Question :
31. Which of the following considered a measure of short-term liquidity? A. Gross : 1224842
31. Which of the following is considered a measure of short-term liquidity? A. Gross profit percentageB. Quick ratioC. Dividend yield ratioD. Return on assets ratio
32. Which of the following is a measure of liquidity? A. Current ratioB. Earnings per shareC. Accounts receivable turnover ratioD. Return on common equity
33. Britt CompanySelected data from Britt Company’s financial statements are provided below.
2012
2011
2010
Cash
$ 22,000
$ 14,000
$ 7,000
Accounts receivable
42,000
16,000
57,200
Inventory
22,000
83,000
50,000
Prepaid expenses
23,000
18,000
20,800
Total current assets
109,000
131,000
135,000
Total current liabilities
$ 65,000
$ 72,000
Net credit sales
221,000
326,000
Cost of goods sold
168,000
299,000
Net cash flows from operating activities
16,000
29,000
Refer to the selected financial data for Britt Company. Britt’s current ratio for 2012 is: A. 0.60.B. 0.99.C. 1.34.D. 1.68.
34. Britt CompanySelected data from Britt Company’s financial statements are provided below.
2012
2011
2010
Cash
$ 22,000
$ 14,000
$ 7,000
Accounts receivable
42,000
16,000
57,200
Inventory
22,000
83,000
50,000
Prepaid expenses
23,000
18,000
20,800
Total current assets
109,000
131,000
135,000
Total current liabilities
$ 65,000
$ 72,000
Net credit sales
221,000
326,000
Cost of goods sold
168,000
299,000
Net cash flows from operating activities
16,000
29,000
Refer to the selected financial data for Britt Company. Which of the following statements is true regarding the company’s liquidity? A. Based on the current ratio, the company’s ability to meet its short-term obligations appears to have deteriorated at the end of 2012 compared to 2011.B. The quick ratio decreased from 2011 to 2012.C. The operating cash flow ratio increased from 2011 to 2012.D. Based on the quick ratio, the company appears to be in a better position to pay its current obligations at the end of 2012 compared to 2011.
35. Britt CompanySelected data from Britt Company’s financial statements are provided below.
2012
2011
2010
Cash
$ 22,000
$ 14,000
$ 7,000
Accounts receivable
42,000
16,000
57,200
Inventory
22,000
83,000
50,000
Prepaid expenses
23,000
18,000
20,800
Total current assets
109,000
131,000
135,000
Total current liabilities
$ 65,000
$ 72,000
Net credit sales
221,000
326,000
Cost of goods sold
168,000
299,000
Net cash flows from operating activities
16,000
29,000
Refer to the selected financial data for Britt Company. Assume that competitors in Britt’s industry have an average receivable turnover ratio of 7.8 times in 2012. Britt’s receivable turnover ratio for 2012 is: A. an indicator that Britt has tightened its credit policies.B. of no value to bankers and other creditors.C. indicating that Britt’s collection policies are less strict than those of its competitors.D. significantly above the industry average.
36. Britt CompanySelected data from Britt Company’s financial statements are provided below.
2012
2011
2010
Cash
$ 22,000
$ 14,000
$ 7,000
Accounts receivable
42,000
16,000
57,200
Inventory
22,000
83,000
50,000
Prepaid expenses
23,000
18,000
20,800
Total current assets
109,000
131,000
135,000
Total current liabilities
$ 65,000
$ 72,000
Net credit sales
221,000
326,000
Cost of goods sold
168,000
299,000
Net cash flows from operating activities
16,000
29,000
Refer to the selected financial data for Britt Company. Assume that competitors in Britt’s industry have an average inventory turnover ratio of 20.8 times in 2012. Britt’s inventory turnover ratio for 2012 indicates that the company: A. has too little inventory on hand at the end of 2012.B. is pricing its products too low.C. is selling its inventory much more quickly than the industry average.D. may have problems with generating sales.
37. Liquidity analysis is required to: A. evaluate a company’s profitability.B. assess a company’s ability to pay its current liabilities.C. be reported in the financial statements for all publicly traded companies.D. provide information about a company’s capital structure.
38. Which of the following is an example of liquidity analysis? A. Total liabilities are divided by total assets.B. Net income is divided by average total assets.C. Net income is divided by the average number of common shares outstanding.D. Quick assets are divided by current liabilities.
39. Which of the following results is generally considered favorable? A. A large decrease in the accounts receivable turnover ratio.B. An increase in the inventory turnover ratio.C. An increase in sales along with a larger decrease in the gross profit percentage.D. A decrease in the operating cash flow ratio.
40. Inventory turned over seven times during the year at Prosser Electronics. Similar electronics retailers have an inventory turnover equal to twelve times per year. What explains Prosser’s state of inventory management? A. Prosser sold too much inventory during the year.B. Prosser needs to increase sales and decrease the amount of inventory on hand.C. Prosser is performing much better than its competitors.D. Prosser should increase the amount of goods on hand to accommodate the growth in inventory demand.
