To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements True / False Questions A primary objective of financial statements is to provide information to current and potential investors and creditors TRUE AACSB Tag: Communications Difficulty: Easy L.O.: The only way an investor will get a return on stock while they own the shares is for the corporation to distribute a dividend TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Return on equity (ROE) is a function of three ratios: net profit margin, return on assets, and financial leverage FALSE AACSB Tag: Relative Thinking Difficulty: Hard L.O.: Time series analysis is where we compare information for a specific company over a period of time to determine changes in operations TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14-1 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements Finding comparable companies in order to compare performance is often difficult since no two companies have identical products, markets and operating strategies TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Component percentages are used to express items on financial statements as a percentage of a base amount TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Negative financial leverage occurs when a company has more debt than stockholders' equity FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Positive financial leverage benefits the common stockholders TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14-2 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements A company that has a high level of inventory and other assets above their investment in property, plant and equipment, should calculate the total asset turnover ratio in addition to the fixed asset turnover ratio TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 10 A company with a high amount of inventory will have a much lower fixed asset turnover ratio when compared to its total asset turnover ratio FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 11 The current ratio is sometimes called the working capital ratio TRUE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 12 The average days' supply in inventory is computed by dividing the days in the year by the ending balance of inventory FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14-3 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 13 A very high current ratio and low quick ratio may indicate the company is not collecting its accounts receivables in a timely manner FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14 The current ratio is a more stringent test of liquidity than the quick ratio FALSE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 15 A low inventory turnover ratio can indicate high sales and/or low inventory levels FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 16 The quality of income computation is a test of the solvency of the company FALSE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 17 Times interest earned gives an indication of the margin of protection for creditors TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14-4 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 18 Many companies use high levels of debt to finance their assets because of financial leverage benefits provided to investors when return on assets (ROA) exceeds the after tax cost of interest TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 19 Dividend yield is calculated by dividing dividends per share by earnings per share and measures the current dividend return to investors FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 20 A high price earnings ratio usually indicates the market is optimistic about the company's future earnings potential TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Multiple Choice Questions 21 Ratios are most useful for analysis when A used alone B compared with historical ratios of the same company C compared with ratios for other companies of the same size D compared with ratios of other companies in the same locations AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14-5 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 22 There are several fundamental purposes decision makers consider when they use financial data Which of the following statements is not one of those fundamental purposes? A Measurement of the current condition of the business B Measurement of past performance of the business C Measurement of the book value of the assets of the business to predict future dividends D Prediction of future potential of the business AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 23 When considering an investment, which of the following is not one of the three critical factors used to evaluate future earning potential of that investment? A Financial analysts' reports B Economy wide factors C Industry factors D Individual company factors AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 24 Which of the following statements is false? A A company implementing a cost advantage strategy is attempting to reduce investment in assets thereby improving the asset turnover ratio B A company implementing a product differentiation strategy is attempting to improve its profit margin through charging higher prices C A company will attract a higher volume of customers and revenue by following a product