Based on the following data, what is the amount of working capital?
Accounts payable
$34,300
Accounts receivable
$72,398
Accrued liabilities
$6,699
Cash
$17,115
Intangible assets
$41,812
Inventory
$74,061
Long-term investments
$97,531
Long-term liabilities
$78,179
Marketable securities
$34,592
Notes payable (short-term)
$23,022
Property, plant, and equipment
$644,131
Prepaid expenses
$2,086
a. $136,231
b. $983,726
c. $124,105
d. $200,252
a. $136,231
The percentage analysis of increases and decreases in individual items in comparative financial statements is called
a. vertical analysis
b. solvency analysis
c. profitability analysis
d. horizontal analysis
d. horizontal analysis
The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.
True or False
False
In a common size income statement, the 100% figure is
a. gross profit.
b. net cost of merchandise sold.
c. net income.
d. net sales.
d. net sales.
Factors which reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability.
True or False
True
The current ratio is
a. used to evaluate a company's liquidity and short-term debt paying ability.
b. calculated by dividing current liabilities by current assets.
c. calculated by subtracting current liabilities from current assets.
d. is a solvency measure that indicated the margin of safety of a noteholder or bondholder.
a. used to evaluate a company's liquidity and short-term debt paying ability.
The excess of current assets over current liabilities is referred to as working capital.
True or False
True
The number of days' sales in inventory is one means of expressing the relationship between the cost of merchandise sold and inventory.
True or False
True
An analysis in which all the components of an income statement are expressed as a percentage of net sales is called
a. horizontal analysis
b. common-size analysis
c. liquidity analysis
d. vertical analysis
d. vertical analysis
A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000 and $222,500 of inventories. Current liabilities are $225,000. The current ratio is 2.5 to 1. True or False
True
Based on the following data for the current year, what is the number of days' sales in accounts receivable?
Net sales on account during year
$452,624
Cost of merchandise sold during year
169,206
Accounts receivable, beginning of year
44,669
Accounts receivable, end of year
54,968
Inventory, beginning of year
95,158
Inventory, end of year
111,029
a. 83 days
b. 90 days
c. 40 days
d. 136 days
c. 40 days
Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of merchandise sold as a percentage of sales must be 85%.
True or False
False
Based on the following data, what is the amount of quick assets?
Accounts payable
$26,374
Accounts receivable
$66,609
Accrued liabilities
$6,971
Cash
$16,636
Intangible assets
$39,366
Inventory
$88,954
Long-term investments
$90,994
Long-term liabilities
$70,947
Marketable securities
$32,081
Notes payable (short-term)
$24,871
Property, plant, and equipment
$603,253
Prepaid expenses
$1,780
a. $740,924
b. $1,474,537
c. $48,717
d. $115,326
d. $115,326
A balance sheet that displays only component percentages is called
a. comparative balance sheet
b. common-sized balance sheet
c. trend balance sheet
d. condensed balance sheet
b. common-sized balance sheet
Based on the following data for the current year, what is the accounts receivable turnover?
Net sales on account during year
$406,154
Cost of merchandise sold during year
200,455
Accounts receivable, beginning of year
44,254
Accounts receivable, end of year
52,836
Inventory, beginning of year
80,033
Inventory, end of year
107,533
a. 8.4
b. 3.8
c. 9.2
d. 2
a. 8.4
Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?
a. number of days' sales in receivables b. rate earned on stockholders' equity
c. ratio of fixed assets to long-term liabilities
d. ratio of net sales to assets
c. ratio of fixed assets to long-term liabilities
The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.
True or False
True
Assume the following sales data for a company: What is the percentage increase in sales from 2009 to 2010?
a. 80%
b. 180%
c. 100%
d. 44.4%
a. 80%
In a common size balance sheet the 100 percent figure is
a. total assets.
b. total property, plant and equipment
c. total current assets.
d. total liabilities.
a. total assets.
Based on the following data for the current year, what is the inventory turnover?
