MGMT Chap 12 HotSeats

2. When using vertical analysis, we express balance sheet items as a percentage of: a. Total assets b. Total liabilities c. Total equity d. Total revenues

a

6. The Sports Zone reports net income of $50,000, net sales of $500,000, and average total assets of $400,000. What is their profit margin? a. 10% b. 80% c. 125% d. 25%

a

1. When using vertical analysis, we express income statement items as a percentage of: a. Net income b. Sales c. Gross profit d. Total assets

b

4. Which of the following is an example of horizontal analysis? a. Comparing operating expenses with sales b. Comparing growth in sales with the growth in cost of goods sold c. Comparing property, plant and equipment with total assets d. Comparing gross profits across companies

b

3. Horizontal analysis examines trends: a.Between companies in the same year b.Between balance sheet accounts in the same year c.For a single company over time d.As a percentage of sales on every financial statement

c

5. The Sports Zone reports net income of $50,000, net sales of $500,000, and average total assets of $400,000. What is their asset turnover? a. 10% b. 10 times c. 1.25 times d. 0.8 times

c

7. The Sports Zone reports net income of $50,000, sales of $500,000, and average assets of $400,000. What is their return on assets? a. 10% b. 80% c. 12.5% d. 25%

c

8. Which of the following would be considered an aggressive accounting practice? a. Writing down inventory due to a decline in inventory value b. Changing from straight line to the double declining balance method of depreciation c. Deciding to remove a loss contingency when the likelihood of an unfavorable decision is probable d. All the above

c