Free Printable A2 Chapter 13: Financial Reporting & Analysis

Worksheets

A2 Chapter 13: Financial Reporting & Analysis

Total questions: 26

Worksheet time: 13mins

Name

Class

Date

Refer to Figure 4.03-A. Based on this information, what is the Merchandise Inventory turnover rate for 20X2 and 20X1?

10.22 times in 20X2; 2.87 times in 20X1

3.13 times in 20X2; 3.31 times in 20X1

4.52 times in 20X2; 21.5 times in 20X1

4.80 times in 20X2; 3.07 times in 20X1

Refer to Figure 4.03-B. Based on this information, what is the equity ratio for the company?

42%

58%

70%

88%

Refer to Figure 4.03-C. Based on the information provided, what is the working capital for Ryan's Sporting Goods?

$10,000

$66,000

$70,000

$71,000

Refer to Figure 4.03-D. Based on this information, what is the ratio of property, plant, and equipment to long-term liabilities for the company?

1.04 to 1

1.63 to 1

2.88 to 1

3.77 to 1

Refer to Figure 4.03-C. Based on this information, what is the quick ratio for the company?

0.80 to 1

1.09 to 1

1.59 to 1

3.13 to 1

Refer to Figure 4.03-E. Based on this information, what is the return (rate earned) on average total assets?

16.8%

37.1%

45.1%

57.5%

The Stockholders' Equity section of the balance sheet for Alpine Ski Shop is shown in Figure 4.03-F. The beginning stockholders' equity amount was $500,000.00. Net income after federal income tax for the year was $65,000.00. The current market price of the stock is $20.00 per share. Based on the information provided, what is the return (rate earned) on average common stockholders' equity for Alpine Ski Shop?

7.7%

9.7%

11.5%

13.3%

Refer to Figure 4.03-B. Based on the information provided, what is the debt ratio for the company?

12%

30%

42%

58%

Refer to Figure 4.03-C. Based on the information provided, what is the current ratio for the company?

3.13 to 1

3.22 to 1

3.27 to 1

3.92 to 1

10.

Refer to Figure 4.03-H. Based on this information, what is the ratio of stockholders’ equity to liabilities for the company?

1.33 to 1

1.60 to 1

2.00 to 1

8.00 to 1

11.

Refer to Figure 4.03-H. Based on this information, what is the equity per share for the company?

$17.50 per share

$21.00 per share

$28.00 per share

$37.50 per share

12.

Refer to Figure 4.03-J. Using the information provided, what is the accounts receivable turnover rate for each year, 20X2 and 20X1?

5.71 times for 20X2; 4.41 times for 20X1

6.67 times for 20X2; 4.00 times for 20X1

5.00 times for 20X2; 4.92 times for 20X1

2.86 times for 20X2; 2.21 times for 20X1

13.

Refer to Figure 4.03-E. Based on the information provided, what is the return (rate earned) on net sales?

16.8%

29.2%

45.2%

74.4%

14.

Refer to Figure 4.03-G. Based on the information provided, what is the return (rate earned) on net sales?

19.6%

24.7%

31.1%

38.1%

15.

Refer to Figure 4.04-K. Which combination of ratios would most likely be preferred by a short-term creditor concerned with a company's ability to meet its financial obligation to the creditor?

Combination 1

Combination 2

Combination 3

Combination 4

16.

Refer to Figure 4.04-L. Based on the price-earnings ratio for each year, which company shows an unfavorable trend for attracting potential investors?

Company W

Company X

Company Y

Company Z

17.

Refer to Figure 4.04-L. Based on the equity per share for the past three years, which company is showing a favorable trend in the shareholder ownership of the company assets?

Company W

Company X

Company Y

Company Z

18.

Refer to Figure 4.04-K. Which combination of ratios reflects the company most likely to be in danger of failing?

Combination 1

Combination 2

Combination 3

Combination 4

19.

Kleen-Up Company has a receivables turnover ratio of 9.2 for the current year and 10.7 for the prior year. Based on these ratios, management decides to increase the late payment charge imposed on clients when bills are not paid on time. Why did Kleen-Up make this change?

Collections of receivables are taking more time, and an increase in the late payment charge should increase timely payments by customers and increase the receivables turnover ratio.

The receivables turnover ratio is decreasing, which reflects that Kleen-Up is reducing the time it takes for customers to pay.

Customers are paying faster and Kleen-Up is charging more to increase revenues.

Kleen-Up is eliminating sales on account for the future.

20.

The financial statements of DN Properties have reflected a rate earned on average total assets for the past three years of 11.2%, 12.1%, and 13.4%. Industry statistics show that businesses similar to DN Properties typically have a rate earned on average total assets between 11.0% and 15.0%. Based on the given information, which statement is correct?

DN Properties struggles to put its assets to profitable use.

DN Properties needs to sell assets to reduce the rate to below 11.0%.

DN Properties is using its assets in a way that is increasing net income but is still failing to meet acceptable industry standards.

DN Properties is improving its use of assets for increasing profitability and is operating near the same level as similar companies in the industry.

21.

GWM Sports Complex has equity per share of $95 for the current year. The equity per share for the past two years was $128 and $112, respectively. Which statement would most likely explain the change in equity per share over the past three years?

GWM has decreased its operating expenses significantly over the past three years.

GWM has reduced notes receivable significantly over the past three years.

GWM has consistently increased net income over the past three years.

GWM had a significant decrease in sales over the past three years.

22.

Norris Manufacturing has a current ratio of 1.3:1. The industry standard for companies similar to Norris Manufacturing is 2.5:1. This means that Norris Manufacturing:

is operating efficiently because of its excessive cash flow.

lacks the ability to pay its current liabilities.

has a higher-than-average financial risk when compared to other firms in its industry.

has a lower-than-average financial risk when compared to other firms in its industry.

23.

Jones Company has been experiencing a lower-than-desired current ratio. To improve the current ratio, Jones Company should:

issue short-term debt to finance additional fixed assets.

issue long-term debt to purchase fixed assets.

issue short-term debt to buy inventory.

issue more capital stock to raise cash.

24.

Cooper Corporation has a ratio of stockholders’ equity to liabilities of 3.15 for the current year. The ratios for the past two years were 2.10 and 2.35, respectively. Which would most likely explain the significant change from the prior year to the current year?

Cooper Corporation expanded its current facilities in the current year.

Cooper Corporation had sales that decreased dramatically over the past three years.

Cooper Corporation used proceeds from a short term note to reduce accounts payable.

Cooper Corporation issued and received payment for a substantial amount of common stock.

25.

Fresh Market's gross profit margin is unchanged, but the net profit margin (return on sales) declined over the same period. What is a possible reason for this?

Dividends were decreased.

Sales increased relative to expenses.

The U.S. Congress increased the tax rate.

The cost of goods sold increased relative to sales.

26.

Parker Industries has a debt ratio of 48.2%. The industry average for companies similar to Parker is 43.5%. This means that Parker likely:

will avoid any difficulty with its creditors.

will be viewed as having high creditworthiness.

has less liquidity than other firms in the industry.

has greater than average financial risk when compared to other firms in its industry.

100 %

A2 Chapter 13: Financial Reporting & Analysis

Total questions: 26

Worksheet time: 13mins

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