From a bankers perspective, the most important ratio on the customers financial statement is - Correct
Answers Current Ratio
Which of the following is an operating performance ratio?
Debt to total assets
Times interest earned
Payout ratio
Times interest earned and payout ratio
None - Correct Answers Times interest earned and Payout Ratio
Horizontal analysis compares the components of a balance sheet with a base item. T/F - Correct
Answers False
Since companies have different numbers of shares outstanding, it is not useful to compare earnings per
share ratios. T/F - Correct Answers True
There are two ratios that help define the operating cycle. They are:
receivables and inventory turnover
receivables and accounts payable
inventory and accounts payable turnover
none of these - Correct Answers Receivables and accounts payable
,The ratio that shows the markup in price over the cost of goods sold is
profit margins
gross margin ratio
return on assets
asset turnover
none - Correct Answers Gross margin ratio
The ratio that shows how investors value the stock is
payout ratio
earnings per share
return on equity
return on assets
none - Correct Answers None
Financial strength ratios are utilized to help predict the long-run solvency of a company. T/F - Correct
Answers True
Ratio analysis is popular because ratios:
summarize important info
are useful in comparisons within a company over time
are useful in comparisons with other companies
all the above - Correct Answers All the above
, ROE shows how much income was earned for every dollar invested by owners. T/F - Correct Answers
True
A company's annual report is used primarily by the taxing authorities. T/F - Correct Answers True
Managerial accounting is involved in:
external reports
internal reports
tax reports
economic reports - Correct Answers Internal reports
Using an accelerated depreciation method for tax purposes would be an example of:
managerial accounting
financial accounting
tax accounting
none - Correct Answers Tax accounting
Owners in corporations are liable only for the amount they have invested and no more. T/F - Correct
Answers True
Information that can make a difference to the decision at hand is considered to be:
reliable
comparable
conservatism
understandability
none - Correct Answers None - relevancy
Answers Current Ratio
Which of the following is an operating performance ratio?
Debt to total assets
Times interest earned
Payout ratio
Times interest earned and payout ratio
None - Correct Answers Times interest earned and Payout Ratio
Horizontal analysis compares the components of a balance sheet with a base item. T/F - Correct
Answers False
Since companies have different numbers of shares outstanding, it is not useful to compare earnings per
share ratios. T/F - Correct Answers True
There are two ratios that help define the operating cycle. They are:
receivables and inventory turnover
receivables and accounts payable
inventory and accounts payable turnover
none of these - Correct Answers Receivables and accounts payable
,The ratio that shows the markup in price over the cost of goods sold is
profit margins
gross margin ratio
return on assets
asset turnover
none - Correct Answers Gross margin ratio
The ratio that shows how investors value the stock is
payout ratio
earnings per share
return on equity
return on assets
none - Correct Answers None
Financial strength ratios are utilized to help predict the long-run solvency of a company. T/F - Correct
Answers True
Ratio analysis is popular because ratios:
summarize important info
are useful in comparisons within a company over time
are useful in comparisons with other companies
all the above - Correct Answers All the above
, ROE shows how much income was earned for every dollar invested by owners. T/F - Correct Answers
True
A company's annual report is used primarily by the taxing authorities. T/F - Correct Answers True
Managerial accounting is involved in:
external reports
internal reports
tax reports
economic reports - Correct Answers Internal reports
Using an accelerated depreciation method for tax purposes would be an example of:
managerial accounting
financial accounting
tax accounting
none - Correct Answers Tax accounting
Owners in corporations are liable only for the amount they have invested and no more. T/F - Correct
Answers True
Information that can make a difference to the decision at hand is considered to be:
reliable
comparable
conservatism
understandability
none - Correct Answers None - relevancy
