Question: Amalgamated Corporation’s net income was $2,400,000 in 2017 and $800,000 in 2018. What percentage increase in net income must Amalgamated achieve in 2019 to offset the decline in profits in 2018?

Answer: 300%

$2,400,000÷$800,000 = 3 or 300%

Question: All of the following ratios are considered measures of profitability except:

Answer: Price-earnings ratio.

Question: Quick assets include which of the following?

Answer: Cash, marketable securities, and receivables.

Question: One number expressed as a percentage of another is called:

Answer: Ratios.

Question: In order for investors and creditors to decide whether to invest in a company or loan a company funds they should do all of the following except:

Answer: Rely on assurances of reliability by the company’s leaders.

Question: Component percentages indicate the relative size of each item included in a total. Which of the following statements is true?

Answer: Income statement items are expressed as a percentage of net sales, while balance sheet items are expressed as a percentage of total assets.

Question: All of the following are measures of liquidity except:

Answer: Debt ratio.

Question: In calculating earnings per share, the denominator of the equation includes:

Answer: Only common stock outstanding.

Question: All of the following are true of operating expenses except:

Answer: Operating expenses are subdivided into the classifications of component and trend.

Question: Working capital is calculated by:

Answer: Subtracting current liabilities from current assets.