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75) The following is a common-sized Income Statement for Sydney and Caesar Companies.
(in thousands)
Sydney %
Caesar%
Net Sales
100.0%
100.0%
Cost of Goods Sold
64.6%
60.8%
Gross Profit
35.4%
39.2%
Operating Expenses
Selling, General and Adm.
15.4%
15.3%
Other
1.4%
1.5%
Income Before Income Tax
18.7%
22.4%
Income Tax Expense
2.7%
3.1%
Net Income
16.0%
19.3%
Which company has the best cost of goods sold percentage?
A) Not enough information is given to assess the question.
B) Sydney Company
C) Caesar Company
D) Too close to make a solid determination.
Question Type: Critical Thinking
76) The following is a common-sized Income Statement for Sydney and Caesar Companies.
(in thousands)
Sydney %
Caesar %
Net Sales
100.0%
100.0%
Cost of Goods Sold
64.6%
60.8%
Gross Profit
35.4%
39.2%
Operating Expenses
Selling, General and Adm.
15.4%
15.3%
Other
1.4%
1.5%
Income Before Income Tax
18.7%
22.4%
Income Tax Expense
2.7%
3.1%
Net Income
16.0%
19.3%
Which company has better control of their overall operating expenses?
A) Not enough information is given to assess the question.
B) Sydney Company
C) Caesar Company
D) Too close to make a solid determination.
Question Type: Critical Thinking
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77) The current ratio for a company with current assets of $73,000, quick assets of $31,000, total
assets of $160,000, current liabilities of $46,000, and net sales of $77,000 would be: (Round
your final answer to two decimal places.)
A) 0.19.
B) 1.59.
C) 3.48.
D) 0.94.
Question Type: Application
78) A company has $56,000 in cash; $16,000 in Accounts Receivable; $26,000 in short-term
investments and $101,000 in merchandise inventory. The company also has $56,000 in current
liabilities. The company’s quick ratio is: (Round your final answer to two decimal places.)
A) 3.55.
B) 1.75.
C) 1.29.
D) 1.00.
Question Type: Application
79) An acid test (quick ratio) of 0.75 would indicate:
A) a ratio that would allow a company to pay off current liabilities with quick assets.
B) that for every $1 of quick assets, there are $0.75 in liabilities.
C) that for every $1 of liabilities, there are $0.75 in quick assets.
D) a ratio that would allow a company to pay off current liabilities with current assets.
Question Type: Concept
80) The debt ratio is the relationship between:
A) current assets and current liabilities.
B) current assets and total liabilities.
C) total assets and total liabilities.
D) total assets and current liabilities.
Question Type: Concept
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81) The lower the interest coverage ratio, the more likely:
A) a default in payment will occur.
B) a business needs to borrow money.
C) a business will suffer a loss.
D) interest payments can be made.
Question Type: Critical Thinking
82) Which of the following measures how efficiently a company utilizes its operating assets?
A) current ratio and quick ratio
B) return on equity and earnings per share
C) debt ratio and interest coverage ratio
D) Accounts Receivable turnover and inventory turnover
Question Type: Concept
83) If management wishes to evaluate the delinquency of charge customers, they could use the:
A) rate of return on total assets.
B) rate of return on equity.
C) Accounts Receivable turnover.
D) quick ratio.
Question Type: Concept
84) A company with an Accounts Receivable turnover of four means that the company collects
its receivables approximately every ________ days.
A) 30
B) 60
C) 90
D) 120
Question Type: Application
85) If Accounts Receivable turnover is 10.4, this means that from the date of:
A) purchase to the date of payment is approximately 35 days.
B) sale to the date of receipt of payment is approximately 35 days.
C) discount to the date of receipt of payment is approximately 35 days.
D) invoice to the date of payment is approximately 35 days.
Question Type: Application
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86) With a beginning Accounts Receivable balance of $76,000; an ending Accounts Receivable
balance of $124,000; and Sales of $900,000, the Accounts Receivable turnover is: (Round your
final answer to two decimal places.)
A) 9.00.
B) 11.84.
C) 23.68.
D) 14.47.
Question Type: Application
87) Inventory turnover measures the relationship between:
A) merchandise inventory and current liabilities.
B) total assets and merchandise inventory.
C) cost of goods sold and merchandise inventory.
D) cost of goods sold and total liabilities.
Question Type: Concept
88) Inventory turnover would most likely be highest for which of the following?
A) Home builder
B) Grocery store
C) Car dealership
D) Heavy equipment dealer
Question Type: Critical Thinking
89) Which of the following ratios measures the earnings of a company on each dollar of assets
invested?
A) Return on assets
B) Return on sales
C) Return on equity
D) Current ratio
Question Type: Concept
90) The ratio that measures the efficiency of all of a company’s assets in generating sales is the:
A) Accounts Receivable turnover ratio.
B) total asset turnover ratio.
C) inventory turnover ratio.
D) fixed asset turnover ratio.
