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Quiz MKL 4

The document contains a 14 question quiz about financial ratios and calculations. It tests understanding of concepts like current assets, current liabilities, working capital, inventory turnover, accounts receivable turnover, times interest earned, return on equity, debt to equity ratio, and more. Sample calculations are provided to compute unknown values like sales based on given financial data for a company.

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76 views

Quiz MKL 4

The document contains a 14 question quiz about financial ratios and calculations. It tests understanding of concepts like current assets, current liabilities, working capital, inventory turnover, accounts receivable turnover, times interest earned, return on equity, debt to equity ratio, and more. Sample calculations are provided to compute unknown values like sales based on given financial data for a company.

Uploaded by

nina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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QUIZ : FINANCIAL RATIO PROGRAM : MIM USU

1. Which of the following is not a current asset?

A.Inventory
B. Prepaid Insurance
C.Fixtures

2.Current asset MINUS current liabilities is the

A.Current Ratio
B.Net Worth
C.Working Capital

3.Current assets DIVIDED BY current liabilities is the

A.Current Ratio
B.Net Worth Ratio
C.Working Capital

4.The quick ratio EXCLUDES which of the following?

A.Accounts Receivable
B.Inventory
C.Cash

Use the following information to answer items 5 - 7:


At December 31 a company's records show the following information:

5.The company's working capital is


A. $60,000
B. $66,000
C. $196,000
6.The company's current ratio is
A. 1.0 : 1
B. 2.0 : 1
C. 2.1 : 1

7.The company's quick ratio is


A. 0.7 : 1
B. 1.0 : 1
C. 2.0 : 1
Use the following information to answer items 8 - 11:
For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of
$525,000. At the beginning of the year its Accounts Receivable were $80,000 and its Inventory was
$100,000. At the end of the year its Accounts Receivable were $86,000 and its Inventory was $110,000.
8.The inventory turnover ratio for the year was
A. 4.8
B. 5.0
C. 7.9

9.The accounts receivable turnover ratio for the year was


A. 6.3
B. 7.5
C. 10.0

10.On average how many days of sales were in Accounts Receivable during the year?
A. 27
B. 37
C. 49

11.On average how many days of sales were in Inventory during the year?
A. 14
B. 46
C. 73

Use the following information for items 12 and 13:


A company's net income after tax was $400,000 for its most recent year. The company's income
statement included Income Tax Expense of $140,000 and Interest Expense of $60,000. At the beginning
of the year the company's stockholders' equity was $1,900,000 and at the end of the year it was
$2,100,000.

12.What is the times interest earned for the company?


A. 6.7
B. 9.0
C. 10.0

13.What is the after-tax return on stockholder's equity for the year?


A. 20%
B. 25%
C. 30%

14. The debt to equity ratio is computed as: (Total Liabilities ÷ Total __________) : 1
15.Which of the following are likely to have the reported amounts on the balance sheet being close to
their current value?
A. Current Assets
B. Long-term Assets
C. Stockholders' Equity

TRUE or FALSE
1.Trend percentages state several years' financial data in terms of a base year. For example, sales for
every year would be stated as a percentage of the sales in the base year. (T / F )

2. The gross margin percentage is computed taking the difference between sales and cost of goods and
then dividing the result by sales. ( T / F )

3. The gross margin percentage is computed by dividing net income before interest and taxes by sales.
(T/F)

4. The price-earnings ratio is determined by dividing the price of a product by its profit margin. ( T / F )

5. If the market value of a share of stock is greater than its book value, the stock is probably overpriced.
(T/F)

Calculation:
1. Selected data from Sheridan Corporation’s year-end financial statements are presented below. The
difference between average and ending inventory is immaterial.
Current ratio ............ 2.0
Acid-test ratio .......... 1.5
Current liabilities ...... $120,000
Inventory turnover ....... 8 times
Gross profit margin ...... 40%
Sheridan's sales for the year was ………………………………..

2. Arlberg Company's net income last year was $250,000. The company has 150,000 shares of common
stock and 80,000 shares of preferred stock outstanding. There was no change in the number of common
or preferred shares outstanding during the year. The company declared and paid dividends last year of
$1.30 per share on the common stock and $1.40 per share on the preferred stock. The earnings per
share of common stock is closest to ………………………

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