ACCT 370 Read & Interact Revsine, Collins, Johnson, Mittelstaedt, & Soffer Chapter 6 solution answer

ACCT 370 Read & Interact Revsine, Collins, Johnson, Mittelstaedt, & Soffer Chapter 6 solutions complete answers

 

Identifying similarities and differences across companies or business units at a single point in time is referred to as

 

Financial reports don't always include the data needed for a complete and faithful picture of a company's activities and operations because that data is filtered by

 

A way to quantify components of change is

 

Stockers Market shows sales of $25,000 and gross profit of $15,000 for the current year on its common-size income statement. For the previous year, it had sales of $22,000 and gross profit of $12,100. This means that, 

 

Trend income statements show each statement item as a percentage of

 

Identifying trends for a single company or business unit refers to      -      analysis.

 

Common-size balance sheets show each statement item as a percentage of

 

True or false: The use of GAAP and management's accounting discretion can distort the reported financial information of a company and an analyst's view of the company.

 

Rogers Inc. has the following items in its financial statements: Net cash provided by operating activities $37,500, Cash $93,750, Sales $750,000, and Total Assets of $1,250,000. On its common-size statement of cash flow, the percentage for net cash provided by operating activities is

 

Jefferson Beach Marina included the following information in its financial statements. Sales in the current year of $575,000 and $400,000 in the previous year. Operating income of $75,000 in the current year and $25,000 in the previous year. In comparison to the previous year, the effect of sales growth on operating income was

 

Riley Corporation has the following items in its financial statements: Sales $750,000, Net Income $25,500, Interest expense $8,500, Beginning assets of $1,250,000, Ending assets of $1,500,000. Assuming Riley's tax rate is 30%, its return on assets (ROA) is

 

Common-size income statements show each statement item as a percentage of

 

Stockers Market shows sales of $25,000 and gross profit of $15,000 for the current year on its trend income statement. For the previous year, it had sales of $22,000 and gross profit of $12,100. This means that

 

Which of the following will cause a company's ROA to increase?

 

Rogers Inc. has the following items on its balance sheet: Accounts payable $37,220, Cash $60,032, Total Current Liabilities $103,390, Total Liabilities of $620,300, and Total Assets of $1,861,000. On its common-size balance sheet, the percentage for Accounts Payable is

 

Companies are said to have a             if they consistently earn rates of return above the competitive floor.

 

Common-size cash flow statements show each statement item as a percentage of

 

Return on Common Equity (ROCE) is calculated as

 

Adjustments to earnings before interest (EBI) includes which of the following?

 

Financial leverage is measured by

 

The risk of nonpayment by a borrower is referred to as            .

 

Return on assets (ROA) can be broken down into asset turnover and

 

Financial ratios useful in analyzing a company's credit risk involve       and       ratios.

 

The             is the rate of return that would be earned in the economist's "perfectly competitive" industry.

 

Current assets divided by current liabilities is the calculation for

 

______ measures a company's performance in using capital provided by common shareholders to generate earnings.

 

The degree to which a firm finances its operations with debt rather than equity is called            .

 

The current ratio is calculated as

 

Which of the following is best used to analyze a company's credit risk?

 

The numerator in the quick ratio is

 

The company's short-term ability to generate cash for working capital needs and immediate debt repayment needs is its

 

Ratios that tell us how efficiently a company uses its assets are       ratios.

 

Short-term liquidity ratios include

 

Jolar Corporation has annual credit sales of $1,000,000, Cost of goods sold of $350,000, Beginning accounts receivable of $200,000, Ending accounts receivable of $300,000, and beginning and ending inventory of $80,000 and $100,000 respectively. Its accounts receivable turnover is

 

Identify the statement that is false regarding the calculation of ROCE.