differentiation strategy versus a cost advantage strategy D All of the other answers are false AACSB Tag: Relative Thinking Difficulty: Hard L.O.: 14-6 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 25 Which of the following companies is most likely pursuing a product differentiation strategy? A Wal-Mart B Kia C McDonalds D Cadillac AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 26 Which of the following is most likely pursuing a cost advantage strategy? A Cadillac B Tiffany C Wal-Mart D Mercedes AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 27 Home Depot's operating strategy is to offer a broad assortment of high-quality merchandise and services at competitive prices using highly knowledgeable service-oriented personnel and aggressive advertising Which of the following is not critical to achieving its strategy? A Cost control B Product differentiation C High level of customer service D High sales volume AACSB Tag: Relative Thinking Difficulty: Hard L.O.: 14-7 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 28 Which of the following statements is false? A When computing the component percentages for the income statement, net income is the base figure B Time series analysis examines a company's performance over time C It is often useful to compare a company's performance with that of a competitor D The North American Industry Classification System assigns industry codes based on business operations AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 29 Which of the following statements is true? A It is usually not difficult to find similar companies for financial performance comparisons B One of the advantages of ratio analysis is that it allows companies of different sizes to be compared C Ratios compare items from the same financial statement D It is preferable to compare a company's performance to industry-wide ratios rather than to use a competitor's ratios AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 30 The base amount in preparing a common-size income statement is usually A cost of goods sold B gross profit C net income D net sales AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 14-8 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 31 Which of the following statements is true? A When cost of goods sold as a percentage of sales increases the gross margin percentage will increase B It is possible for cost of goods sold in dollars to increase while cost of goods sold as a percentage of sales decreases C If gross margin percentage is the same for the current and past year, then sales and cost of goods sold in dollars did not change D If gross margin percentage increases, then the net income percentage will also increase AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 32 Which of the following statements is false? A If selling and administrative expenses as a percentage of sales increases, then gross margin percentage will decrease B If cost of goods sold percentage decreases, then profit margin will increase as a percentage of sales C If sales dollars decrease, we might still report a higher gross profit percentage if cost of goods sold decreases at a faster rate than the decrease in sales D It is possible for selling and administrative expense in dollars to decrease, while selling and administrative expenses as a percentage of sales to increase AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 14-9 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 33 In 2010, Home Style's cost of goods sold percentage was 68.2% and its selling and store operating costs was 19.3% of sales In 2009, their cost of goods sold percentage was 68.9% while its selling and store operating costs was 19.2% of sales What effect would the change in these percentages have on 2010's gross margin percentage and profit margin percentage? A Cost of goods sold would increase gross margin and profit margin percentages but selling and store operating costs would decrease gross margin and profit margin percentages B Cost of goods sold would decrease gross margin and profit margin percentages but selling and store operating costs would increase gross margin and profit margin percentages C Cost of goods sold would increase gross margin and profit margin percentages but selling and store operating costs would decrease the profit margin percentage D Cost of goods sold would decrease gross margin and profit margin percentages but selling and store operating costs would increase profit margin percentage AACSB Tag: Relative Thinking Difficulty: Hard L.O.: 34 Which of the following ratios usually is not considered to be a test of profitability? A Current ratio B Profit margin C Return on assets D Earnings per share AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 35 Which of the following items is not a category of commonly used financial ratios? A Tests of solvency B Tests of liquidity C Tests of timing D Tests of profitability AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 14-10 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 88 The following return on investment ratios were computed for Steven Company: Required: A Compute financial leverage percentage for each year B Explain briefly the stockholders' advantage or disadvantage for each year A 2010: 15% 12% = +3% positive 2009: 15% 15% = -0- neither 2008: 11% 15% = (4%) negative 2007: 20% 