Multiple choice questions (Due 3/4/2020 - Please submit your answer)

1.Assume the following sales data for a company:

2020 $1,050,000

2019 950,000

2018 800,000

2017 650,000

If 2017 is the base year, what is the percentage increase in sales from 2017 to 2019?

a. 100%

b. 61.5%

c. 46.2%

d. 68.4%

2. Saira, Inc. has the following income statement (in millions):

SAIRA, INC.

Income Statement

For the Year Ended December 31, 2020

Net Sales $300

Cost of Goods Sold180

Gross Profit 120

Operating Expenses 45

Net Income$75

Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

a. 40%

b. 60%

c. 100%

d. None of these answer choices are correct.

3. Blaney Clothing Store had a balance in the Accounts Receivable account of $437,500 at the beginning of the year and a balance of $500,000 at the end of the year. Net credit sales during the year amounted to $3,000,000. The average collection period of the receivables in terms of days was

a. 53.2 days.

b. 365 days.

c. 60.1 days.

d. 57 days.

4. The acid-test (quick) ratio

a. is used to quickly determine a company's solvency and long-term debt paying ability.

b. relates cash, short-term investments, and net receivables to current liabilities.

c. is calculated by taking one item from the income statement and one item from the balance sheet.

d. is the same as the current ratio except it is rounded to the nearest whole percent.

5. A liquidity ratio measures the

a. income or operating success of an enterprise over a period of time.

b. ability of the enterprise to survive over a long period of time.

c. short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash.

d. number of times interest is earned.

6. Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000.The average number of days in inventory during the year was

a. 365 days.

b. 60.8 days.

c. 50.7 days.

d. 30 days.

7. Profit margin is calculated by dividing

a. sales by cost of goods sold.

b. gross profit by net sales.

c. net income by stockholders' equity.

d. net income by net sales.

8. The debt to assets ratio measures

a. the company's profitability.

b. whether interest can be paid on debt in the current year.

c. the proportion of interest paid relative to dividends paid.

d. the percentage of the total assets provided by creditors