Liquidity ratios indicate a company's short-term debt-paying ability. These ratios include: (Select all that apply). Each incorrect answer results in a negative point mark.
Select one or more:
a. Acid-test (quick) ratio.
b. Inventory turnover.
c. Accounts receivable turnover.
d. Cash flow liquidity ratio.
e. Total assets turnover.
f. Stock Value to Sales ratio.
g. Equity ratio.
h. Number of days' sales in accounts receivable.
i. Current, or working capital, ratio.
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Profitability tests are an important measure of a company's operating success. These tests include(Mark all that apply). Each incorrect answer results in a negative point mark.
Select one or more:
a. Acid-test (quick) ratio.
b. Times interest earned ratio.
c. Cash flow margin.
d. Times preferred dividends earned ratio.
e. Net income to net sales.
f. Inventory turnover.
g. Return to average common stockholders' equity.
h. Earnings per share of common stock.
i. Rate of return on operating assets.
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Market tests help investors and potential investors assess the relative merits of the various stocks in the marketplace. These tests include: (Mark all that apply). Each incorrect answer results in a negative point mark.
Select one or more:
a. Acid-test (quick) ratio.
b. Inventory turnover.
c. Dividend yield on preferred stock.
d. Dividend yield on common stock.
e. Earnings yield on common stock.
f. Cash flow per share of common stock.
g. Payout ratio on common stock.
h. Price-earnings ratio.
Liquidity ratios indicate a company's short-term debt-paying ability. These ratios include: (Select all that apply). Each incorrect answer results in a negative point mark.
Select one or more:
a. Acid-test (quick) ratio.
b. Inventory turnover.
c. Accounts receivable turnover.
d. Cash flow liquidity ratio.
e. Total assets turnover.
f. Stock Value to Sales ratio.
g. Equity ratio.
h. Number of days' sales in accounts receivable.
i. Current, or working capital, ratio.
Question 2
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Marked out of 10.00
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Profitability tests are an important measure of a company's operating success. These tests include(Mark all that apply). Each incorrect answer results in a negative point mark.
Select one or more:
a. Acid-test (quick) ratio.
b. Times interest earned ratio.
c. Cash flow margin.
d. Times preferred dividends earned ratio.
e. Net income to net sales.
f. Inventory turnover.
g. Return to average common stockholders' equity.
h. Earnings per share of common stock.
i. Rate of return on operating assets.
Question 3
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Marked out of 10.00
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Market tests help investors and potential investors assess the relative merits of the various stocks in the marketplace. These tests include: (Mark all that apply). Each incorrect answer results in a negative point mark.
Select one or more:
a. Acid-test (quick) ratio.
b. Inventory turnover.
c. Dividend yield on preferred stock.
d. Dividend yield on common stock.
e. Earnings yield on common stock.
f. Cash flow per share of common stock.
g. Payout ratio on common stock.
h. Price-earnings ratio.
Related questions
For each ratio, select the building block of financial statement analysis to which it best relates.
| Equity Ratio | |
| Return on total assets | |
| Dividend Yield | |
| Day's sales in Inventory | Liquidity/Efficiency |
| Book Value per Common Share | Market Prospects |
| Accounts Receivable Turnover | Profitability |
| Debt to Equity | Solvency |
| Times Interest Earned | |
| Gross Margin Ratio | |
| Acid Test Ratio |
Selected year-end financial statements of Cabot Corporationfollow. (All sales were on credit; selected balance sheet amountsat December 31, 2015, were inventory, $55,900; total assets,$249,400; common stock, $85,000; and retained earnings,$48,092.)
| CABOT CORPORATION Income Statement For Year Ended December 31, 2016 | ||
| Sales | $ | 453,600 |
| Cost of goods sold | 297,550 | |
| Gross profit | 156,050 | |
| Operating expenses | 98,800 | |
| Interest expense | 3,900 | |
| Income before taxes | 53,350 | |
| Income taxes | 21,492 | |
| Net income | $ | 31,858 |
| CABOT CORPORATION Balance Sheet December 31, 2016 | ||||||
| Assets | Liabilitiesand Equity | |||||
| Cash | $ | 18,000 | Accounts payable | $ | 19,500 | |
| Short-term investments | 9,400 | Accrued wages payable | 3,800 | |||
| Accounts receivable, net | 33,600 | Income taxes payable | 3,300 | |||
| Notes receivable (trade)* | 6,000 | Long-term note payable,secured | ||||
| Merchandise inventory | 36,150 | by mortgage on plant assets | 66,400 | |||
| Prepaid expenses | 2,500 | Common stock | 85,000 | |||
| Plant assets, net | 152,300 | Retained earnings | 79,950 | |||
| Total assets | $ | 257,950 | Total liabilities andequity | $ | 257,950 | |
* These are short-term notes receivable arising from customer(trade) sales.
Required:
Compute the following: (1) current ratio, (2) acid-test ratio,(3) days' sales uncollected, (4) inventory turnover, (5) days'sales in inventory, (6) debt-to-equity ratio, (7) times interestearned, (8) profit margin ratio, (9) total asset turnover, (10)return on total assets, and (11) return on common stockholders'equity. (Do not round intermediatecalculations.)
| * These are short-term notes receivable arising from customer(trade) sales.
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