Question 1

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures.   Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,2013,was $20.Jasmin paid dividends of $0.90 per share during 2013.
What is the return on equity for this corporation?

Accepted Answer

The answer of The following information pertains to Jasmin Corporation.Assume...

Question 2

Holiday Corporation provided these figures for the year ended December 31,2013: Cost of goods sold,$516,117; change in inventory,$67,483 decrease; average accounts payable,$64,599.
What is the company's payables turnover? Round your answer to one decimal place.

Accepted Answer

Payables turnover can be calculated as (Cost of goods sold/Average accounts payable). Therefore, Payables turnover = ($516,117)/($64,599) = 7.994. Rounding this to one decimal place gives us 6.9 times. Therefore, the best choice is C).

Question 3

During the year,Dempsey Corporation's current ratio increased while its quick ratio decreased.Which of the following could help explain this situation?

Accepted Answer

An increase in inventory levels during the year would increase the current ratio because inventory is included in the current assets and the denominator of the ratio. However, it would decrease the quick ratio because inventory is not considered a quick asset (i.e. it takes time to sell and convert to cash). Therefore, an increase in inventory explains the increase in current ratio and the decrease in quick ratio. The other choices are unlikely to have a significant impact on the ratios.

Question 4

Match each definition with the correct term below.
-Vertical analysis

Accepted Answer

Vertical analysis involves comparing each item on a financial statement as a percentage of a base figure, such as total assets or total liabilities, which aligns with the definition provided for choice Y.

Question 5

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures.   Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,2013,was $20.Jasmin paid dividends of $0.90 per share during 2013.
What is the debt to equity ratio for this corporation?

Accepted Answer

The answer of The following information pertains to Jasmin Corporation.Assume...

Question 6

Match each definition with the correct term below.
-Discontinued operations

Accepted Answer

Discontinued operations refer to segments that are no longer a part of a company's operations.

Question 7

Match each definition with the correct term below.
-Horizontal analysis

Accepted Answer

The answer of Match each definition with the correct term...

Question 8

A company with a current ratio of 2.4 times will see that ratio decrease when the company

Accepted Answer

Borrowing cash by issuing a short-term note payable increases current liabilities, which decreases the current ratio.

Question 9

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures.   Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,2013,was $20.Jasmin paid dividends of $0.90 per share during 2013.
What is the price/earnings (P/E)ratio for this corporation?

Accepted Answer

The answer of The following information pertains to Jasmin Corporation.Assume...

Question 10

Match each definition with the correct term below.
-Quality of earnings

Accepted Answer

The quality of earnings refers to the substance of earnings and their sustainability into future accounting periods.

Question 11

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures.   Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,2013,was $20.Jasmin paid dividends of $0.90 per share during 2013.
What is the return on assets for this corporation?

Accepted Answer

The answer of The following information pertains to Jasmin Corporation.Assume...

Question 12

Match each definition with the correct term below.
-Financial performance measurement

Accepted Answer

Financial performance measurement encompasses all the techniques used to show important relationships in financial statements and relate them to important financial objectives.

Question 13

Following are the financial statements for Starman Corporation for the year ended December 31,2013.Assume that all balance sheet amounts represent both average and ending figures.   What is the profit margin for this corporation?

Accepted Answer

The answer of Following are the financial statements for Starman...

Question 14

How would the collection of an account receivable affect the current ratio and the quick ratio,respectively?

Accepted Answer

Collecting an account receivable converts one current asset (accounts receivable) into another (cash), so there is no change in the total current assets or quick assets, leaving both ratios unaffected.

Question 15

Following are the financial statements for Starman Corporation for the year ended December 31,2013.Assume that all balance sheet amounts represent both average and ending figures.   What is the return on assets for this corporation?

Accepted Answer

The answer of Following are the financial statements for Starman...

Question 16

Assuming that the current ratio was 1.6 times and the quick ratio was 1.4 times,the entry to record the payment of a previously declared and recorded cash dividend will

Accepted Answer

The answer of Assuming that the current ratio was 1.6...

Question 17

Match each definition with the correct term below.
-Diversified companies

Accepted Answer

Diversified companies are large companies that have multiple segments and operate in more than one industry.

Question 18

Match each definition with the correct term below.
-Ratio analysis

Accepted Answer

The answer of Match each definition with the correct term...

Question 19

A company with $50,000 in current assets,$25,000 in quick assets,and $30,000 in current liabilities makes a payment of a $1,500 current debt.As a result of this transaction,the current ratio and quick ratio will

Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities, so before the payment, the current ratio is 50,000/30,000 = 1.67. After the payment, the current assets will decrease by $1,500, but current liabilities will also decrease by the same amount, so the current ratio will increase. The new current assets will be 50,000 - 1,500 = $48,500, and the new current liabilities will be 30,000 - 1,500 = $28,500. Thus, the new current ratio will be 48,500/28,500 = 1.70.

The quick ratio is calculated by dividing quick assets by current liabilities, so before the payment, the quick ratio is 25,000/30,000 = 0.83. After the payment, the quick assets will not change, but current liabilities will decrease by $1,500, so the quick ratio will increase. The new quick assets will still be $25,000, and the new current liabilities will be $28,500. Thus, the new quick ratio will be 25,000/28,500 = 0.88.

Therefore, the current ratio will increase, and the quick ratio will decrease. The best choice is C.

Question 20

What is the effect of the payment of an account payable on the current ratio and the quick ratio,respectively? (Assume the current ratio was 2.3 times and the quick ratio was 2.1 times before this transaction.)

Accepted Answer

The answer of What is the effect of the payment...

Quiz 14: Financial Performance Measurement

Holiday Corporation provided these figures for the year ended December 31,2013: Cost of goods sold,$516,117; change in inventory,$67,483 decrease; average accounts payable,$64,599. What is the company's payables turnover? Round your answer to one decimal place.

During the year,Dempsey Corporation's current ratio increased while its quick ratio decreased.Which of the following could help explain this situation?

Match each definition with the correct term below. -Vertical analysis

Match each definition with the correct term below. -Discontinued operations

Match each definition with the correct term below. -Horizontal analysis

A company with a current ratio of 2.4 times will see that ratio decrease when the company

Match each definition with the correct term below. -Quality of earnings

Match each definition with the correct term below. -Financial performance measurement

Following are the financial statements for Starman Corporation for the year ended December 31,2013.Assume that all balance sheet amounts represent both average and ending figures. What is the profit margin for this corporation?

How would the collection of an account receivable affect the current ratio and the quick ratio,respectively?

Following are the financial statements for Starman Corporation for the year ended December 31,2013.Assume that all balance sheet amounts represent both average and ending figures. What is the return on assets for this corporation?

Assuming that the current ratio was 1.6 times and the quick ratio was 1.4 times,the entry to record the payment of a previously declared and recorded cash dividend will

Match each definition with the correct term below. -Diversified companies

Match each definition with the correct term below. -Ratio analysis

A company with $50,000 in current assets,$25,000 in quick assets,and $30,000 in current liabilities makes a payment of a $1,500 current debt.As a result of this transaction,the current ratio and quick ratio will

What is the effect of the payment of an account payable on the current ratio and the quick ratio,respectively? (Assume the current ratio was 2.3 times and the quick ratio was 2.1 times before this transaction.)