Financial Ratios #3 Quick Test

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1. The ratio of current assets to current liabilites is the __________ ratio.
2. Collecting accounts receivable will not change the current ratio or the __________ ratio.
3. The average time it takes for a retailer’s cash to go into inventory and then return to cash is known as the __________ cycle.
4. The amount of credit sales for a year divided by the average balance of accounts receivable is the receivables __________ ratio.
5. The days’ sales in inventory is calculated by dividing 360 or 365 days by the __________ __________ ratio.
6. __________ expenditures are amounts spent for property, plant and equipment.
7. Important financial information is provided by corporations whose stock is publicly traded in its Form __________, an annual report to the SEC.
8. Current assets minus current liabilities is __________ __________.
9. If a company has an inventory turnover ratio of 6, its average days’ sales in inventory is approximately __________ days. (Round to the nearest whole day.)
10. A company averages 40 days of credit sales in its accounts receivable. Its receivable turnover ratio is __________. (Round to the nearest whole number.)
11. If a company offers credit terms of net 30 days, it is likely that its receivables turnover ratio will be no greater than __________. (Round to the nearest whole number.)
12. A significant current asset that is excluded from a retailer’s quick ratio, but is included in its current ratio is __________.
13. The quick ratio is also referred to as the __________-test ratio.
14. Net sales divided by the average amount of assets is the asset __________ ratio.
15. A company is said to be highly __________ when it has a large amount of debt in relationship to owner’s equity.
16. In financial ratios, debt refers to the total amount of __________.
17. In the vertical analysis of a retailer, each amount on its income statement will be divided by net __________.
18. In vertical analysis each item on the balance sheet is divided by total __________.
19. Capital expenditures (and perhaps dividends) are deducted from the net cash flow from __________ activities when calculating free cash flow.
20. Common-size financial statements are related to __________ analysis.
21. Trend analysis is related to __________ analysis.
22. A manufacturer’s current ratio will be __________ than its quick ratio.
23. The external income statement and cash flow statement of a publicly traded corporation will report amounts for __________ years.
24. Dividend yield is the annual cash dividend per share of stock divided by the __________ __________ per share of stock.
25. The __________ ratio is the common stock’s cash dividend per share divided by the earnings per share.
26. Earnings per share is calculated by using the weighted average number of __________ shares of common stock.
27. During the past year a corporation had sales of $500,000. Its cost of goods sold was $400,000 and its selling and administrative expenses were $25,000. Its gross profit percentage was __________%.
28. During the most recent year, a company’s sales were $26 million. Its cost of goods sold was $20 million and its average inventory was $4 million. On average the company’s inventory could supply its customers for __________ days.
Use the following information for answering Questions 29 - 30:
A company has the following current assets and current liabilities:
29. The current ratio is __________ to 1.
30. The quick ratio or acid-test ratio is __________ to 1.
31. A company’s credit sales during the past year were $8,000,000. Its accounts receivable averaged $800,000 during the first six months of the year and averaged $900,000 during the final six months of the year. The receivable turnover ratio for the year was __________ times.
Use the following information for answering Questions 32 - 33:
A corporation had after-tax earnings of $1,000,000 for the most recent calendar year. Its preferred dividend requirement for the same year was $200,000. The corporation started the year with 90,000 shares of common stock outstanding. On July 1, it issued 20,000 shares of common stock. The corporation did not have any treasury stock during the year.
32. The denominator for the calculation of earnings per share is: __________.
33. The earnings per share is $__________.
34. A corporation had 100,000 shares of common stock issued during its accounting year ending December 31. At the start of the year the corporation had no treasury stock. On October 1, it acquired 12,000 shares of treasury stock and held the shares of treasury stock through December. The denominator for calculating the corporation’s earnings per share is __________.
Use the following information for answering Questions 35 - 37:
A corporation had total assets of $2,200,000 at the start of the year and had $2,600,000 at the end of the year. During the year it had net sales of $12,000,000, net income of $480,000, and no interest expense.
35. The asset turnover ratio is __________ times.
36. The profit margin ratio is __________%
37. The return on assets ratio is __________%.
Use the following information for answering Questions 38 - 40:
A corporation had total assets of $3,400,000 at the beginning of the year, and $4,000,000 at the end of the year. Its total liabilities were $1,400,000 at the beginning of the year, and were $1,800,000 at the end of the year. It did not have any preferred stock during the year. Its net income for the year was $252,000.
38. The debt to total assets ratio at the end of the year was __________ to 1.
39. The corporation’s debt-to-equity ratio at the end of the year was __________ to 1.
40. The return on common stockholders’ equity for the year was __________%.

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