Managerial Accounting Chapter 14 Connect

A company with current assets of $100,000 and current liabilities of $60,000 has a working capital of ______. Multiple choice question. -$120,000 -$80,000 -$40,000 -$160,000

$40,000

The following information pertains to JVL, Inc. All dollar amounts are in thousands. Year 2022 2021 Sales $58,000 $51,000 Gross Margin $17,500 $15,100 Net operating income $3,200 $2,850 Net income $1,750 $1,400 Given this information, the percentage change in net income is ______. Multiple choice question. -25% -20% -59%

- 25%

Select all that apply Which of the following can be limitations of financial statement analysis? Multiple select question. -Comparing financial data across companies that follow the same accounting standards, but different accounting methods -Analyzing companies just based on the financial ratio calculations -Using sources external to the company such as industry average, change in economy and/or change in consumer tastes -Using external sources in addition to financial ratios

- Comparing financial data across companies that follow the same accounting standards, but different accounting methods - Analyzing companies just based on the financial ratio calculations

Analyzing financial ratios is the only way analysts should evaluate a company. True false question. - True - False

- False

When evaluating the financial health and future prospects of a company, users rely on ____ ____ analysis. (Enter only one word per blank.)

- Financial ; Statement

When analysts use a company's financial information to make comparisons, three analytical techniques are widely used. They are dollar and ____ changes on statements, ____ - size statements, and ____ . (Enter only one word per blank.)

- Percentage ; Common ; Ratios

In a horizontal analysis, dollar changes highlight ______. - changes that are most important economically - changes that are most unusual - accounts that are the most standard - accounts that are the most unusual

- changes that are most important economically

Analyzing financial data over time is ____ analysis. (Enter only one word per blank.)

- horizontal or trend

Showing data for several years as a percentage of a base year computes ______. Multiple choice question. -dividend yield ratios -trend percentages -gross margin percentages -vertical analysis

- trend percentages

It is difficult to compare financial data between companies when each company ______. - has a different number of customers - uses a different chart of accounts - operates on a different fiscal year - uses a different accounting method

- uses a different accounting method

Identify the examples of stakeholders that use financial statement analysis to evaluate a company's financial health and future prospects. Multiple select question. Stockholders -Customers -Competitors -Managers -Creditors

-Stockholders -Managers -Creditors

Select all that apply When analyzing a company, in addition to financial ratios, managers should consider ______. Multiple select question. -customer satisfaction -industry trends -changes in the management team -employee learning and growth

-customer satisfaction -industry trends -employee learning and growth

If a company has current assets of $200,000 and current liabilities of $120,000, the current ratio is ______ Multiple choice question. -$80,000 -0.6 -1.67 -$320,000

1.67

The following information pertains to JVL, Inc. All dollar amounts are in thousands. Year 2022 2021 2020 Sales $58,000 $51,000 $47,000 Gross Margin $17,500 $15,100 $13,800 Net operating income $3,200 $2,850 $2,100 Net income $1,750 $1,400 $1,100 The company is computing trend percentages with 2020 as the base year. Sales for 2022 will be reported as ____%. (Enter your answer as a whole number rounded to the nearest whole number.)

123 or 124

The following information pertains to JVL, Inc. All dollar amounts are in thousands. Year 2022 2021 2020 Sales $58,000 $51,000 $47,000 Gross Margin $17,500 $15,100 $13,800 Net operating income $3,200 $2,850 $2,100 Net income $1,750 $1,400 $1,100 The company is computing trend percentages with 2020 as the base year. Net income for 2021 will be reported as ______. Multiple choice question. -159% -127% -63% -79%

127%

The following information pertains to JVL, Inc. All dollar amounts are in thousands. Year 2022 2021 Sales $58,000 $51,000 Gross Margin $17,500 $15,100 Net operating income $3,200 $2,850 Net income $1,750 $1,400 Given this information, the percentage change in sales is ____ %. (Enter your answer as a whole number rounded to 1 decimal place.)

13.7

A company had sales of $6.5 million. Assets at the beginning of the year totaled $2.3 million and assets at the end of the year totaled $3.1 million. Total asset turnover for the company was ______.

2.41

If a company has cash of $30,000, marketable securities of $40,000, accounts receivable of $50,000, inventory of $20,000, short-term notes receivable of $30,000, and current liabilities of $60,000, the acid-test ratio is ______. Multiple choice question. -1.83 -1.2 -2.83 -2.5

2.5

The following information pertains to JVL, Inc. All dollar amounts are in thousands. Year 2022 2021 Sales $58,000 $51,000 Gross Margin $17,500 $15,100 Net operating income $3,200 $2,850 Net income $1,750 $1,400 Given this information, the gross margin percentage for 2021 was ____%. (Round your answer to 1 decimal place.)

