Accounting 240 Quiz 4

What is not a liquidity ratio?

Asset turnover

Short-term creditors are most concerned with ...

Liquidity

What would not be considered an example of a discontinued operation?

Shifting production processes within an operation

13) Salamagundi, Inc. has the following income statement (in millions) for the year ended December 31, 2017: Net sales - $160, Cost of Goods Sold - $100, Gross Profit - $60, Operating Expenses - $40, Net Income - $20. Using vertical analysis, what percentage is assigned to net sales?

100% (Always 100%)

Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $300,000 in 2017. The weighted average number of shares outstanding in 2017 was 400,000 shares. Tito Corporation's common stock is selling for $50 per share on the NASDAQ. Tito Corporation's price-earnings ratio is ...

12 times (2,000,000-300,000=1,700,000 then 1,700,000/400,000=4.25 then 50/4.25)

Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what percentage do 2018 sales represent of the base?

120% (780,000/650,000)

25) Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $300,000 in 2017. The weighted average number of shares outstanding in 2017 was 400,000 shares. Tito Corporation's common stock is selling for $50 per share on the NASDAQ. Tito Corporation's payout ratio for 2017 is ...

15% (300,000/2,000,000)

10) Assume the following sales data for a company: 2018 - $960,000, 2017 - $750,000, 2016 - $600,000. If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

25% ((750,000-600,000)/600,000)

Assume the following sales data for a company: 2018 - $980,000, 2017 - $875,000, 2016 - $700,000. If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

25% ((875,000-700,000)/700,000)

Plane Corporation reported net income $24,000, net sales $400,000, and average assets $600,000 for 2017. What is the 2017 profit margin?

6% (24,000/400,000)

20) Aps Company reported the following on its income statement: Income before income taxes -$420,000, Income tax expense - $120,000, Net Income - $300,000 (Subtract income tax from income). An analysis of the income statement revealed that interest expense was $60,000. Aps Company's times interest earned was ...

8 times ((300,000+60,000+120,000)/60,000)

Bill's Dollar Store had a balance in the accounts receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $6,400,000. The accounts receivable turnover was ...

8.0 times (840,000-760,000)/2 then 800,000/6,400,000

Savory Thymes Inc. had net credit sales of $9,000,000 and cost of goods sold of $5,250,000 for the year. The average inventory for the year amounted to $1,250,000. The average days in inventory during the year was approximately ...

87 days (5,250,000/1,250,000 = 4.2 then 365/4.2)

Vertical analysis is also known as ...

Common size analysis

An income statement would not include ...

Dividends paid

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Income from operations

A comparison with other companies that provides insight into a company's competitive position is most commonly known as which of the following types of comparisons?

Intercompany comparisons

Comparisons of financial data made within a company are called

Intracompany comparisons

Which measure is useful in evaluating the efficiency in managing inventories?

Inventory Turnover, Days in Inventory

A common measure of profitability is the ...

Return on common stockholders' equity

12) In a common size financial statement, which of the following is a given percentage of 100%?

Total assets

Horizontal analysis is also known as ...

Trend analysis

Horizontal analysis of comparative financial statements includes the ...

calculation of dollar amount and percentage changes from financial statements over a period of time, as compared to a base year

A high accounts receivable turnover indicates

customers are making payments quickly

Long-term creditors are usually most interested in evaluating ...

solvency