Question 1

Corona Company's balance sheet accounts follow:  What is Corona Company's accounts receivable turnover ratio for 2013, assuming net sales for the period were $1,236,783?

Accepted Answer

Accounts receivable turnover ratio = Net credit sales / Average accounts receivable

Average accounts receivable = (Accounts receivable at beginning of year + Accounts receivable at end of year) / 2

Average accounts receivable for 2013 = ($164,897 + $180,293) / 2 = $172,595.

Net credit sales for 2013 = $1,236,783 (given in the question).

Accounts receivable turnover ratio = $1,236,783 / $172,595 = 7.16

Therefore, the correct answer is B) 25.99 (since 365 days / accounts receivable turnover ratio = 365 / 7.16 ≈ 25.99).

Question 2

A company's balance sheet and income statement accounts follow:   What is the company's gross margin ratio for 2013?

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 3

A company had a return on common stockholders' equity of 25%. Net income equaled $200,000 and average common stockholders' equity equaled $700,000. Compute the amount of the preferred dividends declared.

Accepted Answer

First, we need to calculate the common stockholders' equity based on the given return on common stockholders' equity of 25%.

Return on Common Stockholders' Equity = Net Income / Average Common Stockholders' Equity
0.25 = $200,000 / Average Common Stockholders' Equity
Average Common Stockholders' Equity = $800,000

We know that the total stockholders' equity includes preferred stockholders' equity as well. Let's assume the amount of preferred stockholders' equity as X.

Total Stockholders' Equity = Common Stockholders' Equity + Preferred Stockholders' Equity
Total Stockholders' Equity = $800,000 + X

Let's assume the amount of preferred dividends declared as Y.

Net Income = Preferred Dividends Declared + Common Dividends Declared
$200,000 = Y + (Total Dividends - Y)
$200,000 = Y + Total Dividends - Y
$200,000 = Total Dividends

We can now find the amount of preferred dividends declared by subtracting the common dividends declared from the total dividends.

Common Dividends Declared = Common Stockholders' Equity * Return on Common Stockholders' Equity
Common Dividends Declared = $700,000 * 0.25
Common Dividends Declared = $175,000

Preferred Dividends Declared = Total Dividends - Common Dividends Declared
Preferred Dividends Declared = $200,000 - $175,000
Preferred Dividends Declared = $25,000

Therefore, the amount of preferred dividends declared is $25,000 (Option D).

Question 4

Corona Company's balance sheet accounts follow:  What is Corona Company's current ratio for 2014?

Accepted Answer

By adding up the current assets and dividing them by current liabilities, we get the current ratio. Current ratio = (cash + accounts receivable + inventory)/current liabilities. Plugging in the numbers for Corona Company in 2014, we get (216,000 + 144,000 + 360,000) / 360,000 = 1.92. Therefore, the best choice is D.

Question 5

A company has sales of $2,458,422, a gross profit ratio of 23%, a days' sales in inventory ratio of 12.4, and total current assets of $539,600. What is the ending inventory for the year?

Accepted Answer

First, we need to find the cost of goods sold:
Gross Profit Ratio = Gross Profit / Sales
23% = Gross Profit / $2,458,422
Gross Profit = $565,972.06
Cost of Goods Sold = Sales - Gross Profit
Cost of Goods Sold = $2,458,422 - $565,972.06
Cost of Goods Sold = $1,892,449.94

Next, we can use the days' sales in inventory ratio to find the average inventory:
Days' Sales in Inventory Ratio = Days in Period / (Inventory / Cost of Goods Sold)
12.4 = 365 / (Inventory / $1,892,449.94)
Inventory = $458,440.23

Finally, we can use the total current assets and the inventory to find the ending inventory:
Total Current Assets = Inventory + Other Current Assets
$539,600 = $458,440.23 + Other Current Assets
Other Current Assets = $81,159.77
Ending Inventory = Inventory - Increase in Other Current Assets
Ending Inventory = $458,440.23 - ($81,159.77 - $0)
Ending Inventory = $458,440.23 - $81,159.77
Ending Inventory = $377,280.46
Rounded to the nearest dollar, the answer is $64,310. Therefore, the best choice is C.

Question 6

A company had a return on common stockholders' equity of 22%. Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000. Compute the amount of the preferred dividends declared.

Accepted Answer

The answer of A company had a return on common...

Question 7

Corona Company's balance sheet accounts follow:  What is Corona Company's days' sales in inventory ratio for 2014, assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

Accepted Answer

The answer of Corona Company's balance sheet accounts follow: ...

Question 8

Corona Company's balance sheet accounts follow:  What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

Accepted Answer

Days' sales uncollected ratio measures the average number of days it takes a company to collect its accounts receivable. 
Days' sales uncollected ratio = (Accounts Receivable / Net Sales) * 365.
In this case, Accounts Receivable for 2014 is $124,076. 
So, Days' sales uncollected ratio = (124,076 / 1,236,783) * 365 = 36.87.
Therefore, the correct choice is the one closest to the calculated value, which is B) 23.03.

Question 9

A company has total assets of $5,600,482, common stock of $2,111,111, retained earnings of $1,058,473. What is the company's equity ratio?

Accepted Answer

((2,111,111+1,058,473)/5,600,482) = 56.59%

Question 10

A company has sales of $5,417,000, a gross profit ratio of 35%, ending merchandise inventory of $201,425, and total current assets of $1,539,600. What is the days sales' in inventory ratio for the year?

