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Exam 13: Analyzing Financial Statements

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Question 61

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Which of the following transactions increases both the quick ratio and the current ratio assuming that both ratios are greater than 1?

A) Collecting an account receivable.
B) Purchasing inventory on account.
C) Accruing revenue earned at year-end.
D) Selling inventory on account at the cost of the inventory.

E) B) and D)
F) A) and D)

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Question 62

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Trenton Company has provided the following information: • Net income, $240,000 • Preferred shares issued, 6,000 • Weighted average number of shares of common stock issued, 24,000 • Cash dividends declared and paid on common stock, $30,000 • Market price per share, $36 • Weighted average number of treasury shares of common stock, 4,000 What is Trenton's earnings per share?

A) $8.00.
B) $7.00.
C) $10.50.
D) $12.00.

E) All of the above
F) B) and D)

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Question 63

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The year-end adjusting entry to adjust the unearned revenue account for revenue earned decreases which of the following ratios?

Which of the following ratios are not affected by issuing long-term bonds payable in exchange for cash?

Time series analysis is a comparison of information for a specific company over a period of time to determine changes in operations.

A negative financial leverage percentage occurs when a company has more debt than stockholders' equity.

The quick ratio decreases when the adjusting entry to record bad debt expense is recorded.

A primary objective of financial statements is to provide information to current and potential investors and creditors.

The dividend yield ratio decreases when earnings per share increases.

The cash coverage ratio measures a firm's ability to pay its current liabilities with its cash flows from operating activities.

Which of the following statements is incorrect?

When considering an investment, which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment?

Which of the following statements is correct?

Baron Company reported the following data: The quick ratio is closest to:

The inventory turnover ratio is significantly affected by the choice of inventory accounting method.

A high price/earnings ratio usually indicates the market is optimistic about the company's future earnings potential.

Financial statement analysis is very precise and does not involve judgment.

Some analysts do not use the cash ratio because they see it as too stringent a test of liquidity and the ratio is very sensitive to small events.

At the end of 2016, Jared Corporation reported a return on assets of 16%; net income of $42,000; average total assets of $365,000, and average total liabilities of $165,000. Required: What was Jared's financial leverage percentage?

The following data were reported for Favre Company: Required: Calculate each of the following ratios. Round your answers to two decimal places. A.Dividend yield B.Price/earnings ratio C.Earnings quality