51. Which of the following debt management ratios is the most inclusive for measuring the degree to which a company relies on outsiders for financing? A. Debt to equity ratioB. Times interest earned ratioC. Long-term debt to equity ratioD. Long-term debt to total assets ratio
52. Below are selected financial data for Bouquet, Inc.
2012
2011
Total liabilities
$1,205,000
$952,000
Common stock
250,000
225,000
Additional paid-in capital
150,000
135,000
Retained earnings
155,000
145,000
Bouquet’s debt to equity ratio for 2012 is: A. increasing, which may be a cause of concern for the company.B. increasing, which is always a good sign from the viewpoint of investors.C. decreasing, which may be a cause of concern for the company.D. decreasing, which is always a good sign from the viewpoint of investors.
53. Sapphire Company declared and paid $1 million in dividends to its common stockholders. The effect of this transaction is that the: A. earnings per share decreased.B. earnings per share increased.C. current ratio increased.D. debt to equity ratio increased.
54. Opal Company purchased inventory on credit. The effect of this transaction is that the: A. earnings per share decreased.B. earnings per share increased.C. working capital increased.D. debt to equity ratio increased.
55. The number of times interest charges are earned is computed as: A. net income plus interest charges, divided by interest charges.B. income before income tax plus interest charges, divided by interest charges.C. net income divided by interest charges.D. income before income tax divided by interest charges.
56. Hsu Company reported the following on its income statement:
Income before income taxes
$420,000
Income tax expense
120,000
Net Income
$300,000
An analysis of the income statement revealed that interest expense was $80,000. Hsu Company’s times interest earned was: A. 8.16 times.B. 6.25 times.C. 5.25 times.D. 5.91 times.
57. DuPont analysis recognizes that the return on equity can be broken down into three aspects, which include all of the following except: A. net profit percentage.B. total leverage.C. total liquidity.D. asset turnover ratio.
58. Devon Manufacturing, Inc.The following information is available for Devon Manufacturing for the year ended December 31, 2012:
Net income
$ 844,200
Net sales
6,809,000
Total assets
5,911,000
Total stockholders’ equity
2,575,000
Refer to Devon Manufacturing, Inc. DuPont analysis return on equity (ROE) for Devon is: A. 32.78%.B. 34.51%.C. 35.48%.D. 38.69%.
59. Devon Manufacturing, Inc.The following information is available for Devon Manufacturing for the year ended December 31, 2012:
Net income
$ 844,200
Net sales
6,809,000
Total assets
5,911,000
Total stockholders’ equity
2,575,000
Refer to Devon Manufacturing, Inc. The total leverage per the DuPont analysis computation is: A. 2.30B. 2.64C. 12.40D. 15.20
60. Which one of the following is not a characteristic generally evaluated in ratio analysis? A. LiquidityB. ProfitabilityC. SolvencyD. Marketability
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