Wall Street Prep Accounting Exam 2023 with complete solution (Graded A+)

Liquidity Ratios CORRECT ANS - measures of a firm's short-term ability to meet its current obligations Profitability Ratios CORRECT ANS - measures of a firm's profitability relative to its assets (operating efficiency) and to its revenue (operating profitability) Activity Ratios CORRECT ANS - Measure of efficiency of a firm's assets Solvency Ratios CORRECT ANS - Measure of a firm's ability to pay its obligations Inventory Turnover CORRECT ANS - COGS / avg inventory Receivables Turnover CORRECT ANS - revenue / average accounts receivable DSO (Days Sales Outstanding) CORRECT ANS - AR/Credit Sales * days in period days in period/receivables turnover A/P turnover CORRECT ANS - COGS / Average A/P PPP (payables purchasing period) CORRECT ANS - days in period/ Accounts payable turnover Current Ratio CORRECT ANS - current assets/current liabilities Quick ratio (acid test) CORRECT ANS - Cash and AR divided by current liabilities Gross profit margin CORRECT ANS - gross profit/revenue operating margin CORRECT ANS - operating profit/revenue net profit margin CORRECT ANS - net income/revenue asset turnover CORRECT ANS - revenue/ average assets return on assets (ROA) CORRECT ANS - Net Income / Average Assets return on equity (ROE) CORRECT ANS - net income/ total equity Basic EPS CORRECT ANS - (Net Income - Preferred Dividends)/(Weighted Average of Shares Outstanding) Diluted EPS CORRECT ANS - diluted net income / weighted average diluted shares outstanding dividend yield CORRECT ANS - dividends/net income debt to EBITDA CORRECT ANS - Total Debt/EBITDA interest coverage ratio CORRECT ANS - EBIT/ interest expense fixed charge coverage CORRECT ANS - (EBIT + Lease charges)/(Interest Payments + Lease charges) Debt to Total Assets CORRECT ANS - Total Debt/Total Assets debt to equity CORRECT ANS - total liabilities/total equity cash from operations (CFO) CORRECT ANS - uses net income as a starting point and converts accrual base net income into cash flow from operations via a series of adjustments cash from investing activities (CFI) CORRECT ANS - capital expenditures / asset sales and purchases cash from financing activities (CFF) CORRECT ANS - new borrowing / pay down of debt / new issuance of stock / share repurchases / issuance of dividends working capital CORRECT ANS - -CFO -increase in current assets = cash outflow -increase in current liabilities = cash inflow asset write downs / impairments CORRECT ANS - -added back to CFS via CFO