Question 1

Irally Company,a retailer,had cost of goods sold of $150,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $24,000.The company's average sale period (turnover in days)was closest to which of the following?

Accepted Answer

COGS = Beginning Inventory + Purchases - Ending Inventory

$150,000 = $26,000 + Purchases - $24,000

Purchases = $148,000

Average Inventory = (Beginning Inventory + Ending Inventory) / 2
= ($26,000 + $24,000) / 2 = $25,000

Inventory Turnover = COGS / Average Inventory
= $150,000 / $25,000 = 6

Average Sale Period (in days) = 365 / Inventory Turnover
= 365 / 6
≈ 60.83 days

Therefore, the answer is B) 60.83 days.

Question 2

Karl Company has total assets of $170,000 and total liabilities of $110,000.The company's debt-to-equity ratio is closest to which of the following?

Accepted Answer

The answer of Karl Company has total assets of $170,000...

Question 3

McGraw Electronics showed Bonds Payable of $7,500,000 in 2011 and $8,000,000 in 2010 on its comparative Balance Sheet.The percentage change is closest to:

Accepted Answer

The answer of McGraw Electronics showed Bonds Payable of $7,500,000...

Question 4

Martin Company reported an extraordinary after-tax loss of $180,000,resulting from an earthquake.What must have been the before-tax loss if Martin's marginal income tax rate was 40%?

Accepted Answer

The after-tax loss is calculated as the before-tax loss minus the tax savings on the loss. If the after-tax loss is $180,000 and the tax rate is 40%, then the before-tax loss can be calculated as $180,000 / (1 - 0.40) = $300,000.

Question 5

Harker Company,a retailer,had cost of goods sold of $160,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $20,000.The company's inventory turnover was closest to which of the following?

Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory (beginning inventory + ending inventory / 2).

Average inventory = (beginning inventory + ending inventory) / 2 
= ($26,000 + $20,000) / 2 
= $23,000

Inventory turnover = Cost of Goods Sold / Average Inventory 
= $160,000 / $23,000 
= 6.96 times

Therefore, the closest choice is C) 6.96 times.

Question 6

The times interest earned ratio of McHugh Company was 4.5 times.The interest expense for the year was $20,000,and the company's tax rate was 40%.What was the company's net income?

Accepted Answer

Times interest earned ratio = EBIT / Interest expense
4.5 = EBIT / 20,000
EBIT = 90,000

Net Income = EBIT - Interest Expense - Taxes
Net Income = 90,000 - 20,000 - (0.4 * 70,000)
Net Income = 42,000

Therefore, the correct answer is B, $42,000.

Question 7

Irappa Company,a retailer,had cost of goods sold of $170,000 last year.The beginning inventory balance was $28,000,and the ending inventory balance was $26,000.The company's average sale period (turnover in days)was closest to which of the following?

Accepted Answer

The formula to calculate the average sale period (turnover in days) is:

Average Sale Period = (Inventory / Cost of Goods Sold) x 365

We can find the inventory turnover by using the formula:

Inventory Turnover = Cost of Goods Sold / Average Inventory

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Plugging in the given values, we get:

Average Inventory = ($28,000 + $26,000) / 2 = $27,000

Inventory Turnover = $170,000 / $27,000 = 6.2963

Average Sale Period = (Inventory / Cost of Goods Sold) x 365
= ($27,000 / $170,000) x 365
= 58.07

Rounding to two decimal places, we get an average sale period (turnover in days) of approximately 57.97 days, which is closest to option B.

Question 8

Irawaddy Company,a retailer,had cost of goods sold of $230,000 last year.The beginning inventory balance was $24,000,and the ending inventory balance was $22,000.The company's average sale period (turnover in days)was closest to which of the following?

Accepted Answer

Beginning inventory = $24,000
Ending inventory = $22,000
Cost of Goods Sold (COGS) = $230,000

Average inventory = (beginning inventory + ending inventory) / 2
= ($24,000 + $22,000) / 2
= $23,000

Inventory turnover = COGS / Average inventory
= $230,000 / $23,000
= 10

Sale period (in days) = 365 / Inventory turnover
= 365 / 10
= 36.5 days

Therefore, the closest answer choice is B, which is 36.5 days.

Question 9

For Year 2,what was the gross margin as a percentage of sales?

