Grade 12

1. Current assets DIVIDED BY current liabilities is the __________.

a. Current Ratio
b. Working Capital
c. Net worth Ratio
d. Contribution margin Ratio

For items 2-4, At December 31 a company's records show the following information:

2. The company's working capital is

a. $60,000
b. $66,000
c. $196,000
d. None of the Above
3. The company's current ratio is
a. 1.0 : 1
b. 2.0 : 1
c. 2.1 : 1
d. None of the Above
4. The company's quick ratio is
a. 0.7 : 1
b. 1.0 : 1
c. 2.0 : 1
d. None of the Above
Use the following information to answer items 5- 8:
For its most recent year a company had Sales (all on credit) of $830,000 and Cost of
Goods Sold of $525,000. At the beginning of the year its Accounts Receivable were
$80,000 and its Inventory was $100,000. At the end of the year its Accounts Receivable
were $86,000 and its Inventory was $110,000.
5. The inventory turnover ratio for the year was
a. 4.8
b. 5.0
c. 7.9
d. None of the Above
6. The accounts receivable turnover ratio for the year was
a. 6.3
b. 7.5
c. 10.0
d. None of the Above
7. On average how many days of sales were in Accounts Receivable during the year?
a. 27
b. 37
c. 49
d. None of the Above
8. On average how many days of sales were in Inventory during the year?
a. 14
b. 46
c. 73
d. None of the Above
9. On December 1, ABC Co. hired Juanita Perez to begin working on January 2 at a
monthly salary of $4,000. ABC's balance sheet of December 31 will show a liability of
a. $4,000
b. $48,000
c. $40,000
d. No Liability
10. ABC Co. has current assets of $50,000 and total assets of $150,000. ABC has current
liabilities of $30,000 and total liabilities of $80,000. What is the amount of ABC's
owner's equity?
a. $20,000
b. $30,000
c. $70,000
d. $120,000
11. For a recent year a corporation's financial statements reported the following:

Based on the above information, what amount will the corporation report as Cash
Provided by Operating Activities on the cash flow statement?

a. $65,000
b. $125,000
 c. $155,000
d. None of the Above
12. A corporation reported the following information for the past year:

Assuming these are the only facts, what amount will the corporation report as the Cash
Provided by Operating Activities on the cash flow statement?

a. 225,000
b. $235,000
c. $253,000
d. None of the Above
13. Using the information in Question #12, what amount will be reported under Cash
From Investing Activities?
a. $3,000
b. $8,000
c. $13,000
d. None of the above
The financial statements of Black Barn Company are given below.
14. Refer to the financial statements of Black Barn Company. The firm's current ratio for
2007 is _____.
a. 2.31
b. 1.87
c. 2.22
d. 2.46
15. Refer to the financial statements of Black Barn Company. The firm's quick ratio for
2007 is _____.
a. 1.69
b. 1.52
c. 1.23
d. 1.00

16. Refer to the financial statements of Black Barn Company. The firm's average
collection period for 2007 is _____.
a. 59.31
b. 55.05
c. 61.31
d. 49.05

17. Refer to the financial statements of Black Barn Company. The firm's inventory
turnover ratio for 2007 is _____.
a. 3.15
b. 3.63
c. 3.69
d. 2.58

18. Refer to the financial statements of Black Barn Company. The firm's asset turnover
ratio for 2007 is _____.
a. 1.79
b. 1.63
c. 1.34
d. 2.58
E.
19. Refer to the financial statements of Black Barn Company. The firm's return on sales
ratio for 2007 is _____ percent.
a. 15.5
b. 14.6
c. 14.0
d. 15.0
20. Refer to the financial statements of Black Barn Company. The firm's return on
equity ratio for 2007 is _____.
a. 16.90%
b. 15.63%
c. 14.00%
d. 15.00%

21. A firm has a (net profit / pretax profit ratio) of 0.625, a leverage ratio of 1.2, a
(pretax profit / EBIT) of 0.9, an ROE of 17.82%, a current ratio of 8, and a return on
sales ratio of 8%. The firm's asset turnover is _________.
a. 0.3
b. 1.3
c. 2.3
d. 3.3

22. A firm has an ROA of 14%, a debt/equity ratio of 0.8, a tax rate of 35%, and the
interest rate on the debt is 10%. The firm's ROE is _________.
a. 11.18%
b. 8.97%
c. 11.54%
d. 12.62%

23. A firm has an ROE of -2%, a debt/equity ratio of 1.0, a tax rate of 0%, and an interest
rate on debt of 10%. The firm's ROA is ________.
a. 2%
b. 4%
c. 6%
d. 8%

24. A firm has a (net profit/pretax profit) ratio of 0.6, a leverage ratio of 2, a (pretax
profit/EBIT) of 0.6, an asset turnover ratio of 2.5, a current ratio of 1.5, and a return
on sales ratio of 4%. The firm's ROE is _________.
a. 4.2%
b. 5.2%
c. 6.2%
d. 7..2%
25. Ferris Corp. wants to increase its current ratio from the present level of 1.5 when it
closes the books next week. The action of __________ will have the desired effect.
a. payment of current payables from cash
b. sales of current marketable securities for cash
c. write down of impaired assets
d. delay of next payroll

The financial statements of Midwest Tours are given below.

26. Refer to the financial statements of Midwest Tours. The firm's current ratio for 2007
is _____.
a. 1.82
b. 1.03
c. 1.30
d. 1.65
27. Refer to the financial statements of Midwest Tours. The firm's quick ratio for 2007 is
__________.
a. 1.71
b. 0.78
c. 0.85
d. 1.56

28. Refer to the financial statements of Midwest Tours. The firm's average collection
period for 2007 is __________.
a. 69.35
b. 69.73
c. 68.53
d. 67.77
e. 68.52
29. Refer to the financial statements of Midwest Tours. The firm's inventory turnover
ratio for 2007 is __________.
a. 2.86
b. 1.23
c. 5.96
d. 4.42
30. Refer to the financial statements of Midwest Tours. The firm's asset turnover ratio
for 2007 is __________.
a. 1.86
b. 0.63
c. 0.86
d. 1.63