The document with questions is attached below if you could please just highlight the correct answers!

PLEASE HIGHLIGHT ALL ANSWERS AND LEAVE IN THIS FORMAT.

1. Which of the following use financial statement data to make decisions?

a.

b.

c.

d.

Customers

Investors

Suppliers

All of these

2. Which statement would best provide information about a company?s current liquidity?

a.

b.

c.

d.

Balance Sheet

Income Statement

Statement of Cash Flows

None of these

3. A banker is analyzing a company that operates in the petroleum industry. Which of the

following might be a major consideration in determining whether the company should receive a

loan?

a. The petroleum industry suffers from political pressures concerning the selling price of

its products

b. Infalation has been high for several years in a row

c. All companies in the petroleum industry use the same accounting principles

d. The company has a large amount of interest payments related to many outstanding

loans

4. Which type of analysis compares a single corporation across time?

a.

b.

c.

d.

Cross Sectional Analysis

Time series Analysis

Timetable Analysis

Company Analysis

5. Which of the following types of analysis compares on corporation to another corporation and

to industry averages?

a.

b.

c.

d.

Cross Sectional Analysis

Time Series Analysis

Timetable Analysis

Company Analysis

6. How is the current ratio calculated?

a.

b.

c.

d.

(Cash + Marketable Securities + Accounts Receivables) / Current Liabilities

(Cash + Market Securities) / Current Liabilities

Current Assets / Current Liabilities

Cash Flows from Operating Activities / Current Liabilities

7. Partial information from Fabray Company?s balance sheet is as follows:

Current Assets

Cash

Marketable

Securities

Accounts

Receivable

$1,200,000

Inventories

$3,750,000

$28,800,00

0

$33,150,00

0

Prepaid Expenses

Total Current

Assets

$600,000

$67,500,00

0

Current Liabilities

Notes Payable

$750,000

Accounts Payable

$9,750,000

Accrued Expenses

Income Taxes

Payable

Total Current

Assets

$6,250,000

$250,000

$17,000,00

0

What is Fabray?s current ratio?

a.

b.

c.

d.

0.25

3.0

1.8

3.97

8. Hummel Inc. has $30,000 in current assets and $15,000 in current liabilities. What is

Hummel?s current ratio?

a.

b.

c.

d.

0.5

1

2

3

9. How is the cash ratio calculated?

a. (Cash + Marketable Securities + Accounts Receivables) / Current Liabilities

b. (Cash + Market Securities) / Current Liabilities

c. Current Assets / Current Liabilities

d. Cash Flows from Operating Activities / Current Liabilities

10. Schuester Company has $40,000 in current liabilities, $20,000 in cash, and $25,000 in

marketable securities. What is Schuester?s cash ratio?

a. 1.125

b. 0.889

c. 1.6

d. 0.625

11. What ratio is used to measure a firm?s liquidity?

a.

b.

c.

d.

Debt Ratio

Asset Turnover

Current Ratio

Return on Equity

12. Which of the following transactions could increase a firm?s current ratio?

a.

b.

c.

d.

Purchase of Inventory for Cash

Payment of Accounts Payable

Collection of Accounts Receivable

Purchase of Temporary Investments for Cash

13. Total Liabilities / Total Equity =

a.

b.

c.

d.

Times Interest Earned Ratio

Accounts Payable Turnover

Receivables Turnover Ratio

Debt-to-Equity Ratio

14. When analyzing a company?s debt-to-equity ratio, if the ratio has a value that is greater than

1, then the company has:

a.

b.

c.

d.

Less debt than equity

More debt than equity

Equal amounts of debt and equity

None of these are correct

15. Cost of goods sold / average inventory is the formula to compute:

a.

b.

c.

d.

Accounts Receivable Turnover

Gross Profit Percentage

Inventory Turnover

Return on Sales Percentage

16. Which of the following is the formula to compute the net profit margin percentage?

a.

b.

c.

d.

Net Income / Net sales

Operating Income / Net sales

Net Income / Average Equity

Net Income [Interest Expense X (1 ? Tax Rate)] / Average Total Assets

17. If Abrams Company has an inventory turnover of 7.3 and a receivables turnover of 9.6,

approximately how long is its operating cycle?

a.

b.

c.

d.

72 days

88 days

95 days

There is not enough information to calculate the operating cycle

18. Which of the following ratios is used to measure the profit earned on each dollar invested in

a firm?

a.

b.

c.

d.

Current Ratio

Asset Turnover Ratio

Return on Sales Ratio

Return on Equity

19. Pillsbury Corporation has $65,000 of cost of goods sold and average inventory of $30,000.

What is Pillsbury?s inventory turnover rate?

a.

b.

c.

d.

0.46

1.17

1.46

2.17

20. Selected information for Berry Company is as follows:

Average Common Stock

Average Additional paid-in

capital

Average Retained Earnings

Sales Revenue for Year

Net Income for Year

$600,00

0

$250,00

0

$370,00

0

$915,00

0

$240,00

0

Berry?s return on equity, rounded to the nearest percentage point is:

a.

b.

c.

d.

20%

21%

28%

40%

21. Which of the following ratios is used to measure a firm?s profitability?

a. Liabilities / Equity

b. Sales Assets

c. Net Income / Net Sales

d. Assets / Equity

22. If a company has a higher net profit margin than most of its competitors, this means that:

a.

b.

c.

d.

The company is more efficient with its assets

The company has more liyal customers

The company has a lower proportion of debt financing

The company has a higher proportion of each sales dollar that is profit

23. When DuPont analysis reveals that a company has much higher than average asset

turnover and much lower than average profit margin, what can be concluded about the

company?s strategy?

a.

b.

c.

d.

It is a product differentiator

It is a low-cost provider

It has no strategy

It needs to concentrate on improving it profit margins

24. Gross Profit Margin =

a.

b.

c.

d.

Sales Revenue ? Cost of Goods Sold / Sales Revenues

(Sales Revenues ? Operating Expenses) / Sales Revenues

Current Assets / Current Liabilities

Inventory / (Cost of Goods Sold / 365)

25. Investors should have strong confidence in a firm?s outlook and earnings growth if the Priceto-Earnings Ratio is over ___.

a.

b.

c.

d.

12

10

20

5