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Exam 13: Measuring and Evaluating Financial Performance

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Question 1

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A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover.A higher inventory turnover suggests a smaller investment in inventory is required.

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Question 2

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Which of the following factors would not necessarily contribute to a going-concern problem?

A) Excessive reliance on debt financing.
B) Loss of key personnel without comparable replacement.
C) Inadequate maintenance of long-lived assets.
D) Declining profit margins.

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Question 3

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A decrease in accounts receivable turnover ratio is indicative of:

The fixed asset turnover ratio is a measure of the efficiency of a company.Fixed asset turnover ratio = Net sales revenue/Average net fixed assets.This ratio is used to evaluate the efficient use of fixed assets to generate sales revenue.

Which of the following ratios is used to evaluate solvency?

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

Net sales divided by average total assets is the calculation for which of the following ratios?

Company X has net sales revenue of $1,250,000,cost of goods sold of $760,000,and all other expenses of $290,000.The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000.The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000.The return on equity (ROE) ratio is closest to:

Net income divided by Net sales is the calculation for which of the following ratios?

Company X has net sales revenue of $780,000,cost of goods sold of $343,200 and all other expenses of $327,600 for the current year.At the beginning of the year,503,000 shares of common stock were outstanding,and at the end of the year,537,000 shares of common stock were outstanding.The basic EPS for the company is:

On December 31,2014 and 2015,a company had 10,000 shares of common stock outstanding.The following information is also available: Use the information above to answer the following question.The earnings per share at December 31,2015 is closest to:

The following information is taken from the financial statements of a company for the current year: On a common size balance sheet,the percentage that should be shown for current assets is closest to

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

Company X has net sales revenue of $1,250,000,cost of goods sold of $760,000,and all other expenses of $290,000.The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000.The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000.The fixed asset turnover ratio is closest to:

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

A company has a debt to assets ratio of .45 and a return on equity ratio of 10%.If the company then issues common stock,which of the following is a true statement?

An increase in the gross profit percentage indicates that:

If cost of goods sold remains unchanged,an increase in the inventory turnover rate is indicative of:

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

Although the inventory turnover ratio is an important analytical tool for many companies,it would be most crucial for a company that: