Chapter 14 – Analyzing Financial Statements
48. The records of Marshall Company include the following:
The financial leverage percentage is which of the following?
Chapter 14 – Analyzing Financial Statements
49. Which of the following transactions decreases earnings per share?
50. Which of the following transactions decreases earnings per share?
Chapter 14 – Analyzing Financial Statements
51. Trenton Company has provided the following information:
• Net income, $240,000;
• Preferred shares issued, 6,000;
• Average common shares issued, 24,000;
• Common cash dividends declared and paid, $30,000;
• Market price per share, $36
• Average treasury shares of common stock, 4,000.
What were Trenton’s earnings per share?
Chapter 14 – Analyzing Financial Statements
52. Trenton Company has provided the following information:
• Net income, $240,000;
• Preferred shares issued, 6,000;
• Average common shares issued, 24,000;
• Common cash dividends declared and paid, $30,000;
• Market price per share, $36
• Average treasury shares of common stock, 4,000.
What was Trenton’s price earnings ratio?
Chapter 14 – Analyzing Financial Statements
53. Cecilia Company reported net income of $1,200,000. Their average total liabilities were
$4,300,000 and average total stockholders’ equity was $5,200,000. Interest expense was
$100,000 and their tax rate was 40%. What was their return on assets ratio?
54. Which of the following transactions will increase the quality of income ratio?
Chapter 14 – Analyzing Financial Statements
55. Negative financial leverage occurs when the
56. Which of the following transactions will increase a current ratio which is currently 2.5?
Chapter 14 – Analyzing Financial Statements
57. Which of the following transactions will not increase the cash ratio?
58. Which of the following ratios is not an indicator of a company’s short-term financial
strength?
Chapter 14 – Analyzing Financial Statements
59. Teague Company’s working capital was $40,000 and total current liabilities were 1/4 of
that amount. What was the current ratio?
Chapter 14 – Analyzing Financial Statements
60. Agnes Company reported the following data:
What was the current ratio?
Chapter 14 – Analyzing Financial Statements
61. Agnes Company reported the following data:
What was the inventory turnover ratio?
Chapter 14 – Analyzing Financial Statements
62. Agnes Company reported the following data:
What was the average days’ supply in inventory?
Chapter 14 – Analyzing Financial Statements
63. If the current ratio is 2, the payment of a cash dividend, which was recorded as a liability
on the date of declaration, will result in which of the following?
64. Which of the following transactions would increase the current ratio of a company if the
ratio is currently greater than 1?
Chapter 14 – Analyzing Financial Statements
65. Potaw Company reported the following data at the end of 2010:
What was the accounts receivable turnover ratio?
Chapter 14 – Analyzing Financial Statements
66. Potaw Company reported the following data at the end of 2010:
What was the average number of days to collect receivables during 2010?
Chapter 14 – Analyzing Financial Statements
67. Cromwell Company began the year with a balance in inventory of $110,000 and ended the
year with a balance of $102,000. The net sales for the year were $983,000 with a gross profit
on sales of $295,000. What was the inventory turnover ratio?
68. Thomas Company had income before interest and taxes of $120,000. Interest expense for
the period was $17,000 and income taxes amounted to $28,500. The average stockholders’
equity was $680,000. What is Thomas’ return on equity (ROE)?
Chapter 14 – Analyzing Financial Statements
69. Wildlife Co. reported net income of $8.3 million, interest expense of $.5 million and they
are in a 30% tax rate bracket. Their average total assets are $65.8 million and average
stockholders’ equity is $48.6 million. What is Wildlife’s financial leverage percentage?
70. Which of the following is false?
Chapter 14 – Analyzing Financial Statements
71. Which of the following is false?
72. Which of the following is not a measure of solvency?
Chapter 14 – Analyzing Financial Statements
73. Bailey Corporation reported the following information for 2010:
What is Bailey’s debt-to-equity ratio?
74. The debt-to-equity ratio measures which of the following?
Chapter 14 – Analyzing Financial Statements
75. Which of the accounting ratios considers the importance of cash flows relating to required
interest payments?
76. Which of the following is correct?
Chapter 14 – Analyzing Financial Statements
77. Which ratio reflects the stock market’s assessment of a company’s future performance?
78. The Apple Pie Company had net income of $47,500, earnings per share of $3.17 and
declared dividends per share of $2.00 during 2010. On December 31, 2010, the stock had a
market price of $18.50 per share. What is Apple Pie’s price/earnings ratio?