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100) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 average days in inventory is: (Round all calculations to 1 decimal place.)
A) 121.7 days.
B) 70.2 days.
C) 110.6 days.
D) 101.4 days.
101) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 debt to equity ratio is:
A) 50.0%.
B) 60.0%.
C) 70.0%.
D) 80.0%.
102) Excerpts from Stealth Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
40,000
$
36,000
Inventory
28,000
35,000
Net sales
190,000
186,000
Cost of goods sold
114,000
108,000
Total assets
425,000
405,000
Total stockholders' equity
240,000
225,000
Net income
32,500
28,000
Stealth Company's 2021 gross profit ratio is:
A) 77.1%.
B) 80.0%.
C) 40.0%.
D) 60.0%.
103) Excerpts from Stealth Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
40,000
$
36,000
Inventory
28,000
35,000
Net sales
190,000
186,000
Cost of goods sold
114,000
108,000
Total assets
425,000
405,000
Total stockholders' equity
240,000
225,000
Net income
32,500
28,000
Stealth Company's 2021 return on assets is: (Round your answer to 1 decimal place.)
A) 7.1%.
B) 7.8%.
C) 13.5%.
D) 44.7%.
104) Excerpts from Stealth Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
40,000
$
36,000
Inventory
28,000
35,000
Net sales
190,000
186,000
Cost of goods sold
114,000
108,000
Total assets
425,000
405,000
Total stockholders' equity
240,000
225,000
Net income
32,500
28,000
Stealth Company's 2021 profit margin is: (Round your answer to 1 decimal place.)
A) 17.1%.
B) 13.5%.
C) 7.6%.
D) 4.5%.
105) Excerpts from Stealth Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
40,000
$
36,000
Inventory
28,000
35,000
Net sales
190,000
186,000
Cost of goods sold
114,000
108,000
Total assets
425,000
405,000
Total stockholders' equity
240,000
225,000
Net income
32,500
28,000
Stealth Company's 2021 asset turnover is: (Round your answer to 1 decimal place.)
A) 3.7 times.
B) 2.8 times.
C) 2.2 times.
D) 0.5 times.
106) Excerpts from Stealth Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
40,000
$
36,000
Inventory
28,000
35,000
Net sales
190,000
186,000
Cost of goods sold
114,000
108,000
Total assets
425,000
405,000
Total stockholders' equity
240,000
225,000
Net income
32,500
28,000
Stealth Company's 2021 return on equity is: (Round your answer to 1 decimal place.)
A) 17.1%.
B) 14.0%.
C) 12.6%.
D) 7.1%.
107) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 gross profit ratio is:
A) 57.5%.
B) 36.5%.
C) 63.5%.
D) 60.0%.
108) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 return on assets is: (Round your answer to 1 decimal place.)
A) 48.2%.
B) 9.3%.
C) 8.8%.
D) 9.0%.
109) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 profit margin is: (Round your answer to 1 decimal place.)
A) 18.8%.
B) 9.0%.
C) 19.4%.
D) 15.1%.
110) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 asset turnover is: (Round your answer to 1 decimal place.)
A) 3.7 times.
B) 2.8 times.
C) 2.2 times.
D) 0.5 times.
111) Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are
presented below:
2021
2020
Accounts receivable
$
80,000
$
72,000
Inventory
84,000
70,000
Net sales
400,000
372,000
Cost of goods sold
254,000
216,000
Total assets
850,000
810,000
Total stockholders' equity
500,000
450,000
Net income
75,000
56,000
TPX Company's 2021 return on equity is: (Round your answer to 1 decimal place.)
A) 16.7%.
B) 15.0%.
C) 15.8%.
D) 21.4%.
112) Given the information below, what is the company's gross profit?
Sales Revenue
$
320,000
Accounts Receivable
50,000
Ending Inventory
100,000
Cost of Goods Sold
250,000
Sales Returns
20,000
A) $250,000.
B) $70,000.
C) $220,000.
D) $50,000.
113) Return on assets equals:
A) Gross profit ratio × Inventory turnover.
B) Profit margin × Inventory turnover.
C) Gross profit ratio × Asset turnover.
D) Profit margin × Asset turnover.