29.6

The following information pertains to JVL, Inc. All dollar amounts are in thousands. Year 2022 2021 Sales $58,000 $51,000 Gross Margin $17,500 $15,100 Net operating income $3,200 $2,850 Net income $1,750 $1,400 Given this information, the net income percentage for 2022 is ______. Multiple choice question. -25% -2.7% -20% -3%

3%

If Company B has marketable securities of $30,000, cash of $50,000, current liabilities of $40,000, accounts receivable of $40,000, prepaid expenses of $10,000 and short-term notes receivable of $30,000, what is its acid-test ratio?

3.75

If a company has cost of goods sold of $20,000,000, a beginning inventory balance of $4,000,000 and an ending inventory balance of $4,500,000, what is the inventory turnover ratio?

4.7

A company has current liabilities of $20,000 and current assets of $100,000. The current ratio is ______. Multiple choice question. -0.2 -5 -$120,000 -$80,000

5

A company with an inventory turnover of 4 has an average sale period of ______ days.

91.25

Which ratio is used to measure how quickly credit sales are converted into cash? Multiple choice question. -Times interest earned -Inventory turnover -Accounts receivable turnover -Working capital

Accounts receivable turnover

Which of the following measures excludes inventories and prepaid expenses from total current assets, leaving only the more liquid assets to be divided by current liabilities? Multiple choice question. -Current ratio -Working capital -Acid-test (quick) ratio -Accounts receivable turnover

Acid-test (quick) ratio

In a horizontal analysis, the ____ changes highlight the changes that are the most important economically; the ____ changes highlight the changes that are the most unusual. (Enter either dollar or percentage in each blank.)

Dollar ; Percentage

A company with a current ratio of at least 2 will never have difficulty meeting its financial obligations. True false question.

False

On a common-size income statement, each item is expressed as a percentage of net income. True false

False

One of the reasons the current ratio is useful is because it is easy to interpret. True false question.

False

When constructing a common-size income statement, each item is expressed as a percentage of ______. Multiple choice question. -net income -sales -retained earnings -gross profit

Sales

Continual liquidity problems can lead to bankruptcy. True false question.

True

The relations among financial statement items at a given point in time is the focus of ____ analysis. (Enter only one word per blank.)

Vertical

On a common-size balance sheet, items are usually expressed as a percentage of total ____. (Enter only one word per blank.)

assets

When constructing a common-size balance sheet, all items are usually expressed as a percentage of total ______. Multiple choice question. -liabilities -assets -stockholders' equity -sales

assets

A vertical analysis in which each financial statement item is expressed as a percentage is a(n) ____ - size financial statement.(Enter only one word per blank.)

common

Dividing current assets by current liabilities calculates the ____ ratio. (Enter only one word per blank.)

current

Current assets divided by current liabilities is ______. Multiple choice question. -acid-test (quick) ratio -working capital -current ratio -financial leverage

current ratio

When evaluating the trend in a company's current ratio, a(n) ______ ratio might be a sign of eliminating obsolete inventory whereas a(n) ______ ratio might be the result of stockpiling inventory. Multiple choice question. -declining, improving -improving, declining

declining, improving

The acid-test ratio is designed to measure how well a company can meet its obligations without having to liquidate or depend too heavily on its ____. (Enter only one word per blank.)

inventory

Managers want to minimize working capital because ______. Multiple choice question. -it is difficult for most large companies to obtain financing -it prevents inventory growth -companies do not need much working capital -it must be financed with long-term debt or equity

it must be financed with long-term debt or equity

How quickly an asset can be converted to cash is known as ____. (Enter only one word per blank.)

liquidity

Vertical analysis focuses on ______. Multiple choice question. -relations among financial statement items over time -trend percentages -relations among financial statement items at a given point in time -relations among financial statement items in the future

relations among financial statement items at a given point in time

The adequacy of a current ratio depends upon ______. Multiple choice question. -whether or not it is greater than 2 -the composition of the assets -the company's net income -the composition of the liabilities

the composition of the assets

A base year is selected and the data for all years are stated as a percentage of that base year when computing a(n) ____ percentage. (Enter only one word per blank.)

trend

A common-size financial statement is a ______ analysis. Multiple choice question. -vertical -trend -horizontal

vertical

Because it must be financed with long-term debt and equity, maintaining large amounts of ____ ____ is costly. (Enter only one word per blank.)

working ; capital

Current assets minus current liabilities is known as ____ ____ . (Enter only one word per blank.)

working ; capital

Current assets minus current liabilities is ______. Multiple choice question. -gross margin percentage -financial leverage -working capital -return on total assets

working capital

If a company has current assets of $225,000 and current liabilities of $200,000, working capital is ______. Multiple choice question. -1.125% -$425,000 -$(25,000) -$25,000

$25,000