Question 1 - CMA 1285 4.
23 - Ratios: Liquidity, Leverage, Coverage and Activity
Windham Company has current assets of $400,000 and current liabilities of $500,000. Windham Company's current
ratio would be increased by
A. Refinancing a $100,000 long-term loan with short-term debt.
B. The payment of $100,000 of accounts payable.
C. The collection of $100,000 of accounts receivable.
D. The purchase of $100,000 of inventory on account.
Question 2 - ICMA 10.P2.046 - Ratios: Liquidity, Leverage, Coverage and Activity
Which one of the following is the best indicator of long-term debt paying ability?
A. Debt-to-total assets ratio.
B. Working capital turnover.
C. Current ratio.
D. Asset turnover.
Question 3 - ICMA 10.P2.001 - Comparative Financial Statement Analysis
Gordon has had the following financial results for the last four years.
Year 1 Year 2 Year 3 Year 4
Sales $1,250,000$1,300,000$1,359,000$1,400,000
Cost of goods sold 750,000 785,000 825,000 850,000
Gross profit $ 500,000$ 515,000$ 534,000$ 550,000
Inflation factor 1.00 1.03 1.07 1.10
Gordon has analyzed these results using vertical common-size analysis to determine trends. The performance of
Gordon can best be characterized by which one of the following statements?
A. The common-size gross profit percentage has decreased as a result of an increasing common-size trend in
cost of goods sold.
B. The increased trend in the common-size gross profit percentage is the result of both the increasing trend in
sales and the decreasing trend in cost of goods sold.
C. The common-size trend in sales is increasing and is resulting in an increasing trend in the common-size
gross profit margin.
D. The common-size trend in cost of goods sold is decreasing which is resulting in an increasing trend in the
common-size gross profit margin.
Question 4 - ICMA 2013.2.P2.009 Adapted - Special Issues
Which one of the following statements best reflects the relationship between the results of financial ratios calculated
in a local currency versus those calculated after the local statements have been remeasured or translated into the
reporting currency?
A. Financial ratio results are similar under translation and remeasurement, and ratios under translation are also
often similar to those in the local currency.
B. Financial ratio results are different under translation and remeasurement, and ratios under translation are
also often different from those in the local currency.
C. Finacial ratio results are similar under translation and remeasurement, but ratios under translation are often
different from those in the local currency.
D. Financial ratio results are different under translation and remeasurement, but ratios under translation are
often similar to those in the local currency.
Question 5 - CMA 1291 P2 Q21 - Ratios: Profitability, Market and Profitability Analysis
Sands, Inc. uses a calendar year for financial reporting. The company is authorized to issue 5,000,000 shares of $10
par common stock. At no time has Sands issued any potentially dilutive securities. Listed below is a summary of
Sands' common stock activities.
Number of common shares issued and outstanding at Dec. 31, 20X6:1,000,000
Shares issued as a result of a 10% stock dividend on Sept. 30, 20X7: 100,000
Shares issued for cash on March 31, 20X8: 1,000,000
Number of common shares issued and outstanding at Dec. 31, 20X8:2,100,000
A two-for-one stock split of Sands' common stock took place on March 31, 20X9.
The weighted-average number of common shares used in computing earnings per common share for 20X8 on the
20X9 comparative income statement was:
A. 1,850,000.
B. 4,200,000.
C. 2,100,000.
D. 3,700,000.
