Question 1
The stockholders' equity to debt ratio is a measure of the corporation's:
A. ability to stimulate the growth of business debt.
B. ability to generate profit.
C. long-term solvency.
D. ability to do all of the other answers.
Question 2
Ratios are simply a way of expressing data as logical relationships within or between financial statements.
True
False
Question 3
Public corporations must publish annual financial reports.
True
False
Question 4
The following selected data are taken from the Blake Company's accounts:
Sales in 2012 $714,000
Cost of goods sold in 2012 432,000
Accounts receivable, 12/31/12 484,000
Accounts receivable, 1/1/12 440,000
Inventory, 1/1/12 260,000
Inventory, 12/31/12 140,000
The inventory turnover rate is:
A. 1.66
B. 2.16
C. 3.57
D. 1.35
Question 5
The current ratio is computed as total assets divided by total liabilities.
True
False
Question 6
The two elements used in determining the rate of return on operating assets are:
A. net operating income and operating assets.
B. net income and turnover of operating assets.
C. net operating income and turnover of operating assets.
D. net income and operating assets.
Question 7
The information gained from an analysis of financial statements has its greatest value in assisting the user in making predictions.
True
False
Question 8
Trend percentages are basically a type of:
A. horizontal analysis.
B. vertical analysis.
C. ratio analysis.
D. All of the above answers are incorrect.
Question 9
Expressing the change in net sales from one period to the next in both absolute and percentage terms is an example of horizontal analysis.
True
False
Question 10
Earnings per share of common stock is a measure of the per share:
A. profit after taxes.
B. dividend distribution.
C. earnings available to common stockholders.
D. profit before interest and taxes.
Question 11
Outside parties use financial statement analysis for:
A. assessing the results of past management performance.
B. assisting in decisions on investing.
C. assisting in decisions on extending credit.
D. All of the above answers are correct.
Question 12
In evaluating a company, the financial analyst must be alert to the economic climate in which that company operates, the general economic conditions in the country, regional conditions, and conditions in the industry and related industries.
True
False
Question 13
The gross margin amounts for Blue Co. were $40,000, $44,000, and $50,000, respectively, for the years 2010 through 2012. If 2010 is the base year for a trend analysis, the appropriate percentages for 2011 and 2012 are:
A. 110% and 125%.
B. 220% and 250%.
C. 10% and 25%.
D. 22% and 25%.
Question 14
A company that has favorable financial leverage is using debt or preferred stock to magnify the earnings per share on common stock.
True
False
Question 15
One of the most well-known and often-used liquidity ratios is the current ratio.
True
False
Question 16
The stockholders' equity to debt ratio is a measure of the corporation's profitability.
True
False
Question 17
Trend percentages emphasize changes that have occurred over a period of time.
True
False
Question 18
In conducting vertical analysis of an income statement, what element is expressed as 100% so that all others are relative to it?
A. Net sales
B. Gross margin
C. Cost of goods sold
D. Net income
Question 19
The times interest earned ratio reflects the ability of a company to make interest payments.
True
False
Question 20
Horizontal analysis and trend percentages are quite similar forms of financial statement analysis.
True
False
Question 21
Common-size statements show only period-to-period percentage changes in financial statement items.
True
False
Question 22
You are given the following information:
Income before interest and taxes $600,000
Less: Interest expense (45,000)
Balance $555,000
Less: Taxes (at 40% rate) (222,000)
Income after taxes $333,000
Less: Preferred dividends (15,000)
Income available to common stockholders $318,000
The number of times interest was earned is:
A. 13.33
B. 33.33
C. 12.33
D. 7.40
Question 23
According to the Grafton Furniture Profit video, which is not one of the 4 types of accent chairs Marcus asks Stephan to design?
California
Florida
Midwest
Southwest
East Coast
Question 24
According to the Grafton Furniture Profit video, what is the approximate gross profit percentage for Grafton furniture when Marcus initially arrives and reviews the financials?
70%
90%
50%
25%
Question 25
According to the Grafton Furniture Profit video, when initially surveying the business processes, Marcus discusses the Work-in-Process (WIP) Master List with the employees and determines that:
All the WIPs on the Master list are at zero.
The company keeps adequate WIP records.
The company does not have a master list.
The company initially sets all projects at 50% complete.
Question 26
According to the Grafton Furniture Profit video, what is the name of the new Quick-ship line of 4 chairs that Marcus pitches to the largest retail buying consumer group in the country?
Ready-to-buy
American Dream
Californian
Cuban
Question 27
According to the Grafton Furniture Profit video, in order to prevent future quality issues, Marcus gives Stephan what to mark furniture that meets quality standards and is ready to ship?
Green ribbons
Approval stamp
Pink slips
Yellow dots
Question 28
According to the Grafton Furniture Profit video, what is the actual retail price for a Quick ship line, ready-to-buy chair that Grafton quotes a large, nationwide retailer?
$495
$250
$1,700
$1,000
2 points
Question 29
According to the Grafton Furniture Profit video, how much revenue did Grafton furniture do last year?
$1 million
$2,448,000
$1.5 million
$500,000
Question 30
According to the Grafton Furniture Profit video, how much profit margin leakage was Grafton furniture experiencing because of inefficiencies like mistakes, do-overs, and poor workflow?
20%
30%
50%
70%