Deck 4: Financial Statement Analysis

Question 1

-Calculate the net working capital in terms of dollars and as a percentage of total assets for both years:
Net working capital ____________ _____________
Ratios ____________ _____________

Answer 1

Question 2

-Calculate the return on revenue ratio for both years:
Ratios ____________ _____________

Answer 2

Question 3

-Calculate the profit margin on revenue ratio for both years:
Ratios ____________ _____________

Answer 3

Question 4

-Calculate the return on equity ratio for both years:
Ratios ____________ _____________

Question 5

-Calculate the return on total assets ratio for both years:
Ratios ____________ _____________

Question 6

-Identify with a check mark, which ratios show an improvement between the two years:

Question 7

-Calculate the net working capital's change in dollars and in percentage between the years 2012 and 2011:
In dollars _____________
In percentage _____________

Question 8

-Calculate the shareholders' equity change in dollars and in percentage between the years 2012 and 2011:
In dollars _____________
In percentage _____________

Question 9

-Calculate the total liabilities change in dollars and in percentage between the years 2011 and 2012
In dollars _____________
In percentage _____________

Question 10

-Calculate the total assets' change in dollars and in percentage between the years 2011 and 2012
In dollars _____________
In percentage _____________

Question 11

-Total assets turnover is: _____________

Question 12

-Return on total assets is: _____________

Question 13

-Profit margin on revenue is: _____________

Question 14

-Return on equity is: _____________

Question 15

-Debt-to-total assets is: _____________

Question 16

-Debt-to-equity is: _____________

Question 17

-Return on revenue is: _____________

Question 18

-Times-interest-earned is: _____________

Question 19

-Fixed-charges-coverage ratio is: _____________

Question 20

-Average collection period is: _____________

Question 21

-Inventory turnover is: _____________

Question 22

-The current ratio is: _________________

Question 23

-The quick ratio is: _________________

Question 24

-The debt-to-total assets ratio is: _________________

Question 25

-The debt-to-equity ratio is: _________________

Question 26

-The times-interest-earned ratio is: _________________

Question 27

-The fixed-charges coverage ratio is: _________________

Question 28

-The average collection period is:_________________

Question 29

-The inventory turnover is: _________________

Question 30

-The capital assets turnover is: _________________

Question 31

-The total assets turnover is: _________________

Question 32

-The profit margin on revenue ratio is: _________________

Question 33

-The return on revenue ratio is: _________________

Question 34

-The return on total assets ratio is: _________________

Question 35

-The return on equity ratio is:_________________

Question 36

-Total non-current assets:_________________

Question 37

-Inventories:_________________

Question 38

-Total current assets: _________________

Question 39

-Total equity:_________________

Question 40

-Total current liabilities: _________________

Question 41

-Total liabilities: _________________

Question 42

-Cost of sales: _________________

Question 43

-Total distribution costs: _________________

Question 44

-Total administrative expenses: _________________

Question 45

-Profit before taxes: _________________

Question 46

-The current ratio is: _________________

Question 47

-The quick ratio is: _________________

Question 48

-The debt-to-total assets ratio is: _________________

Question 49

-The debt-to-equity ratio is: _________________

Question 50

-The times-interest-earned ratio is:_________________

Question 51

-The fixed-charges coverage ratio is: _________________

Question 52

-The average collection period is: _________________

Question 53

-The inventory turnover is: _________________

Question 54

-The capital assets turnover is: _________________

Question 55

-The total assets turnover is: _________________

Question 56

-The profit margin on revenue ratio is: _________________

Question 57

-The return on revenue ratio is: _________________

Question 58

-The return on total assets ratio is: _________________

Question 59

-The return on equity ratio is: _________________

Question 60

What is the best measure of a company's liquidity?

A) the quick ratio
B) the debt-to-total assets ratio
C) the current ratio
D) the times-interest-earned

Question 61

Why do managers analyze financial statements?

A) to review the company's profitability
B) to see whether or not the financial statements have been prepared in accordance with generally accepted accounting principles
C) to see how the company is performing and to use that information to determine whether budgets have been met and goals achieved
D) to examine the past to gauge past performance and use that information to enhance future performance

Question 62

What is the "rule of thumb" for the-debt-to-total-assets ratio, and what does it mean?

A) The debt-to-equity ratio is 45%, which is a satisfactory debt-to-equity ratio.
B) The debt-to-total-assets ratio is 65%, and creditors may not provide more debt financing to the company.
C) The debt-to-total assets ratio is 50%, and creditors will provide more debt financing.
D) The debt-to-total-debt ratio is 50%, and creditors may be reluctant to provide more financing.

Question 63

What are the components of working capital?

A) current revenues and current expenses
B) operating assets and operating expenses
C) current assets and current liabilities
D) current assets and long-term borrowings

Question 64

What is removed from current assets to calculate the quick ratio?

A) marketable securities
B) cash
C) trade receivables
D) inventories

Question 65

Which of the following is a debt-coverage ratio?

A) inventory turnover
B) earnings per share
C) times-interest-earned
D) return on equity

Question 66

What is the denominator of the times-interest-earned ratio?

A) finance costs
B) profit for the year
C) finance costs less income taxes
D) profit before taxes

Question 67

Which of the following is an asset-management measure?

A) return on assets
B) times-interest-charges
C) average collection period
D) current ratio

Question 68

Which of the following is divided by inventory to calculate the inventory turnover ratio?

A) total assets
B) gross profit
C) cost of sales
D) operating expenses

Question 69

Which of the following is divided by total assets to calculate the total assets turnover ratio?

A) cost of sales
B) profit for the year
C) revenue
D) profit before taxes

Question 70

What is the profit margin on revenue performance measure related to?

A) operating income
B) gross profit
C) capital assets
D) working capital

Question 71

Which of the following is a measure of profitability?

A) return on revenue
B) times-interest-earned
C) inventory turnover
D) quick ratio

Question 72

What is related to a company's performance under the DuPont financial system?

A) gross profit
B) revenue
C) total assets
D) equity

Question 73

Which of the following is a measure of liquidity?

A) total assets turnover ratio
B) average collection period
C) return on revenue ratio
D) current ratio

Question 74

Which of the following is a measure of returns?

A) total assets turnover
B) quick ratio
C) average collection period
D) return on revenue ratio

Question 75

Which ratio measures solvency?

A) debt-to-equity ratio
B) return on total assets ratio
C) total assets turnover ratio
D) return on revenue ratio

Question 76

Which of the following helps measure growth in components of a financial statement?

A) common-size statement analysis
B) the cash budget
C) the DuPont financial system
D) horizontal analysis

Question 77

Which of the following ratios tells us how management is managing the largest current asset in a company such as Future Shop or Best Buy?

A) The quick ratio.
B) The current ratio.
C) The debt-to-total assets ratio.
D) The inventory turnover.

Question 78

Which of the following is NOT an asset-management ratio?

A) earnings per share
B) total assets turnover
C) inventory turnover
D) average collection period

Question 79

Which ratio is most likely to interest marketing managers?

A) debt-to-total assets
B) profit margin on revenue
C) current ratio
D) total assets turnover

Question 80

What measures the productivity level of a business?

A) profit margin on revenue
B) current ratio
C) total assets turnover
D) average collection period