Financial Ratios(Quick Test #1)

1. Current assets minus current liabilities is capital.

2. The time it takes for a retailer’s purchases of merchandise to be sold and turned into cash is known as its cycle.

3. Current assets divided by current liabilities is the ratio.

4. The quick ratio is also known as the -test ratio.

5. Which category of assets is most likely to have carrying amounts that are similar to market values?

6. Balance sheet amounts represent time.

7. Income statement amounts represent time.

8. The Cash Flow from Operating Activities represents time.

9. The accounts receivable turnover ratio is best calculated using net sales.

10. The payment of an account payable will change the amount of working capital.

11. Most companies have an operating cycle that is than one year.

12. The cash payment of $200,000 to reduce accounts payable of $200,000 is likely to change a corporation’s current ratio.

13. If the current maturities of long-term debt will be paid with operating cash, they should be classified as liabilities.

14. The cost of goods sold divided by average inventories during the period describes the inventory ratio.

15. Banks and suppliers who have provided credit to a corporation are referred to as the corporation’s .

16. The book value of a corporation is equal to its .

17. The annual noncash expense associated with a prior capital expenditure other than land is expense.

18. The first section of the statement of cash flows reports the amount of cash provided or used by a company’s activities.

19. The second section of the statement of cash flows reports the amount of cash provided or used by a company’s activities.

20. The calculation of free cash flow is the cash provided from operating activities minus the amount of expenditures.

21. Which of the following is an advantage for a profitable corporation to finance a new asset with bonds instead of stock?

22. In the debt to equity ratio, debt refers to liabilities.

23. A higher degree of leverage will mean a higher degree of .

24. Generally, the of earnings will be higher with more conservative accounting practices.

25. In vertical analysis, each item on a retailer’s income statement will be presented as a percentage of .

26. Common-size income statements result from analysis.

27. analysis provides the percentage changes from one year to the next.

28. Presenting each balance sheet item as a percentage of total assets is known as analysis.

29. Presenting many years of a company’s revenues, costs, or other important data as a percentage of a base year is referred to as analysis.

30. Management’s Discussion and is found in a corporation’s annual report to the U.S. Securities and Exchange Commission.

31. The annual report to the U.S. Securities and Exchange Commission is referred to as Form .

32. Stock that has the amount of its long-term dividends specified at the time the stock is issued is stock.

33. Earnings per share is calculated using the weighted average number of shares of common stock.

34. If a corporation has cumulative preferred stock, the preferred stock’s requirement is subtracted from the corporation’s net income when calculating the earnings per share.

35. The gross profit margin is the dollars of gross profit divided by the dollars of net .

36. A company’s inventory is usually reported on its balance sheet at its .

37. Which amount should logically be the numerator in the calculation of inventory turnover?

38. The total asset turnover is the annual net divided by the average amount of total assets during the same year.

39. Sales minus the Cost of Goods Sold is profit.

40. The times interest earned ratio relates interest to a total income amount.

41. The times interest earned ratio is calculated using income before .

42. The book value per share is calculated using the number of shares of common stock.

43. The numerator in the profit margin ratio is .

44. The dividend payout ratio is the dividend per share of common stock divided by the per share.

45. The dividend yield is the annual dividend per share of common stock divided by the stock’s per share.

46. Which is a more conservative indicator of a company’s ability to meet its short-term obligations?

47. The best balance sheet amounts for computing the “return on” ratios are the -the-year amounts.

48. The best balance sheet amounts for computing the turnover ratios are the -the-year amounts.

49. A highly-professional and effective management team will be reported as an asset on a corporation’s balance sheet.

50. As a result of its marketing and advertising, a corporation’s brand name has become its most valuable asset. The brand name will be reported on the corporation’s balance sheet at an amount that includes its past marketing and advertising costs.