18% = +2% positive B 2010: Positive leverage of 3% means the stockholders gained because of the use of debt 2009: The return on assets increased to 15% but the return on equity did not increase Stockholders did not gain from the use of debt because leverage was zero 2008: Negative leverage of 4% means the stockholders lost because of the use of debt 2007: The increase in the return on assets and the positive leverage of 2% are both favorable to stockholders AACSB Tag: Analytic Difficulty: Hard L.O.: 14-33 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 89 The following data were shown in the records of Victoria Company at the end of 2010: Assume 365 days in the year Compute the following ratios: A Quick ratio B Current ratio C Receivable turnover ratio D Inventory turnover ratio E Average age of receivables F Average days' supply in inventory A $180,000 $50,000 = 3.6 to B $225,000 $50,000 = 4.5 to C $120,000 $10,000 = 12 times D $84,000 $42,000 = times E 365 12 = 30 days F 365 = 183 days AACSB Tag: Analytic Difficulty: Medium L.O.: 14-34 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 90 The following data were available for Holiday Company: Sales revenue, $225,000 (including $75,000 cash sales) Cost of goods sold, $175,000 Average inventory, $20,000 Average net accounts receivable, $20,000 Assume 365 days in the year Compute the following ratios: A Inventory turnover ratio B Average days' supply in inventory C Receivable turnover ratio D Average age of receivables A $175,000 $20,000 = 8.75 times B 365 8.75 = 42 days C ($225,000 $75,000) $20,000 = 7.5 times D 365 7.5 = 49 days AACSB Tag: Analytic Difficulty: Medium L.O.: 91 Compete Corporation reported a quick ratio of 1.75, current assets of $50,000 and a current ratio of A Compute the total amount of quick assets B What is another name for the quick ratio? C Describe what type of assets is considered quick assets and give some examples D How does the quick ratio compare to the current ratio? A $50,000 = $25,000 current liabilities $25,000 1.75 = $43,750 quick assets B Acid-test ratio C Quick assets are assets able to be readily converted to cash usually at their book values Quick assets often include cash, short-term investments, and net accounts receivable D The quick ratio test of liquidity is a more stringent test of short-term liquidity than the current ratio It compares quick assets (cash or one step away from cash) to total current liabilities The quick ratio is less than the current ratio for a company AACSB Tag: Analytic Difficulty: Hard L.O.: 14-35 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 92 The following data were reported by Universe Company at year-end: Compute the following: A Debt to equity ratio B Current ratio C Quick ratio D Which, if any, of the above are liquidity ratios? E Which, if any, of the above are profitability ratios? A $150,000 $375,000 = 40 or 40% B $150,000 $75,000 = 2.0 to C $105,000 $75,000 = 1.4 to D Current ratio and quick ratio E None of the ratios listed are profitability ratios AACSB Tag: Analytic Difficulty: Medium L.O.: 4, 14-36 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 93 Walkers World Company gathered the following information for 2010: Compute the following: A Receivable turnover ratio B Average number of days to collect receivables C Inventory turnover ratio D Average number of days' supply of inventory A [$432,000 B 365 days C $231,000 D 365 days 65%) $44,000] ($100,000 = 122 average days' to collect ($28,000 + $38,000)/2 = times = 52 average days' supply $7,000) + ($70,000 $5,000) = 3.0 AACSB Tag: Analytic Difficulty: Hard L.O.: 14-37 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 94 De Carlo Company had the following data available from the balance sheets and income statements: AACSB Tag: Analytic Difficulty: Medium L.O.: 4, 14-38 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 95 Indicate the effect of each item on the ratios given below in the following manner: if an item would cause an increase in the ratio, place a check in the + column; if a decrease place a check in - column; and if no change, check the column Each item is independent of the others 14-39 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements A + (current assets increased) B (decrease quick assets by the difference) C (amount of average accounts receivable increased) D (increases shares outstanding) E + (increase in current assets by the gain) F (decrease in quick assets by the loss) G -0- (current assets are unchanged) AACSB Tag: Relative Thinking Difficulty: Hard L.O.: 4, 96 Longhorn Company reported the following data at year-end: Compute the following: A Debt to equity B Current ratio A ($350,000 $200,000) $200,000 = 75% B $80,000 $75,000 = 1.07 to AACSB Tag: Analytic Difficulty: Medium L.O.: 5, 14-40 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 97 Carolina Company computed the following ratios for a two year period: Required: Comment on the trend of each of the ratios from 2009 to 2010 State concerns or possible implications for the future of each A The current ratio has decreased to half of the 2009 ratio The company's liquidity is taking a down turn Currently due bills may not be able to be paid in a timely manner B ROE decreased The profitability of the company may be of concern C The quality of income ratio went from above one to below one