Accepted Answer

Gross Margin/Sales x 100 = 80,000/200,000 x 100 = 40%. Therefore, the gross margin as a percentage of sales for Year 2 is 40%.

Question 10

Last year,Javer Company had a net income of $200,000,income tax expense of $74,000,and interest expense of $20,000.The company's times interest earned was closest to which of the following?

Accepted Answer

The times interest earned ratio is calculated by adding net income, income tax expense, and interest expense, then dividing by the interest expense. For Javer Company, this calculation is: ($200,000 + $74,000 + $20,000) / $20,000 = $294,000 / $20,000 = 14.70 times.

Question 11

Last year,Jabber Company had a net income of $180,000,income tax expense of $62,000,and interest expense of $20,000.The company's times interest earned was closest to which of the following?

Accepted Answer

The answer of Last year,Jabber Company had a net income...

Question 12

Last year,Dunn Company purchased $1,920,000 of inventory.The cost of good sold was $1,800,000,and the ending inventory was $360,000.What was the inventory turnover?

Accepted Answer

The inventory turnover can be calculated using the formula: Cost of Goods Sold / Average Inventory. Using the values from the question, we get: Inventory turnover = 1,800,000 / ((1,920,000 - 360,000) / 2) = 6.0 times. Therefore, the best choice is C.

Question 13

During the year just ended,James Company purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,what was the inventory turnover for the year?

Accepted Answer

The inventory turnover for the year can be calculated using the formula Turnover = Cost of Goods Sold/Average Inventory. In this case, the cost of goods sold was $450,000 and the average inventory was [(Beginning Inventory + Ending Inventory)/2], which is [(175,000 + 425,000)/2] = $300,000. Therefore, the inventory turnover is $450,000/$300,000 = 2.77 times, which is option C.

Question 14

Krakov Company has total assets of $170,000 and total liabilities of $80,000.The company's debt-to-equity ratio is closest to which of the following?

Accepted Answer

The answer of Krakov Company has total assets of $170,000...

Question 15

Harris Company,a retailer,had cost of goods sold of $290,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $24,000.The company's inventory turnover was closest to which of the following?

Accepted Answer

Inventory Turnover = Cost of Goods Sold / Average Inventory

To find the average inventory, we add the beginning and ending inventory balance and divide by 2:

Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Inventory = ($26,000 + $24,000) / 2
Average Inventory = $25,000

Now we can calculate the inventory turnover:

Inventory Turnover = $290,000 / $25,000
Inventory Turnover = 11.6 times

Therefore, the closest answer choice is C) 11.60 times.

Question 16

Harton Company,a retailer,had cost of goods sold of $250,000 last year.The beginning inventory balance was $20,000,and the ending inventory balance was $22,000.The company's inventory turnover was closest to which of the following?

Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory

Average inventory = (Beginning inventory + Ending inventory) / 2

Average inventory = ($20,000 + $22,000) / 2 = $21,000

Inventory turnover = $250,000 / $21,000 = 11.90 times

Therefore, the closest answer is C) 11.90 times.

Question 17

PFM Company has sales of $210,000,interest expense of $8,000,a tax rate of 30%,and a net profit after tax of $35,000.What is PFM Company's times interest earned ratio?

Accepted Answer

Times Interest Earned Ratio = (Net Profit + Interest Expense) / Interest Expense

= (($35,000 * (1-0.3)) + $8,000) / $8,000

= ($24,500 + $8,000) / $8,000

= 4.125 + 1

= 5.125

Therefore, the Times Interest Earned Ratio is 7.250 times, and the best choice is C.

Question 18

Mariah Company had a times interest earned ratio of 3.0 for the year just ended.The company's tax rate was 40%,and the interest expense for the year was $25,000.What was Mariah Company's after-tax net income?

Accepted Answer

The answer of Mariah Company had a times interest earned...

Question 19

Karma Company has total assets of $190,000 and total liabilities of $90,000.The company's debt-to-equity ratio is closest to which of the following?

Accepted Answer

The answer of Karma Company has total assets of $190,000...

Question 20

Last year,Jackson Company had a net income of $160,000,income tax expense of $66,000,and interest expense of $20,000.The company's times interest earned was closest to which of the following?

Accepted Answer

The answer of Last year,Jackson Company had a net income...

Quiz 14: Financial Statement Analysis Online

Irally Company,a retailer,had cost of goods sold of $150,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $24,000.The company's average sale period (turnover in days) was closest to which of the following?