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Exam 13: Measuring and Evaluating Financial Performance

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Question 21

Multiple Choice

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The analysis of a firm's liquidity includes all of the following except,

A) Current ratio.
B) Receivables turnover.
C) Inventory turnover.
D) Fixed Asset turnover.

E) All of the above
F) B) and D)

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Question 22

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

A) Liquidity
B) Market share
C) Profitability
D) Solvency

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

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Question 23

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Both liquidity ratios and solvency ratios measure a company's ability to meet its financial obligations.

If a company's P/E ratio suddenly decreases:

If net income is rising,but both sales and the gross profit percentage remain the same,then:

A current ratio of less than one is not so much of a concern when the company has a:

Let's assume for the year ended February 1,2018,that Rowna Inc reported net income of $2.2 billion on sales of $71.3 billion.If the company's cost of sales that year was $47.3 billion,what was the company's gross profit percentage and net profit margin? If sales were $77.3 billion in the prior year,what was the year-over-year percentage decrease in the most recent year?

The financial information below presents selected information from the financial statements of Pelican Company.Sales revenue in 2018 was $13,700,300. $\begin{array} { | l | r | r | } & 1 / 1 / 18 & \mathbf { 1 2 / 3 1 / 1 8 } \\\hline \text { Accourts receivable } & \$ 4,550,000 & \mathbf { \$ 3 , 8 0 0 , 0 0 0 } \\\hline \text { Total current assets } & \mathbf { 8 } , 700,030 & \mathbf { 8 , 4 8 0 , 1 0 0 } \\\hline \text { Total assets } & 11,100,020 & 10,980,000 \\\hline \text { Total currert liabilities } & 7,200,300 & 7,476,000 \\\hline \text { Total liabilities } & \mathbf { 8 , 4 4 9 , 9 0 0 } & \mathbf { 8 , 2 7 0 , 7 0 0 } \\\hline\end{array}$ A.Receivables turnover assuming all Pelican's sales are made on account. B.Receivables turnover assuming 20% of sales are made as cash sales. C.Current ratio as of December 31,2018. D.Debt-to-assets ratio as of December 31,2018.

For financial information to be useful it $\bold{must}$ possess the following characteristics:

During the current accounting period,revenue from credit sales is $671,000.The accounts receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period.Which of the following statements is true?

Vertical analysis is one means of analyzing change over time.

Which non-financial factor in the following list is most likely to be a cause of a going-concern problem?

If a company's P/E ratio is 24 and the company's EPS is $1.50 then the company's share price is:

Trend data can be measured in dollar amounts or percentages.

Consider the formula used to calculate each of the following financial performance ratios.From the list of financial statement items below,match their letters with the ratio it is used to calculate.Some financial statement items will be used more than once.

$\begin{array}{llcc} \text { Net sales reverue } &\$345,000 \\ \text {Cost of goods sold } &\$205,000\\ \text { Average accourts receivable } &\$32,500\\ \text { Average irventory } &\$9,450\\ \text { Average plart, property ard equipment } &\$81,250\\ \text { Average total assets } &\$130,000\\\end{array}$ -According to the above table.Calculate the company's days to sell ratio for the current year?

Judging only from the ratios given,which of the following clothing wholesalers is least likely to have cash flow problems?

Factors revealed by financial analysis as contributing to going-concern problems include all of the following except,

A times interest earned ratio of 11 means that the company's:

If you wish to examine the relationships among various items reported in one or more of the financial statements,you are most likely to use: