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Which of the following is considered a liquidity ratio?

a. price-earnings ratio

b. times interest earned

c. average collection period

d. free cash flow

e. debt to total assets ratio

The income (loss) from discontinued operations consists of the

a. income (loss) from continuing operations.

b. the gain (loss) on the disposed operations.

c. income (loss) from the disposed operations.

d. both b and c

e. both a and c.

Discontinued operations refer to

a. the disposal of a component of an entity.

b. the availability for sale of a component of an entity.

c. the elimination of a product line.

d. both a and b

e. both b and c

Vertical analysis is rarely performed on which of the following statements?

a. income statement

b. statement of cash flows

c. statement of financial position

d. All of the above statements have vertical analysis performed on them.

e. b and c

4. Which of the following is considered a profitability ratio?

a. price-earnings ratio

b. times interest earned.

c. average collection period

d. free cash flow

e. debt to total assets ratio

Comparisons with a competitor company to provide insight into a company's competitive position is an a. intracompany basis comparison.

b. intercompany basis comparison.

c. industry comparison.

d. both a and c

e. none of the above

A technique for evaluating a series of financial statement data over a period of time is called

a. horizontal analysis.

b. vertical analysis.

c. ratio analysis.

d. none of the above

e. both a and b

A technique for evaluating financial statement data that expresses each item within a financial statement as a percentage of a base amount is called

a. horizontal analysis.

b. vertical analysis.

c. ratio analysis.

d. none of the above

e. both a and b

Vertical analysis of comparative income statements would show cost of goods sold as a percentage of

a. total assets.

b. inventory.

c. net sales.

d. net income

e. total liabilities.

A measure of the ability of a company to pay total liabilities is a

a. liquidity ratio.

b. solvency ratio.

c. current ratio.

d. profitability ratio.

e. working capital ratio.

Use the following data to answer questions 11-13.

Current assets $150,000

Total assets 500,000

Current liabilities 125,000

Total liabilities 200,000

Net sales 550,000

Net credit sales. 300,000

Cost of goods sold 200,000

Gross profit 350,000

Net income. 100,000

Average gross receivables 50,000

Average inventory 40.000

11. What is the receivables turnover?

a. 1 times

b. 6 times

c. 11 times

d. 17 times

e. none of the above

12. What is the debt to total assets?

a. 25%

b. 40%

c. 83%

d. 133%

e. none of the above

13. What is the profit margin?

a. 18%

b. 36%

c. 64%

d. 82%

e. none of the above

14. Which of the following

a. Under both ASPE and IFRS, basic earnings per share must be reported on the income a true statement? statement.

b. Under ASPE, basic earnings per share must be reported on the income statement.

c. Under IFRS, basic earnings per share must be reported in the income statement.

d. Neither ASPE nor IFRS require that the basic earnings per share be reported on the income statement.

e. Only when discontinued operations are presented must basic earnings per share be reported on the income statement.

15. Which of the following is a factor that would limit the usefulness of your financial analysis?

a. alternative accounting policies

b. comprehensive income

c. nonrecurring items

d. diversification

e. all of the above

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