1 Understanding Financial Statements Online Quiz Questions

True or false: Earnings per share (EPS) tells a shareholder how much cash the company actually paid them per share.

True or false: A balance sheet summarizes a business’s financial activity over a period, such as a quarter.

A lender wants to see a company’s assets and obligations on June 30, rather than its activity across the entire quarter. Which statement is most directly suited to that request?

A business pays cash to buy a machine it expects to use for several years. In which section of the statement of cash flows is this purchase usually reported?

A company reports revenue of $750,000 and operating income of $90,000. What is its operating margin?

Select all the transactions that are financing activities on the statement of cash flows.

Which circumstances can help explain why net income differs from cash flow? Select all that apply.

What ratio is calculated as revenue divided by average total assets?

A company reports revenue of $900,000 for the year, total assets of $400,000 at the beginning of the year, and total assets of $500,000 at year-end. Calculate its asset turnover and explain why the calculation uses average total assets.

A company generated $900,000 in revenue. Its total assets were $400,000 at the beginning of the period and $500,000 at the end. Using average total assets, what is its asset turnover?

A business wants to report its assets, liabilities, and shareholders’ equity as of the final day of its fiscal quarter. Which statement should it use?

A company pays cash to buy equipment it expects to use for several years. In which section of the statement of cash flows is this payment usually reported?

Earnings per share tells shareholders how much cash the company actually paid to each shareholder.

A company reports revenue of $\$500{,}000$ and operating income of $\$60{,}000$. What is its operating margin?

Which liquidity ratio uses cash, short-term investments, and receivables in its numerator, rather than relying on selling inventory?

A company has current assets of $\$120{,}000$ and current liabilities of $\$80{,}000$. What is its current ratio?

A company reports revenue of $500$ thousand dollars, cost of goods sold of $300$ thousand dollars, operating expenses of $140$ thousand dollars, interest expense of $10$ thousand dollars, and income taxes of $12$ thousand dollars. What is its net income in thousands of dollars?

A company reports debt of 240,000 and shareholders’ equity of 160,000. Using debt divided by shareholders’ equity as the definition, what is its debt-to-equity ratio?