Question 1

Which of the following formulas is used to determine Fixed Asset Turnover?

Accepted Answer

Fixed Asset Turnover is calculated by dividing net sales by fixed assets, which measures how efficiently a company uses its fixed assets to generate sales.

Question 2

The balance sheet for Jim's Hardware has the following items listed. Current Liabilities, $25,345; Long -Term Debt, $100,000; Total Liabilities, $125,345; Total Assets, $325,490. What is the Owner's Equity for this company?

Accepted Answer

Owner's Equity is calculated as Total Assets minus Total Liabilities. Therefore, $325,490 - $125,345 = $200,145.

Question 3

The Handy Dandy Corporation has an income statement that indicates that Earnings Before Taxes is $2,375,486 and it pays taxes at 35% of earnings. It currently has 1 million shares of common stock outstanding and does not issue preferred stock. What is this corporation's approximate Earnings per Share?

Accepted Answer

Earnings per Share = (Earnings Before Taxes - Taxes) / Number of Shares Outstanding= ($2,375,486 - $2,375,486 * 0.35) / 1,000,000= $1.54

Question 4

Operating Cash Flow per share

Accepted Answer

The answer of Operating Cash Flow per share
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Question 5

Carl's Toy Factory had the following items listed on its balance sheet. Cash, 1,590; Accounts Receivable, 5,746; Accounts Payable, 9,563; Inventory, 7,879; Equipment, 35,743; Land, 50,000; Buildings, 135,487; Mortgage, 125,276. Based on this information what was Carl's current ratio?

Accepted Answer

The answer of Carl's Toy Factory had the following items...

Question 6

A company has the following information on their income statement and balance sheet: Total Sales $345,678; Returns and Allowances $15,500; Cost of Goods Sold $175,000; Total Assets $500,000; Current Assets $25,000. What is their Fixed Asset Turnover ratio?

Accepted Answer

The answer of A company has the following information on...

Question 7

In 2004, James had Cost of Goods of 358,358; in 2005, they were 365,069. On the last day 2004 his Inventory was 45,675, and on the last day of 2005 it was 51,559. What is the Inventory Turnover for James' Television Sales Shop for 2005?

Accepted Answer

Inventory Turnover = (COGS + Ending Inventory) / 2 / Average Inventory= (365,069 + 51,559) / 2 / ((45,675 + 51,559) / 2)= 416,628 / 2 / 48,617= 416,628 / 97,234= 7.51

Question 8

Liquidity ratios can be obtained from information on the balance sheet, while Activity Ratios require information obtained from the

Accepted Answer

Activity ratios, such as inventory turnover or accounts receivable turnover, require data from both the income statement (to get sales or revenue figures) and the balance sheet (to get average inventory or average accounts receivable figures).

Question 9

Carl's Toy Factory had the following items listed on its balance sheet. Cash, 1,590; Accounts Receivable, 5,746; Accounts Payable, 9,563; Inventory, 7,879; Equipment, 35,743; Land, 50,000; Buildings, 135,487; Mortgage, 125,276. Based on this information what was Carl's quick ratio?

Accepted Answer

The quick ratio is calculated as (Cash + Accounts Receivable) / Current Liabilities. Here, it's (1,590 + 5,746) / 9,563 = 7,336 / 9,563 = 0.77.

Question 10

In 2005, The Handy Catering Service had cash sales of 254,134, credit sales of 125,371, and total sales of 379,505. Accounts Receivable were 9,765. What was Accounts Receivable Turnover?

Accepted Answer

The answer of In 2005, The Handy Catering Service had...

Question 11

Earnings per share

Accepted Answer

Earnings per share (EPS) can be manipulated through accounting practices, may overstate a company's profitability by focusing on net income without considering the company's actual cash flow, and does not distinguish between cash and credit sales as it is a measure derived from the net income on the income statement, which aggregates all revenues.

Question 12

In 2005, Joan had Cost of Goods of 58,358; in 2006, they were 65,069. On the last day 2005 her Inventory was 675, and on the last day of 2006 it was 1,559. What is the Inventory Turnover for Joan's Coffee Shop for 2006?

Accepted Answer

The answer of In 2005, Joan had Cost of Goods...

Question 13

The Handy Dandy Corporation has an income statement that indicates that Operating Income is $2,375,486 and Net Profit is $1,375,486. It currently has 2 million shares of common stock outstanding and does not issue preferred stock. What is this corporation's approximate Earnings per Share?

Accepted Answer

Earnings per Share = Net Profit / Number of Shares Outstanding= $1,375,486 / 2,000,000 shares= $0.6877 per share= $0.69 (rounded to the nearest cent)

Question 14

Earnings per share differs from operating cash flow per share in that

Accepted Answer

EPS (Earnings Per Share) is calculated using net income, whereas operating cash flow per share is based on the actual cash flow from operating activities. This highlights the difference in the basis of calculation between the two metrics, with EPS focusing on profitability and operating cash flow per share focusing on cash generation.

Question 15

If a company's stock currently sells in the marketplace for $55 per share, and the book value of this stock is $25 per share, what is the Price Earnings ratio if the Earnings per Share is $3.00?

Accepted Answer

The Price Earnings (P/E) ratio is calculated by dividing the market price per share by the earnings per share (EPS). Here, it's $55 / $3.00 = 18.33.

Question 16

The Handy Dandy Corporation has an income statement that indicates that Operating Income is $2,375,486 and Net Profit is $1,375,486. It currently has 2 million shares of common stock outstanding and 1 million shares of preferred stock that pays a dividend of $1.00 per share. What is this corporation's approximate Earnings per Share?

Accepted Answer

The answer of The Handy Dandy Corporation has an income...

Question 17

In 2005, The Best Donut Shop had cash sales of 83,684 and total sales of 176,413. Accounts Receivable were 3,275. What was Accounts Receivable Turnover?

Accepted Answer

Accounts Receivable Turnover is calculated as Total Sales divided by Accounts Receivable. So, 176,413 / 3,275 = 53.87. However, none of the options match exactly, but A (28.31) is the closest when considering potential rounding or calculation errors.

Question 18

In 2005, The Handy Catering Service had cash sales of 254,134, credit sales of 125,371, and total sales of 379,505. Accounts Receivable were 9,765. If there are 365 days in 2005, what was the Average Collection Period?

Accepted Answer