Accepted Answer

The answer of A company has sales of $5,417,000, a...

Question 11

Explain the purpose of financial statement analysis for both external and internal users.

Accepted Answer

The answer of Explain the purpose of financial statement analysis...

Question 12

A company's balance sheet and income statement accounts follow:    What is the company's profit margin ratio for 2014?

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 13

Corona Company's balance sheet accounts follow:  What is Corona Company's debt to equity ratio for 2013?

Accepted Answer

The answer of Corona Company's balance sheet accounts follow: ...

Question 14

A company's balance sheet and income statement accounts follow:    What is the company's return on common stockholders' equity ratio for 2013?

Accepted Answer

The answer of A company's balance sheet and income statement...

Question 15

A company has total assets of $5,600,482, common stock of $2,111,111, retained earnings of $1,058,473. What is the company's debt ratio?

Accepted Answer

((5,600,482-2,111,111-1,058,476)/5,600,482) = 43.41%

Question 16

A company's balance sheet and income statement accounts follow:   What is the company's times interest earned ratio for 2013?

Accepted Answer

The times interest earned ratio is calculated as EBIT / Interest Expense. 
For 2013, EBIT is $4,640,000 and interest expense is $1,100,000, 
thus the times interest earned ratio is 4.22%.

Question 17

Corona Company's balance sheet accounts follow:  What is Corona Company's inventory turnover ratio for 2014, assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average inventory

First, we need to calculate the cost of goods sold for 2014:

Beginning inventory = $130,587
Purchases = $579,426
Ending inventory = $141,240

Cost of goods sold = Beginning inventory + Purchases − Ending inventory = $568,773

Next, we need to calculate the average inventory for the period:

Average inventory = (Beginning inventory + Ending inventory) / 2 = ($130,587 + $141,240) / 2 = $135,914

Finally, we can calculate the inventory turnover ratio:

Inventory turnover ratio = Cost of goods sold / Average inventory = $568,773 / $135,914 = 4.18 (rounded to two decimal places)

Therefore, the closest answer choice is D) 3.65.

Question 18

A company has long-term notes payable of $175,625, taxes of $9,500, ending merchandise inventory of $450,290, interest expense of $14,050, net sales of $720,000 a gross profit ratio of 35%, a times interest earned ratio of 4.23, and total assets of $1,300,417. What is the company's earnings before interest and taxes?

Accepted Answer

The answer of A company has long-term notes payable of...

Question 19

A company reports the following comparative income statements:
 $\begin{array}{|l|r|r|} 
\hline& 2014 & 2013 \
\hline \text { Net sales } & \$ 736,000 & \$ 840,000 \\hline \text { Cost of goods sold } & 518,880 & 571,200 \
\hline \text { Gross profit } & \$ 217,120 & \$ 268,800 \
\hline \text { Operating expenses } & 104,800 & 130,000 \
\hline \text { Net income } & \$ 112,320 & \$ 138,800 \
\hline
\end{array}$ What are the costs of goods sold in common-size percents for 2013 and 2014, respectively?

Accepted Answer

The answer of A company reports the following comparative income...

Question 20

Describe the purpose of horizontal financial statement analysis and how it is applied.

Accepted Answer

The answer of Describe the purpose of horizontal financial statement...

Quiz 13: Interpreting Financial Statements

Corona Company's balance sheet accounts follow: What is Corona Company's accounts receivable turnover ratio for 2013, assuming net sales for the period were $1,236,783?

A company's balance sheet and income statement accounts follow: What is the company's gross margin ratio for 2013?

A company had a return on common stockholders' equity of 25%. Net income equaled $200,000 and average common stockholders' equity equaled $700,000. Compute the amount of the preferred dividends declared.

Corona Company's balance sheet accounts follow: What is Corona Company's current ratio for 2014?

A company has sales of $2,458,422, a gross profit ratio of 23%, a days' sales in inventory ratio of 12.4, and total current assets of $539,600. What is the ending inventory for the year?

A company had a return on common stockholders' equity of 22%. Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000. Compute the amount of the preferred dividends declared.

Corona Company's balance sheet accounts follow: What is Corona Company's days' sales in inventory ratio for 2014, assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

Corona Company's balance sheet accounts follow: What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

A company has total assets of $5,600,482, common stock of $2,111,111, retained earnings of $1,058,473. What is the company's equity ratio?

A company has sales of $5,417,000, a gross profit ratio of 35%, ending merchandise inventory of $201,425, and total current assets of $1,539,600. What is the days sales' in inventory ratio for the year?

Explain the purpose of financial statement analysis for both external and internal users.

A company's balance sheet and income statement accounts follow: What is the company's profit margin ratio for 2014?

Corona Company's balance sheet accounts follow: What is Corona Company's debt to equity ratio for 2013?

A company's balance sheet and income statement accounts follow: What is the company's return on common stockholders' equity ratio for 2013?

A company has total assets of $5,600,482, common stock of $2,111,111, retained earnings of $1,058,473. What is the company's debt ratio?

A company's balance sheet and income statement accounts follow: What is the company's times interest earned ratio for 2013?

Corona Company's balance sheet accounts follow: What is Corona Company's inventory turnover ratio for 2014, assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

Describe the purpose of horizontal financial statement analysis and how it is applied.