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Financial Statement Ratios Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Which of the following BEST defines gross profit margin?

Question 2 2. Choose the best answer to explain liabilities.

Question 3 3. Using the image of the balance sheet, what is this company's current ratio?

Use this material to answer question #4

Vandox Company Ltd is a company looking to secure a loan with a commercial bank.

The following details are available:

1. Interest expense = $58,000

2. Earnings = $215,000

3. Total liabilities = $143,000

4. Total assets = $450,000

5. Total equity = $29,000

Question 4 4. Calculate the debt-to-equity ratio.

Question 5 5. Choose the best answer to explain assets.

Page 2

Question 6 6.

Transway Ltd. has the following assets: A car, a truck, land, and a building worth $1,000, $12,000, $50,000, and $30,000 respectively.

If the sales of Transway Ltd. amounted to $ 50,000, calculate the asset turnover ratio.

Question 7 7. XYZ Corporation has total assets of $200,000 and total liabilities of $80,000. What is the debt ratio of XYZ Corporation?

Question 8 8. Choose the best answer as it relates to a baseline ratio.

Use this material to answer question #9

Vandox Company Ltd is a company looking to secure a loan with a commercial bank.

The following details are available:

1. Interest expense = $58,000

2. Earnings = $215,000

3. Total liabilities = $143,000

4. Total assets = $450,000

5. Total equity = $29,000

Question 9 9. Calculate the debt ratio.

Question 10 10. RoBags Company Ltd. manufactures bags for kids. If their inventory turnover was 10 times, what was their days sales in inventory?

Page 3

Question 11 11. On what financial statement can you find the total asset and total liabilities values?

Question 12 12. The lower the debt ratio, the _____ the risk for potential financers.

Question 13 13. Calculate this company's quick ratio using the balance sheet image.

Question 14 14. What is the ideal debt ratio for an organization?

Question 15 15. The formula for computing a company's debt ratio is _____.

Page 4

Question 16 16. As a general rule, companies are able to meet their short-term liabilities if they have a quick ratio of _____.

Use this material to answer question #17

Vandox Company Ltd is a company looking to secure a loan with a commercial bank.

The following details are available:

1. Interest expense = $58,000

2. Earnings = $215,000

3. Total liabilities = $143,000

4. Total assets = $450,000

5. Total equity = $29,000

Question 17 17. Calculate the interest coverage ratio.

Question 18 18. If a company is highly leveraged, this means that _____

Question 19 19. There are five basic _____ which are calculated using information found in the balance sheet and income statement that are measures of the productivity and efficiency of a business.

Question 20 20. Wayne Company Ltd. makes and sells block-notes. The previous year, Wayne Company Ltd. sold 2000 block-notes at $1.50. The inventory on Jan 1 was $500 and $700 at year end. Calculate the inventory turnover ratio.

Page 5

Question 21 21. Efficiency ratios determine _____.

Question 22 22. Using the image of the balance sheet, what is this company's debt-to-assets ratio?

Question 23 23. Why is the debt ratio used?

Question 24 24. Identify the best explanation for assets.

Question 25 25. A company has liabilities that are equal to $75,000, while its assets are $150,000. What is its current ratio?

Financial Statement Ratios Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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