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91) Butterfly Tours has a cash balance of $75,000; short-term investments of $19,000; net
receivables of $60,000; and inventory of $400,000. Current liabilities total $170,000. The quick
ratio is: (Round your final answer to two decimal places.)
A) 3.26 to 1.
B) 2.91 to 1.
C) 0.91 to 1.
D) 0.79 to 1.
Question Type: Application
92) Illusion Inc.’s operating income for the year was $78,000. The interest expense was $11,400
and the income tax expense was $6,000. Illusion Inc.’s interest coverage ratio for the year is:
(Round your final answer to two decimal places.)
A) 13.00.
B) 4.48.
C) 6.84.
D) 0.15.
Question Type: Application
93) Blue Gem Supply has an average days’ in receivable of 44 days. Blue’s Accounts Receivable
turnover is closest to: (Assume a 365-day year in your calculations. Round your final answer to
the closest day.)
A) 44.
B) 8.
C) 11.
D) 15.
Question Type: Application
94) Kitty–Lion Company has a beginning Accounts Receivable balance of $69,000 and an ending
Accounts Receivable balance of $60,000. Sales are $249,000. Kitty-Lion’s Accounts Receivable
turnover rate is: (Round your final answer to two decimal places.)
A) 3.61.
B) 4.15.
C) 3.86.
D) 1.93.
Question Type: Application
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95) Island Industries has a cost of goods sold of $1,900,000. The beginning and ending
merchandise inventories are $130,000 and $122,000, respectively. Island Industries inventory
turnover ratio is: (Round your final answer to two decimal places.)
A) 14.62 times.
B) 15.57 times.
C) 15.08 times.
D) 30.19 times.
Question Type: Application
96) Hook Corporation has a cost of goods sold of $1,800,000. The beginning merchandise
inventory was $191,000 and the ending merchandise inventory is $209,000. Hook’s inventory
turnover ratio is: (Round your final answer to two decimal places.)
A) 9.42 times.
B) 8.61 times.
C) 9.00 times.
D) 4.50 times.
Question Type: Application
97) The ratio of dividends to the average number of common shares outstanding is:
A) earnings per share.
B) dividend payout ratio.
C) dividends per share.
D) dividend yield.
Question Type: Concept
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98) Metropolitan Builders reported the following for 2016:
Net sales:
$355,000
Net income:
$28,600
Market price per share of common stock:
$32.50
Dividends:
$13,500
Average number of shares of common stock
outstanding:
128,000
What are the dividends per share for Metropolitan Builders? : (Round your final answer to the
nearest cent.)
A) $0.11/share
B) $0.22/share
C) $0.12/share
D) $0.81/share
Question Type: Application
99) Mockingjay, Inc. reported the following for 2016:
Net sales:
$335,000
Net income:
$34,600
Market price per share of common stock:
$37.50
Dividends:
$18,500
Average number of shares of common stock
outstanding:
121,000
What are the earnings per share for Mockinjay, Inc.?: (Round your final answer to the nearest
cent.)
A) $0.15/share
B) $0.29/share
C) $0.13/share
D) $0.07/share
Question Type: Application
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100) Max Corp. reported the following for 2016:
Net sales:
$345,000
Net income:
$27,600
Market price per share of common stock:
$38.50
Dividends:
$17,500
Average number of shares of common stock
outstanding:
121,000
What is the dividend payout ratio for Max Corp? (Round your final answer to two decimal
places, X.XX%.)
A) 36.59%
B) 5.07%
C) 63.41%
D) 38.50%
Question Type: Application
101) The Betta Group reported the following for 2016:
Net sales:
$240,000
Net income:
$35,000
Market price per share of common stock:
$31.75
Dividends:
$4,300
Average number of shares of common stock
outstanding:
9,600
What are the dividends per share for Betta? (Round your final answer to two decimal places.)
A) $4.09/share
B) $31.75/share
C) $0.45/share
D) $3.65/share
Question Type: Application
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102) Cordoba, Inc. reported the following for 2016:
Net sales:
$240,000
Net income:
$38,000
Market price per share of common stock:
$31.75
Dividends:
$4,100
Average number of shares of common stock
outstanding:
$9,600
What is the dividend payout ratio for Cordoba, Inc.? (Round your final answer to two decimal
places, X.XX%.)
A) 42.71%
B) 10.79%
C) 31.8%
D) 1.71%
Question Type: Application
103) Coyote Corp. reported the following for 2016:
Net sales:
$220,000
Net income:
$38,000
Market price per share of common stock:
$25.75
Dividends:
$4,200
Average number of shares of common stock
outstanding:
$10,100
What are the earnings per share for Coyote Corp.? (Round your final answer to the nearest cent.)
A) $3.35/share
B) $25.75/share
C) $0.42/share
D) $3.76/share
Question Type: Application
104) Current assets divided by current liabilities yields the:
A) quick ratio.
B) current ratio.
C) debt ratio.
D) working capital ratio.
Question Type: Concept