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Exam 13: Measuring and Evaluating Financial Performance

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Question 71

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A current ratio of 2.5 means that for every dollar of:

A) accounts payable,there is $2.50 of cash.
B) current liabilities,there is $2.50 of current assets.
C) current assets,there is $2.50 of current liabilities.
D) total liabilities,there is $2.50 of cash.

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

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Question 72

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Special items reported as part of comprehensive income,but not included in net income,might include:

A) gains or losses on foreign currency exchange.
B) interest expense.
C) extraordinary gains and losses.
D) income tax expense.

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

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Question 73

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Which of the following analysis techniques does not pertain to changes over time?

The going-concern assumption is also known as the continuity assumption.

Horizontal analysis is the comparison of a company's financial information to a base amount.

Which of the following is not a profitability ratio?

In a common size income statement,each item on the income statement is expressed as a percentage of:

A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

The ratio that measures the company's ability to meet required interest payments is the:

A share of stock sells for $20.The company has $64 million in earnings and 200 million outstanding shares.The P/E ratio for the company is closest to:

Use the information above to answer the following question.The gross profit percentage for the current year rounded to the nearest whole percent is closest to

Company X has net sales revenue of $436,000,cost of goods sold of $343,000,and all other expenses of $90,000.If interest expense is $10,000 and income tax expense is $1,000,the times interest earned ratio is closest to

Choose the appropriate letter of the financial performance category to match the following financial performance ratio of that category. P - Profitability L - Liquidity S - Solvency _____ Debt to assets ratio _____ Receivables turnover ratio _____ Fixed asset turnover ratio _____ Current ratio _____ Return on equity _____ Price earnings ratio _____ Times interest earned ratio _____ Quick ratio _____ Inventory turnover ratio _____ Earnings per share

If an analyst wants to examine a company's current ability to generate income,which of the following would best be considered?

How competitors calculate depreciation is most likely to affect comparisons between competitors if property,plant and equipment:

Which of the following statements regarding the P/E ratio is not true?

Liquidity measures the ability of a company to meet its current financial obligations.

The debt-to-assets ratio is the:

A decrease in accounts receivable turnover ratio is indicative of:

The higher the times interest earned ratio,the greater the risk of nonpayment of interest.