Ratio Analysis Paper 4

1

The acid test ratio shows the ability of a company to pay its current liabilities without having to






2

When a fixed asset is sold for less than book value, which one of the following will decrease?






3

If a company has a current ratio of 2.1 and pays off a portion of its accounts payable with cash, the current ratio will






4

Clauson, Inc., grants credit terms of 1/15, net 30 and projects gross sales for next year of $2,000,000. The credit manager estimates that 40% of their customers pay on the discount date, 40% on the net due date, and 20% pay 15 days after the net due date. Assuming uniform sales and a 360-day year what is the projected days’ sales outstanding (rounded to the nearest whole day)?






5

Alliance Ltd. has $80 million in current assets, comprised of $30 million in inventory and $50 million in cash and marketable securities The company’s current liabilities total $50 million If Alliance purchases an additional $10 million in inventory with $10 million in cash, the effect of this transaction on the company would be to






6

Carson Corporation computed the following items from its financial records for the current year:
Current ratio 2 to 1
Inventory turnover 54 days
Accounts receivable turnover 24 days
Current liabilities turnover 36 days
The number of days in Carson’s operating cycle for the current year was






7

To determine the operating cycle for a retail department store, which one of the following pairs of items is needed?






8

Accounts receivable turnover ratio will normally decrease as a result of






9

Which one of the following inventory cost flow assumptions will result in a higher inventory turnover ratio in an inflationary economy?






10

The days’ sales in receivables ratio will be understated if the company






Result

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