Question : 87.If the ratio of total stockholders’ equity to total assets : 1169144

 

 

87.If the ratio of total stockholders’ equity to total assets was greater in 2017 than in 2016, then   

A. total assets increased by a greater amount than did total stockholders’ equity.

 

B. the ratio of total liabilities to total assets was smaller in 2017 than in 2016.

 

C. creditors would consider it riskier to lend to this company in 2017 than in 2016.

 

D. the ratio of total liabilities to total assets was larger in 2017 than in 2016.

 

 

 

 

88.A company has total assets of $120,000, current assets of $80,000, total liabilities of $50,000, and current liabilities of $25,000. What is the current ratio?   

A. 4.8 to 1

 

B. 3.2 to 1

 

C. 2.4 to 1

 

D. 1.6 to 1

 

 

 

89.A company has total assets of $120,000, current assets of $80,000, total liabilities of $50,000, and current liabilities of $25,000. What amount of working capital is available to meet its obligations?   

A. $30,000

 

B. $55,000

 

C. $95,000

 

D. $70,000

 

 

 

90.A company’s January 1 balance in Merchandise Inventory is $40,000. The December 31 balance is $35,000. Cost of goods sold is $220,000. The company’s inventory turnover is   

A. 17.05 to 1.

 

B. 6.29 to 1.

 

C. 5.87 to 1.

 

D. 18.18 to 1.

 

 

 

91.Modern Products, Inc. had accounts receivable of $240,000 in 2016, and $300,000 in 2017. Net sales for 2017 was $3,000,000, and gross profit margin was $1,200,000. The accounts receivable turnover for 2017 was:   

A. 12.5 times.

 

B. 11.1 times.

 

C. 10 times.

 

D. 5 times.

 

 

 

92.Modern Products, Inc. had accounts receivable of $240,000 in 2016, and $300,000 in 2017. Net sales for 2017 was $3,000,000, and gross profit margin was $1,200,000. The average collection period for 2017 was:   

A. 29.2 days.

 

B. 36.5 days.

 

C. 32.9 days.

 

D. 32.4 days.

 

 

 

93.Which of the following is most likely to indicate that a firm is experiencing difficulty in collecting its receivables?   

A. Its accounts receivable turnover decreases from 10 to 8.

 

B. Its accounts receivable turnover increases from 8 to 10.

 

C. Its average collection period decreases from 36 to 32.

 

D. The bad debt reserve decreases by 10%.

 

 

 

 

94.What is a ratio that measures financial strength?   

A. ratio of stockholders’ equity to total liabilities

 

B. current ratio

 

C. working capital

 

D. rate of return on sales

 

 

 

 

95.Low inventory turnover compared with the industry average might reflect any of the following except:   

A. obsolete goods.

 

B. poor purchasing procedures.

 

C. excess merchandise.

 

D. an increase in market share.

 

 

 

 

96.All of the following are shortcomings of financial statement analyses except:   

A. accounts reflect historical costs instead of market values.

 

B. the dollar is considered a stable monetary unit.

 

C. trend analysis uses a common base year for comparative purposes.

 

D. accounting policies and procedures differ among companies.

 

 

 

 

 

 

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