Financial statement analysis Exam
1. Unified Corporation's net income was $1,800,000 in 2007 and $600,000 in 2008.
What percentage increase in net income must Unified achieve in 2009 to offset the
decline in profits in 2008?
A) 75%.
B) 300%.
C) 33.33%.
D) 800%.
Answer: B
Feedback:
1,800,000/600,000 = 3 or 300%
2. If a retail store has a current ratio of 2 1/2 to 1 and current assets of $175,000,
the amount of working capital is:
A) $ 70,000.
B) $262,500.
C) $225,000.
D) $105,000.
Answer: D
Feedback:
175,000 - (175,000/2.5) = 105,000
3. The Sirene company has working capital of $180,000 and a current ratio of 3 to
1. The amount of current assets is:
A) $135,000.
B) $180,000.
C) $270,000.
D) $ 90,000.
Answer: C
Feedback:
3CL – CL = 180,000: CL = 90,000; CA=270,000
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,4. During the years 2007 through 2009, Walston, Inc., reported the following
amounts of net income (dollars in thousands):
Relative to the prior year, the percentage change in net income:
A) Was the same in 2008 and 2009.
B) Was larger in 2009 than in 2008.
C) Was smaller in 2009 than in 2008.
D) Cannot be determined without knowing how many shares of stock were
outstanding.
Answer: C
Feedback:
20/130 less than 20/110
The following refers to questions
Shown below are selected data from the balance sheet of Megabyte, a small
electronics store (dollar amounts are in thousands):
5. Refer to the above data. The quick ratio is:
A) 1.5 to 1.
B) .7 to 1.
C) .45 to 1.
D) Some other amount.
Answer: B
Feedback:
(50 + 90)/200 = .7
6. Refer to the above data. The current ratio is:
A) 5.0 to 1.
2
, B) 1.5 to 1.
C) .7 to 1.
D) Some other amount.
Answer: B
Feedback:
(50 + 90 + 160)/200 = 1.5
7. Refer to the above data. Working capital amounts to:
A) $150,000.
B) $250,000.
C) $100,000.
D) Some other amount.
Answer: C
Feedback:
300 – 200 = 100
8. Refer to the above data. Megabyte’s debt ratio is:
A) 75%.
B) 25%.
C) 60%.
D) Some other amount.
Answer: A
Feedback:
450/600 = 75%
The following refers to questions
Shown below are selected data from the balance sheet of Select Auto Parts, a retail
store (dollar amounts are in thousands):
9. Refer to the above data. The quick ratio is:
A) 5%.
B) 1.5 to 1.
C) 20%.
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1. Unified Corporation's net income was $1,800,000 in 2007 and $600,000 in 2008.
What percentage increase in net income must Unified achieve in 2009 to offset the
decline in profits in 2008?
A) 75%.
B) 300%.
C) 33.33%.
D) 800%.
Answer: B
Feedback:
1,800,000/600,000 = 3 or 300%
2. If a retail store has a current ratio of 2 1/2 to 1 and current assets of $175,000,
the amount of working capital is:
A) $ 70,000.
B) $262,500.
C) $225,000.
D) $105,000.
Answer: D
Feedback:
175,000 - (175,000/2.5) = 105,000
3. The Sirene company has working capital of $180,000 and a current ratio of 3 to
1. The amount of current assets is:
A) $135,000.
B) $180,000.
C) $270,000.
D) $ 90,000.
Answer: C
Feedback:
3CL – CL = 180,000: CL = 90,000; CA=270,000
1
,4. During the years 2007 through 2009, Walston, Inc., reported the following
amounts of net income (dollars in thousands):
Relative to the prior year, the percentage change in net income:
A) Was the same in 2008 and 2009.
B) Was larger in 2009 than in 2008.
C) Was smaller in 2009 than in 2008.
D) Cannot be determined without knowing how many shares of stock were
outstanding.
Answer: C
Feedback:
20/130 less than 20/110
The following refers to questions
Shown below are selected data from the balance sheet of Megabyte, a small
electronics store (dollar amounts are in thousands):
5. Refer to the above data. The quick ratio is:
A) 1.5 to 1.
B) .7 to 1.
C) .45 to 1.
D) Some other amount.
Answer: B
Feedback:
(50 + 90)/200 = .7
6. Refer to the above data. The current ratio is:
A) 5.0 to 1.
2
, B) 1.5 to 1.
C) .7 to 1.
D) Some other amount.
Answer: B
Feedback:
(50 + 90 + 160)/200 = 1.5
7. Refer to the above data. Working capital amounts to:
A) $150,000.
B) $250,000.
C) $100,000.
D) Some other amount.
Answer: C
Feedback:
300 – 200 = 100
8. Refer to the above data. Megabyte’s debt ratio is:
A) 75%.
B) 25%.
C) 60%.
D) Some other amount.
Answer: A
Feedback:
450/600 = 75%
The following refers to questions
Shown below are selected data from the balance sheet of Select Auto Parts, a retail
store (dollar amounts are in thousands):
9. Refer to the above data. The quick ratio is:
A) 5%.
B) 1.5 to 1.
C) 20%.
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