ACC290 – Principles of Accounting I – Final Exam Study Guide 2012 Remember to check out ACCNerd.com for the latest updates! 1. Which financial statement is used to determine cash generated from operations? A. Income statement B. Statement of operations C. Statement of cash flows D. Retained earnings statement 2. In terms of sequence‚ in what order must the four basic financial statements be prepared? A. Balance sheet‚ income statement‚ statement of cash flows‚ and capital statement
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RATIO ANALYSIS Financial ratios are useful indicators of a firm’s performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm’s financials to those of other firms. In some cases‚ ratio analysis can predict future bankruptcy. Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used: 1. Liquidity ratios
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Ratio Worksheet 1. a. Split £10 into the ratio 2 : 3 c. Split 50 sweets into the ratio 9 : 1 e. Split 2.50m into the ratio 3 : 2 g. Divide 56kg into the ratio 2 : 5 : 1 i. Divide 75 birds into the ratio 8 : 5 : 2 k. Split 3kg 600g into the ratio 1 : 2 : 3 b. Split £48 into the ratio 3 : 5 d. Change 250ml into the ratio 7 : 3 f. Change £6.60 into the ratio 5 : 6 h. Split £100 into the ratio 5 : 4 : 1 j. Divide 1.20m in the ratio 2 : 3 : 4 l. Split 1 hr 20 mins into the ratio 1 : 4
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(1-t) = 0.18(1-0.4) = 0.108 The Cost of Preferred Equity If o’grady Apparel Company wants to raise financing using preferred shares‚ it could use Po = D/K KPS=D/Pn . so‚ 17% annual dividend rate times $60 (stated value) which is Dt is 10.2. After that 10.2 divided by $57 which gives us 0.1789.After tax cost of preferred shares. The Cost of Common Equity If the company needs to make the cost of common equity it has to use Po = D/(k-g) or K = D1/(Pn+g) so‚ the dividends per share in 2009 is 1.76
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The Golden Ratio The golden ratio is a number used in mathematics‚ art‚ architecture‚ nature‚ and architecture. Also known as‚ the divine proportion‚ golden mean‚ or golden section it expresses the relationship that the sum of two quantities is to the larger quantity as is the larger is to the smaller. It is also a number often encountered when taking the ratios of differences in different geometric figures. Represented mathematically as approximately 1.618033989‚ and by the Greek letter Phi
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Identify the main users of financial reports‚ explaining to what use(s) they may put such reports. To what extent is there a conflict between different uses? How far are these conflicts resolved in a single set of annual accounts? The financial reports are profit and loss account‚ balance sheet and cash flow statement. There are many users /parties interested in the accounts of a company /organization. These include the following: The owners / shareholders The directors / managers The employees
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expenses totaled $2‚800‚000 and fixed expenses totaled $720‚000. What is the company’s contribution margin ratio? | | | A) | 30% | | | B) | 70% | | | C) | 150% | | | D) | 250% | | | | | | Feedback:The correct answer is A (Learning Objective 3): The company’s contribution margin (CM) ratio is determined as follows. CM ratio = CM ÷ Sales = (Sales – Variable expenses) ÷ Sales CM ratio = ($4‚000‚000 - $2‚800‚000) ÷ $4‚000‚000 = 30% | | 4 INCORRECT | | Astair‚ Inc. reported sales of
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evaluate how well it is performing‚ one of those tools is the debt ratio calculation. The debt ratio shows the proportion of assets financed with debt‚ liabilities. It is calculated by the companies total liabilities divided by its total assets and is used as a percentage. Total assets and total debts can be found on the balance sheet. “It can be used to evaluate a business’s ability to pay its debt” (Nobles p. 89). The debt ratio can be used to evaluate a business’s ability to pay it’s debts.
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Efficiency Ratios The efficiency ratio is an indicator of how well Johnson and Johnson (J&J) is run on an organizational wide basis. Efficiency ratios are also defined as asset turnover ratios (Finkler‚ Kovner & Jones‚ 2007). The asset turnover ratio measures how productive J&J is in managing all of its assets to generate Sales. This efficiency ratio is calculated by dividing sales by total assets by total revenue. For year 2010‚ J&J had an asset turnover of 0.6. Comparing J&J’s
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Bradstreet. (2012). Catalog and mail-order houses. Key Business Ratios. Microsoft‚ Inc. (2012a). Amazon.com‚ industry 10-year summary. Retrieved from http://investing.money.msn.com/investments/key-ratios?symbol=AMZN&page= Microsoft‚ Inc. (2012c). Amazon.com‚ industry financial conditions ratios. Retrieved from http://investing.money.msn.com/investments/key-ratios?symbol=AMZN&page= Microsoft‚ Inc. (2012e). Amazon.com‚ industry price ratios. Retrieved from http://investing. Yahoo!‚ Inc. (2012‚ September
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