Which of the following should not be included as an application of the rate of return concept? rate of return measurea the overall Orofitability of the compay a. b. rate of return can be used in planning and controlling busihess operations
Which of the following should not be included as an application of the rate of return concept? rate of return measurea the overall Orofitability of the compay a. b. rate of return can be used in planning and controlling busihess operations
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:T01 18tructure of the firm
Which of the following should not be included as an application of the
1.
rate of return concept?
a. rate of return measuree the overall orofitability of the company
rate of return can be used in plenning and controlling busmess
operations
C.
b.
rate of return may be used to arrive at Belling prices or the
product lines
d.
rate of return may be used in planning the asset and equity
е.
answer not given.
2. Financial statement8 which are reduced to simpler terms by expressing
amounts in even thoUBands
peso
percentages so that the relative importance of each individual account
or classification to the total will stand out are called
or by reducing peso amounts
to
8.
Unconverted atatements
b.
Common size statements
C.
Statement of cash receipts and disbursements
d. Cash-flow analysia
Morking capital analysis
е.
3, It is the difference between current assets and current liabilities or
that portion of total current assets that has been supplied by long-
term liabilities and owners. It indicates the capability 6f a bueiness
to meet current liabilities and current operations in the future.
d.
Working capital
Return on capital
e. Fixed assets
8.
mb. Net. working capitel
Profit margin
C.
This tells you what part of each peso of sales the company retained as
profit. It is a very handy guide in comparing the earnings of this
year with previous years to determine the earnings trend of the
company. It is also very valueble in comparing earnings of the company
with that of other companies in the same industry.
4.
Yield on investment
b.
Eainings per share of stock
Margin of profit
Inventory turnover
Return on total assets
a.
C.
erid d.
е.
Transcribed Image Text:This ratio tells whether the compuny's invenlory is Loo high or too
low. It tells you how many tines during the year the. average inventory
Но
of
5.
was sold and enables you to compure stock inventories of Lhe
with that of olhor comparnies in the same industry.
12.
Company
Inventory divided by total assels
b.
8.
Quick assets divided by current liabililies
Cost 'of goods sold and expenses divided by current assela
d.
с.
Cost of goods sold divided by net sales
Cost of sales divided by average inventory
е.
6.
How are trade receivables used in the calculation of each of
following?
13.
Acid test
(quick) ratio
Numerator
b.
Receivable
turnover
Numerator
Denominator
Denominator
Numerator
a.
Numerator
Denominator
d.
c.
Not used
14
If current assets exceed current liabilitíes, payments to creditom
made on the last day of the month will
Decrease cUrrent ratio.
b. Increase current ratio.
Decrease net working capital.
d.
7.
a.
C.
Increase net working capital.
8.
Which of the following ratios measures short-term solvency?
Current ratio
b.
8.
Age of receivables
Creditors' eqúity to total assets
d.
c.
Return on inyestment
9.
A company has a current ratio of 2 to 1. This ratio will decrease if
the company
Receives a 5% stock dividend on one of its marketable securities.
b. Pays a large account payable which had been a current liability.
Borrows cash on a six-month note.
d.
a.
с.
Solls merchandise for more than cost and records the sale using
the perpetuai-inventory method.
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