 

The days accounts receivable outstanding

 

Walker Company includes the following in its financial statements: Cash $7,500, Accounts Receivable $2,500, Inventory $5,000, Accounts payable $2,350, Accrued liabilities $3,750. Its current ratio is

 

Jolar Corporation has annual credit sales of $1,000,000, Cost of goods sold of $350,000, Beginning accounts receivable of $200,000, Ending accounts receivable of $300,000, and beginning and ending inventory of $80,000 and $100,000 respectively. Its inventory turnover is

 

The quick ratio is similar to the current ratio, except it excludes

 

Days inventory held

 

Activity ratios include

 

More timely payment of accounts payable would lead to

 

The calculation for the accounts receivable turnover ratio is

 

Information about Peralta Enterprise's operations include: 65 days to sell inventory, 84 days to collect cash from customers, and 45 days to pay for inventory purchases. What is the company's operating cycle?

 

Jolar Corporation has annual credit sales of $1,000,000, Cost of goods sold of $350,000, Beginning accounts receivable of $200,000, Ending accounts receivable of $300,000, and beginning and ending inventory of $80,000 and $100,000 respectively. Its days accounts receivable outstanding is

 

The ratio that tells us if a company can pay its long term debt is the

 

The calculation for the             ratio is Cost of goods sold divided by average inventory.

 

Samson Corporation has $200,000 of outstanding long-term debt, $400,000 in total liabilities, and $1,000,000 of total assets of which $75,000 is goodwill. Its long-term debt to tangible assets would be

 

Jolar Corporation has annual credit sales of $1,000,000, Cost of goods sold of $350,000, Beginning accounts receivable of $200,000, Ending accounts receivable of $300,000, and beginning and ending inventory of $80,000 and $100,000 respectively. Its days inventory held is closest to

 

The ratio that tells us the company's ability to make interest and principal payments is known as the             ratio.

 

The accounts payable turnover ratio

 

During a period in which a company experiences rapid growth, which of the following is a preferable solvency measure?

 

A company's operating cycle is determined by

 

The ability to generate cash from ongoing core business activities is called

 

Long-term solvency ratios include

 

An increase in accounts receivable can signal unfavorable business conditions such as

 

Long-term debt to assets and long-term debt to tangible assets

 

Cash flow from investing activities includes

 

The interest coverage ratio is calculated as

 

The cash flow coverage ratio

 

These types of companies have capital expenditures limited to the amount needed to sustain current levels of operations, usually at a time when operating cash flows are significantly positive.

 

Cash flow from       refers to the amount of cash a company is able to generate from ongoing core business activities.

 

The most significant source of external financing for most companies is       .

 

An increase in inventory can signal unfavorable business conditions such as

 

Which of the following are true regarding the payment of dividends?

 

Companies present cash flows related to expansion of fixed assets and cash flows related to nonoperating investments in the cash flow from       activities section of the statement of cash flows.

 

A company is in       when it fails to make a required loan payment on time.

 

These types of companies may require large investments in property plant and equipment when their operating cash flows are often negative.

 

One way to determine credit risk using many variables simultaneously is called the

 

Debt financing may be preferred over equity financing because

 

Identify the true statement regarding dividends.

 

_______ is (are) intended to help lenders assess a borrower's default risk.

 

Which of the following ratios is not part of the Z-score model?

 

If a borrower has a serious cash flow problem, lenders may

 

Blackwell Corporation has the following items in its financial statements: Sales $850,000, Net income $157,500, Common Dividends $10,000, Preferred Dividends $7,500, Beginning Shareholders' Equity of $775,000, and Ending Shareholders' Equity of $875,000. Blackwell's ROCE is

 

Cash plus marketable securities plus receivables divided by current liabilities is the calculation for

 

A company's ability to generate a stream of cash inflows sufficient to maintain its productive capacity and be able to pay its debt is known as its .

 

A company's long-term ability to generate cash internally or from external sources to repay debt when due is its

 

______ continually works to drive down the rate of return on assets toward the competitive floor.

 

Days Accounts Receivable Outstanding

 

An income statement that shows each statement item as a percentage of sales is called a(n) - income statement.

 

Interest Coverage Ratio is calculated as

 

Return on assets is calculated as

 

Statements that recast each item as a percentage of a base year number are called statements.

 

Which of the following will cause a company's ROA to decrease?