FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Financial Statements and Ratio Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

Operating profit is ________.

A) gross profit minus operating expenses
B) sales revenue minus cost of goods sold
C) earnings before depreciation and taxes
D) sales revenue minus depreciation expense

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Without adjustment, inflation may tend to cause ________ firms to appear more efficient and profitable than ________ firms.

A) larger; smaller
B) older; newer
C) smaller; larger
D) newer; older

Correct Answer

verified

B

Question 3

True/False

Review LaterAdd Note

Total asset turnover commonly measures the liquidity of a firm's total assets.

Higher the value of the times interest earned ratio, higher is the proportion of the firm's interest income compared to its contractual interest payments.

The ________ ratios are primarily used as measures of return.

Which of the following is true of benchmarking?

________ ratio measures the proportion of total assets financed by the firm's creditors.

Earnings per share results from dividing earnings available for common stockholders by the number of shares of common stock authorized.

A firm with a total asset turnover that is lower than industry standard but with a current ratio that meets industry standard must have excessive ________.

The two basic measures of liquidity are the debt-to-equity ratio and the asset turnover ratio.

Colonial Furniture's net profits before taxes for 2015 totaled $354,000. The company's total retained earnings were $338,000 for 2014 year-end and $389,000 for 2015 year-end. Colonial is subject to a 26 percent tax rate. What was the cash dividend declared by Colonial Furniture in 2015?

The use of the unaudited financial statements for ratio analysis is preferable because it reflects the firm's true financial condition.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -If Dana Dairy Products has credit terms which specify that accounts receivable should be paid in 25 days, the average collection period ________ since 2012. (See Table 3.2)

ABC Corp. extends credit terms of 45 days to its customers. Its credit collection would likely be considered poor if its average collection period was ________.

Which of the following represents a current asset?

Given the following balance sheet, income statement, historical ratios and industry averages, calculate the Pulp, Paper, and Paperboard, Inc. financial ratios for the most recent year. Analyze its overall financial situation for the most recent year. Analyze its overall financial situation from both a cross-sectional and time-series viewpoint. Break your analysis into an evaluation of the firm's liquidity, activity, debt, and profitability. Income Statement Pulp, Paper, and Paperboard, Inc. For the Year Ended December 31, 2013 Balance Sheet Pulp, Paper, and Paperboard, Inc. December 31, 2013 Historical and Industry Average Ratios Pulp, Paper and Paperboard, Inc.

Cross-sectional ratio analysis is used to ________.

As the financial leverage multiplier increases, this may result in ________.

________ measures the overall effectiveness of management in generating profits with its available assets.

The magnification of risk and return introduced through the use of fixed-cost financing, such as debt and preferred stock is called financial leverage.