The 2010 earnings are of lower quality than those of 2009 D Cash coverage has plummeted One might be concerned about the declining amount of cash from operations to pay interest payments E Since the profit margin declined from 2009 to 2010, less of each sales dollar is realized in income Note: Overall, the company is experiencing unfavorable trends AACSB Tag: Analytic Difficulty: Medium L.O.: 4, 5, 14-41 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 98 The following financial data are available for Murphy Company: Compute the following: A Return on equity B Price/earnings ratio C Dividend yield A Return on equity 19.93% ($196,300/$985,000) B Price earnings ratio 10 ($24.50/$2.45) C Dividend yield 5.10% ($1.25/$24.50) AACSB Tag: Analytic Difficulty: Medium L.O.: 14-42 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 99 The following data were reported for Favre Company: Compute the following: A Dividend yield B Price/earnings ratio C Quality of earnings A 3.0% (.60/20) B EPS = $275,000 175,000 shares = $1.57 PE = $20 $1.57 = 12.74 C $280,000 275,000 = 1.02 AACSB Tag: Analytic Difficulty: Medium L.O.: 14-43 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 100 Polk Corporation reported the following information related to its common stock (par $10) outstanding and net income: Compute the following: A Price/earnings ratio B Dividend yield A $40 [($35,000) ($40,000 $10)] = 4.57 B ($10,000 4,000 shares) $40 = 6.25% AACSB Tag: Analytic Difficulty: Medium L.O.: 14-44 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 101 MNF Corporation gathered the following data at the end of the accounting period, December 31, 2009: Part Compute the following: A Profit margin B Return on equity C Earnings per share D Dividend yield ratio E Price-earnings ratio F Return on assets G Financial leverage percentage Part Interpret the financial leverage percentage Part A $60,000 $1,200,000 = 5% B $60,000 $300,000 = 20% C $60,000 50,000 shares = $1.20 D ($22,500 50,000 shares) $9 = 5% E $9.00 $1.20 = 7.5 F [$60,000 + ($25,000 60)] $500,000 = 15% G 20% 15% = 5% Part The advantage is favorable to the stockholders if the ratio is positive, and it is unfavorable to the stockholders if the ratio is negative because of the difference between earnings on total assets and the cost of debt (interest expense net of income tax) For MNF Corporation, the company's stockholders are benefiting from financial leverage because the cost of borrowing is less than the return to the shareholders AACSB Tag: Analytic Difficulty: Hard L.O.: 4, 14-45 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements Matching Questions 102 Indicate the proper category for each ratio Return on equity Earnings per share Owners' equity to total equities Inventory turnover ratio Cash ratio Quality of income Profit margin Dividend yield ratio Current ratio 10 Return on assets 11 Financial leverage 12 Fixed asset turnover ratio 13 Debt/equity ratio 14 Creditors' equity to total equities 15 Quick ratio 16 Receivable turnover ratio 17 Cash coverage 18 Price/earnings ratio 19 Times interest earned Profitability Liquidity Solvency Market Liquidity Profitability Market Solvency Profitability Liquidity Solvency Liquidity Profitability Profitability Profitability Profitability Solvency Liquidity Solvency 13 16 18 14 15 10 11 12 17 19 AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 4, 5, 6, 14-46 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 014: Analyzing Financial Statements 103 Match the ratio computation with the ratio Profit margin Return on assets Financial leverage Return on equity Quality of income Times interest earned EPS Dividend yield ratio Debt/equity ratio 10 Quick ratio 11 Fixed asset turnover ratio 12 Inventory turnover ratio 13 Current ratio 14 Price/earnings ratio 15 Receivable turnover ratio 16 Cash ratio 17 Cash coverage ratio Net Income Average stockholders' equity (Net Income + After-tax interest expense) Average total assets Return on equity – Return on assets Net Income Average number of shares of common stock outstanding Net Income Net sales revenue Current assets Current liabilities Quick assets Current liabilities Net credit sales Average net receivables Cost of goods sold Average inventory Total liabilities Stockholders' Equity Market price per share 13 10 15 12 EPS 14 Dividends per share Market price per share Cash flows from operating activities (before interest and tax expense) Interest Paid (Cash + Cash equivalents) Current liabilities Cash flows from operating activities Net Income (Net Income + Interest + Income tax expense) Interest Expense Net sales revenue Average net fixed assets 17 16 11 AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 4, 5, 6, 104 Match the characteristic that is reflected best by the indicators Debt/equity ratio Earnings per share Working capital Return on assets Current ratio Financial leverage Price/earnings ratio Liquidity Solvency Profitability Profitability Liquidity Market performance Profitability AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 4, 5, 6, 14-47 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e ... L.O.: 14- 14 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank, visit... L.O.: 14- 5 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank, visit... L.O.: 14- 7 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank, visit