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Financial Ratios Quiz | AccountingCoach

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Financial Ratios

NOTE: For multiple-choice and true/false questions, simply place your cursor over what you think is the correct answer. (There is no need to click the answer.) For fill-in-the-blank questions place your cursor over the _________. If you have difficulty answering the following questions, learn more about this topic by reading our Financial Ratios Explanation. We also have Crosswords and Q&A for this topic.

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4. The quick ratio EXCLUDES which of the following? Accounts Receivable Inventory Cash

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Email Address: Use the following information to answer items 5 - 7: At December 31 a company's records show the following information: Cash $ 10,000 Accounts Receivable Inventory Prepaid Insurance Long-term Assets Accounts Payable Notes Payable due in 10 months Wages Payable Long-term Liabilities Stockholders' (Owner's) Equity 30,000 80,000 6,000 200,000 30,000 25,000 5,000 70,000 196,000

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The company's working capital is



The company's working capital is $60,000

Financial Ratios Quiz | AccountingCoach

$66,000 $196,000

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6. The company's current ratio is 1.0 : 1 2.0 : 1 2.1 : 1

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The company's quick ratio is 0.7 : 1 1.0 : 1 2.0 : 1

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Use the following information to answer items 8 - 11: For the year 2010 a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the beginning of 2010 its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of 2010 its Accounts Receivable were $86,000 and its Inventory was $110,000.


The inventory turnover ratio for the year 2010 w as 4.8 5.0 7.9


The accounts receivable turnover ratio for the year 2010 was 6.3 7.5 10.0


On average how many days of sales w ere in Accounts Receivable during 2010? 27 37 49


On average how many days of sales w ere in Inventory during 2010? 14 46 73

Use the following information for items 12 and 13: A company's net income after tax was $400,000 for the year 2010. The company's income statement included Income Tax Expense of $140,000 and Interest Expense of $60,000. At the beginning of the year 2010 the company's stockholders' equity was $1,900,000 and at the end of 2010 it was $2,100,000.


W hat is the times interest earned for the company? 6.7 9.0 10.0


W hat is the after-tax return on stockholder's equity for the year 2010? 20% 25% 30%


The debt to equity ratio is computed as: (Total Liabilities Total ______________ _______) : 1



Financial Ratios Quiz | AccountingCoach

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years. He is the author of the 2011 Master Accounting Download Package which has been praised for its ability to simplify accounting in a way that anybody can understand.

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