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Mixed Quiz
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1
A company with a high debt-to-equity ratio and a low times-interest-earned ratio has low financial risk.
A)True
B)False
2
If sales for 2011 and 2010 were $924,000 and $800,000, respectively, then the percentage change shown in a horizontal analysis would be:
A)15.5%
B)13.4%
C)(15.5%)
D)8%
3
If a company's income statement showed net sales equal to $780,000, gross margin of $390,000, and net income of $97,500, then a vertical analysis of the income statement would show a percentage figure for net income equal to:
A)100%
B)25%
C)12.5%
D)15.0%
4
Which of the following ratios would be LEAST helpful in determining if your level of debt was too high?
A)Current ratio
B)Days in the collection period
C)Times interest earned
D)Debt to equity ratio
5
Which of the following ratios would be MOST helpful in determining if your sales price is too low given your costs?
A)Current ratio
B)Days in the collection period
C)Inventory turnover
D)Gross Margin
6
Which of the following ratios would be MOST helpful in determining if you have slow-moving or obsolete items held for sale?
A)Asset turnover
B)Return on equity
C)Inventory turnover
D)Earnings per share
7
Which of the following ratios helps you know if your customers are complying with your credit policy?
A)Receivable turnover
B)Operating margin
C)Cash flow per share
D)gross margin
8
Which ratio would typically be the lowest assuming that return on assets is higher than average interest rate?
A)Return on assets
B)Gross Margin
C)Return on equity
D)These would all be about the same
9
Gopher Industries gathered the following year-end data (in thousands) for 2011 and 2010:

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The return on equity for 2011 was:
A)16.78%
B)19.35%
C)22.86%
D)12%
10
Gopher Industries gathered the following year-end data (in thousands) for 2011 and 2010:

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The gross margin for 2011 was:
A)14.12%
B)32%
C)44.12%
D)52.45%
11
Gopher Industries gathered the following year-end data (in thousands) for 2011 and 2010:

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The asset turnover ratio for 2011 was:
A).6148
B).5862
C).6464
D).5572
12
California Company reported total stockholders' equity of $1,500,000 at December 31, 2011. In addition, there were 160,000 shares of common stock and zero shares of preferred stock outstanding for the entire year. During 2011, California earned net income equal to $200,000, which included deductions of $14,000 for interest and $30,000 for income taxes. Total dividends declared and paid to common stockholders during the year were $120,000. The company's statement of cash flows showed $130,000 in net cash inflows from operating activities, and its stock was selling for $34 per share on December 31, 2011.

The times interest earned ratio was:
A)17.43
B)14.29
C)16.43
D)12.44
13
California Company reported total stockholders' equity of $1,500,000 at December 31, 2011. In addition, there were 160,000 shares of common stock and zero shares of preferred stock outstanding for the entire year. During 2011, California earned net income equal to $200,000, which included deductions of $14,000 for interest and $30,000 for income taxes. Total dividends declared and paid to common stockholders during the year were $120,000. The company's statement of cash flows showed $130,000 in net cash inflows from operating activities, and its stock was selling for $34 per share on December 31, 2011.

The price-earnings ratio at the end of 2011 was:
A)41.98
B)27.2
C)22.7
D)45.33
14
California Company reported total stockholders' equity of $1,500,000 at December 31, 2011. In addition, there were 160,000 shares of common stock and zero shares of preferred stock outstanding for the entire year. During 2011, California earned net income equal to $200,000, which included deductions of $14,000 for interest and $30,000 for income taxes. Total dividends declared and paid to common stockholders during the year were $120,000. The company's statement of cash flows showed $130,000 in net cash inflows from operating activities, and its stock was selling for $34 per share on December 31, 2011.

The dividend payout ratio was:
A)65%
B)70%
C)60%
D)80%
15
California Company reported total stockholders' equity of $1,500,000 at December 31, 2011. In addition, there were 160,000 shares of common stock and zero shares of preferred stock outstanding for the entire year. During 2011, California earned net income equal to $200,000, which included deductions of $14,000 for interest and $30,000 for income taxes. Total dividends declared and paid to common stockholders during the year were $120,000. The company's statement of cash flows showed $130,000 in net cash inflows from operating activities, and its stock was selling for $34 per share on December 31, 2011.

Which of the following audit opinions indicates that the financial statements of the company are presented fairly except for some specified aspect of the statements.
A)Adverse
B)Qualified
C)Unqualified
D)Disclaimer





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