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Exam 14: Performance Measurement

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Question 21

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Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What is the return on common shareholders' equity for 2022?

A) 4.5%
B) 17.1%
C) 18.5%
D) 20.0%

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Question 22

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A successful grocery store would probably have

A) a low inventory turnover.
B) a high inventory turnover.
C) zero profit margin.
D) low volume.

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Question 23

Multiple Choice

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Best Baskets Limited (BBL) had a current ratio of 0.8:1 before borrowing $50,000 from the bank with a short-term note payable.What effect did the borrowing transaction have on BBL's current ratio?

Identifying discontinued items is important if a potential investor is going to use reported net income to estimate a company's value.

If a company has sales of $220 in 2021 and $560 in 2022, the percentage increase in sales from 2021 to 2022 is 155%.

Factors than can limit the usefulness of financial analysis do not include

If, over a three-year period, sales increased by 30%, and cost of goods sold increased by 45%,

The inventory turnover ratio is calculated by dividing

One objective of the statement of income is to separate the results of continuing operations from those of discontinued operations.

Use the following information for questions During 2022, Amazing Corp.reported after-tax net income of $900,000 and paid $175,000 in common dividends.The weighted average number of common shares issued in 2022 was 200,000.There are no preferred shares issued.At year end, Amazing's common shares are selling for $81 per share on the Toronto Stock Exchange. -Amazing's dividend yield for 2022 is

Use the following information for questions During 2022, Amazing Corp.reported after-tax net income of $900,000 and paid $175,000 in common dividends.The weighted average number of common shares issued in 2022 was 200,000.There are no preferred shares issued.At year end, Amazing's common shares are selling for $81 per share on the Toronto Stock Exchange. -Amazing's payout ratio for 2022 is

An investor interested in purchasing a company's shares for their income potential would be more interested in the company's dividend yield and payout ratios than its price-earnings ratio.

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What is the return on assets for 2022?

Horizontal analysis showed a 25% increase in accounts receivable in 2022 over 2021.Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period.Given this information, what conclusion(s) may be reached?

If a company is very diversified

In horizontal analysis, if an item has a negative amount in the base year, and a positive amount in the following year, the percentage change will exceed 100%.

A common measure of solvency is

Users of financial statements consider a lower debt to total assets ratio to be

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022. -What is the receivables turnover ratio for 2022?