114) The profit margin ratio indicates the amount of net income achieved for each:
A) collection on a receivable.
B) dollar of inventory.
C) dollar of total assets.
D) dollar of sales.
115) Nerf Mania reports net income of $500,000, net sales of $4,000,000, and average assets of
$2,000,000. The return on assets is:
A) 200%.
B) 25%.
C) 50%.
D) 12.5%.
116) Nerf Mania reports net income of $500,000, net sales of $4,000,000, and average assets of
$2,000,000. The profit margin is:
A) 12.5%.
B) 25%.
C) 50%.
D) 8 times.
117) Nerf Mania reports net income of $500,000, net sales of $4,000,000, and average assets of
$2,000,000. The asset turnover is:
A) 0.25 times.
B) 0.5 times.
C) 2 times.
D) 8 times.
118) Richard's Sporting Goods reports net income of $100,000, net sales of $500,000, and average
assets of $1,000,000. The return on assets is:
A) 10%.
B) 20%.
C) 50%.
D) 5 times.
119) Richard's Sporting Goods reports net income of $100,000, net sales of $500,000, and average
assets of $1,000,000. The profit margin is:
A) 10%.
B) 20%.
C) 50%.
D) 5 times.
120) Richard's Sporting Goods reports net income of $100,000, net sales of $500,000, and average
assets of $1,000,000. The asset turnover is:
A) 0.1 times.
B) 0.5 times.
C) 2 times.
D) 5 times.
121) The price-earnings (PE) ratio is calculated as:
A) Earnings per share divided by the stock price
B) Retained earnings times the stock price
C) Stock price divided by net income
D) Stock price divided by earnings per share
122) Curry Footwear reports net income of $500,000, earnings per share of $1.50, and has a stock
price of $45.00 at the end of the year. What is Curry Footwear's price-earnings ratio?
A) 30.0
B) 11,111.1
C) 67.5
D) 46.5
57
123) Compared to growth stocks, value stocks' price-earnings ratio is typically:
A) There is no relationship between the price-earnings ratios of growth and value stocks.
B) The same.
C) Higher.
D) Lower.
124) All of the following are profitability ratios except:
A) Profit margin
B) Return on equity
C) Asset turnover
D) Current ratio
125) Below is information related to two companies:
Company 1
Company 2
Return on assets
8.2
%
6.3
%
Debt to equity
67.2
%
53.4
%
Based on the ratios above, what is generally true about these two companies?
A) Company 1 has lower profitability and higher risk.
B) Company 1 has higher profitability and higher risk.
C) Company 1 has lower profitability and lower risk.
D) Company 1 has higher profitability and lower risk.
126) Investors generally view which of the following as the measure most indicative of company
success?
A) Liquidity
B) Solvency
C) Employee satisfaction
D) Profitability
127) Which of the following items would be reported at the very bottom of the income statement
just before net income?
A) Gain on the sale of long-term assets.
B) Discontinued operations.
C) Loss due to business restructuring.
D) Loss due to write-down of receivables.
128) The sale or disposal of a significant component of a company's operations is referred to as:
A) A discontinued operation.
B) Other gains and losses.
C) Other revenues and expenses.
D) Gain or loss on sale of assets.
129) A discontinued operation refers to:
A) The sale or disposal of a significant component of a company's operations.
B) Discontinued inventory items.
C) Inventory items that have been completed and sold.
D) The sale of most long-term assets.
130) What is the correct order to present the following items in the income statement?
A) Other revenues and expenses, income tax expense, discontinued operations, net income.
B) Other revenues and expenses, income tax expense, net income, discontinued operations.
C) Discontinued operations, net income, other revenues and expenses, income tax expense.
D) Discontinued operations, net income, income tax expense, other revenues and expenses.
131) A company incurred a material loss due to the write-down of inventory. This loss should be
reported as:
A) Other revenues.
B) A loss from discontinued operations.
C) Other expenses.
D) A separate line item in retained earnings.
132) A company incurred a material gain on the sale of land. This gain should be reported as:
A) Other revenues.
B) A gain from discontinued operations.
C) Other expenses.
D) A separate line item in retained earnings.
