and ratio analysis. 122. The ability to meet short-term obligations and to efficiently generate.
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81. A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy. 82. Accounts receivable turnover is calculated by dividing net sales by average accounts receivable. 83. Showdown Co. had net sales of $680,000 and average accounts receivable of $64,000. Its accounts receivable turnover was.
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  141. Common-size financial statements are useful in: A. Analyzing income statements. B. Analyzing companies of different sizes. C. Alerting users of differences that should be explored and explained. D. Comparing different geographical regions of a company. E. All of these answers are correct. 142. Comparative financial statements in which each amount is expressed as a percentage.
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335. Match each of the following terms with the appropriate definitions. 1. Financial reporting Refers to the availability of resources to meet short-term cash requirements.   2. Efficiency The application of analytical tools to general-purpose financial statements and related data for making business decisions.   3. Financial statement analysis Refers to a company's long-run financial viability and its.
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  176. The merchandise turnover ratio: A. Is used to analyze profitability. B. Is used to measure solvency. C. Depends on the type of inventory valuation method. D. Validates the acid-test ratio. E. Measures how quickly a firm sells its merchandise inventory. 177. Days' sales in inventory: A. Focuses on ending inventory. B. Is a ratio that tells us.
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96. Dividend yield is calculated by dividing annual cash dividends per common share by earnings per share. 97. Dividend yield is calculated by dividing annual cash dividends per common share by the market price per share. 98. GAP's earnings per share is $3.11. Its common dividend is $.36 per share and its.
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  216. The pledged assets to secured liabilities ratio: A. Is calculated by dividing book value of secured liabilities by book value of pledged assets. B. Can be calculated from the book value of assets and liabilities. C. Is not relevant to secured creditors. D. Can always be calculated from information provided in the financial.
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  126. Comparison standards for financial statement analysis include: A. Intracompany. B. Competition. C. Industry. D. Guidelines. E. All of these answers are correct. 127. Intracompany standards for financial statement analysis: A. Are based on a company's prior performance. B. Are set by competitors. C. Are set by the company's industry. D. Are based on rules of thumb. E. Are based on.
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242. Eoos had $1,189,000 in net income for the year. There were 150,000 common shares outstanding. The market price per share was $23.27. Calculate the price-earnings ratio. 243. Gluten Corporation had net income of $1,718,000. It paid preferred dividends of $65,000. There were 600,000 common shares outstanding. The market price per.
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6. Profitability is the ability to generate future revenues and meet long-term obligations. 7. Liquidity and efficiency are considered to be building blocks of financial statement analysis. 8. Evaluation of company performance includes (1) past and current performance, (2) current financial position, and (3) future performance and risk. 9. The four building blocks.
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  171. The gross margin ratio: A. Measures a merchandising firm's ability to earn a profit from the sale of inventory. B. Is also called the profit margin ratio. C. Is also called the gross profit ratio. D. Measures a merchandising firm's ability to earn a profit from the sale of inventory and is also.
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2. Financial statement analysis lessens the need for expert judgment. 3. External users of accounting information are often directly involved in running a company. 4. The purpose of financial statement analysis for internal users is to provide information helpful in improving the company's efficiency or effectiveness in providing products or services. 5. A.
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  156. Bob's Burgers has total assets of $425 million. Its total liabilities are $100 million. Its equity is $285 million. Calculate the debt ratio. A. 35.1% B. 23.5% C. 38.5% D. 28.5% E. 58.8% 157. Which of the following statements is false when describing the debt ratio? A. It is of use to both internal and external.
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11. Financial analysis refers to the communication of relevant financial information to decision makers. 12. Standards for comparison of performance are necessary when making judgments about a company's performance. 13. Standards for comparison for interpreting financial statement analysis include: intracompany, credit standing, and industry. 14. Analysis measures taken from a selected competitor or.
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56. Quick assets include cash, inventory, and receivables. 57. The acid-test ratio is current assets divided by current liabilities. 58. The acid-test ratio is a more accurate measure of a company's liquidity than the current ratio. 59. The common rule of thumb is that a company's acid-test ratio should be at least 1.5.
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106. The book value of assets is an accurate measure of current market values. 107. The pledged assets to secured liabilities ratio is calculated by dividing secured liabilities by pledged assets. 108. The pledged assets to secured liabilities measures whether or not the pledged assets of the debtor provide adequate security for.
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  146. Current assets minus current liabilities is called: A. Profit margin. B. Financial leverage. C. Current ratio. D. Working capital. E. Quick assets. 147. Current assets divided by current liabilities is called the: A. Current ratio. B. Quick ratio. C. Working ratio. D. Liquidity ratio. E. Solvency ratio. 148. The average number of times a company's inventory is sold during an accounting.
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230. In October, Target-Mart had $975,000 in net credit sales and $275,000 in accounts receivable. Calculate the days' sales uncollected for October. 231. In April, Stride Rite had $4,875 million in sales and $990 million in accounts receivable. For the same period, Geox had $5,595 million in sales and $834 million.
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111. Profit margin is sales divided by net income. 112. Profit margin reflects the percent of net income in each dollar of net sales. 113. All companies desire a low return on total assets. 114. Brown Company has net income of $125,000. Its net sales were $1,739,000 and its average total assets were.
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  221. Blaise Corporation has net income of $187,000, net sales of $1,496,000 and average total assets of $1,040,000. Its return on total assets was: A. 18.0%. B. 144.0%. C. 12.5%. D. 556.1%. E. 69.5%. 222. Markham Corporation had net income of $1,330,000, net sales of $22,000,000 and average total assets of $5,783,000. Its return on total.
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  136. Trend analysis is also called: A. Trend percent analysis. B. Financial analysis. C. Index number analysis. D. Trend percent analysis and index number analysis. E. Financial analysis and index number analysis. 137. The dollar change for a financial statement is calculated by: A. Subtracting the analysis period amount from the base period amount. B. Subtracting the base.
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  186. Jolly Co. had net sales of $111,500 and accounts receivable of $12,700. Its days' sales uncollected was: A. 11.7. B. 23.3. C. 41.6. D. 42.5. E. 46.6. 187. Hornish Co. had net sales of $5,265 million and accounts receivable of $225 million. Its days' sales uncollected was: A. 2.98. B. 15.6. C. 19.4. D. 81.8. E. 65.2. 188. Accounts receivable turnover.
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71. The days' sales in inventory is calculated by dividing ending inventory by cost of goods sold and multiplying the result by 365. 72. Chicago Company's cost of goods sold was $19,250. Its average merchandise inventory was $4,575. Its merchandise turnover was 4.2. 73. Holding Co. had cost of goods sold of.
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