Question 1

Financial analysis is a mechanical and mathematical process of evaluating information reported in financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Lucas Company has provided the following information: 
• Cash flow from operating activities,$360,000
• Net income,$306,000
• Interest expense,$30,000
• Interest cash payments,$20,000
• Income tax payments,$240,000
• Income tax expense,$246,000
-
What was Lucas' times interest earned ratio?

Accepted Answer

A) 18.9 
B) 19.4 
C) 28.3 
D) 31.0 
A) 18.9 
B) 19.4 
C) 28.3 
D) 31.0

Question 3

When considering an investment,which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment?

Accepted Answer

A) Global event factors. 
B) Economy-wide factors. 
C) Industry factors. 
D) Individual company factors. 
A) Global event factors. 
B) Economy-wide factors. 
C) Industry factors. 
D) Individual company factors.

Question 4

Equity capital is considered less risky because dividend payments are always at the company's discretion and are not legally enforceable until declared.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following ratios increases when cash is collected on an account receivable?

Accepted Answer

A) Current. 
B) Quick. 
C) Return on assets. 
D) Receivable turnover ratio. 
A) Current. 
B) Quick. 
C) Return on assets. 
D) Receivable turnover ratio.

Question 6

Which of the following statements is false?

Accepted Answer

A) When computing the component percentages for the income statement,net income is the base figure. 
B) Time-series analysis examines a company's performance over time. 
C) It is often useful to compare a company's performance with that of a competitor. 
D) The North American Industry Classification System assigns industry codes based on business operations. 
A) When computing the component percentages for the income statement,net income is the base figure. 
B) Time-series analysis examines a company's performance over time. 
C) It is often useful to compare a company's performance with that of a competitor. 
D) The North American Industry Classification System assigns industry codes based on business operations.

Question 7

Which of the following is not a measure of solvency?

Accepted Answer

A) Debt-to-equity ratio. 
B) Cash coverage ratio. 
C) Times interest earned ratio. 
D) Earnings per share. 
A) Debt-to-equity ratio. 
B) Cash coverage ratio. 
C) Times interest earned ratio. 
D) Earnings per share.

Question 8

The records of Marshall Company include the following:   
-The return on assets (calculated using the modified method discussed in the text)is closest to:

Accepted Answer

A) 14.9%. 
B) 18.3%. 
C) 15.3%. 
D) 14.7%. 
A) 14.9%. 
B) 18.3%. 
C) 15.3%. 
D) 14.7%.

Question 9

Baron Company reported the following data:  
- The cash ratio is closest to:

Accepted Answer

A) 1.14 
B) 0.95 
C) 0.38 
D) 0.36 
A) 1.14 
B) 0.95 
C) 0.38 
D) 0.36

Question 10

Which of the following transactions will increase the quality of income ratio?

Accepted Answer

A) Paying cash to suppliers. 
B) Accruing sales revenue. 
C) Selling treasury stock for more than its cost. 
D) Collecting an account receivable. 
A) Paying cash to suppliers. 
B) Accruing sales revenue. 
C) Selling treasury stock for more than its cost. 
D) Collecting an account receivable.

Question 11

The following data were shown in the records of Victoria Company at the end of 2019:
   Calculate each of the following ratios.Round your answers to one decimal place.
A.Quick ratio
B.Current ratio
C.Receivable turnover ratio
D.Inventory turnover ratio
E.Average days to collect receivables
F.Average days to sell inventory

Accepted Answer

A.Quick ratio = $180,000 ÷ $50,000 = 3.6

Question 12

Compete Corporation reported a quick ratio of 1.75,current assets of $50,000,and a current ratio of 2.
A.Calculate the total amount of quick assets.
B.What is another name for the quick ratio?
C.Describe what type of assets are considered quick assets and give some examples.
D.How does the quick ratio compare to the current ratio?

Accepted Answer

A.Current ratio = 2 = current assets div

Question 13

Bailey Corporation reported the following information for 2019:   What is Bailey's debt-to-equity ratio?

Accepted Answer

A) 2 
B) 1.25 
C) 1.0 
D) 3.0 
A) 2 
B) 1.25 
C) 1.0 
D) 3.0

Question 14

Agnes Company reported the following data:  
- What was the average number of days to sell inventory? (Assume 365 days in a year. )

Accepted Answer

A) 165.9 
B) 202.7 
C) 182.5 
D) 121.7 
A) 165.9 
B) 202.7 
C) 182.5 
D) 121.7

Question 15

Packers Corporation reported the following data for the year ended December 31,2019:
   Calculate each of the following ratios:
A.Net profit margin
B.Return on assets
C.Return on equity
D.Earnings per share
E.Price/earnings ratio
F.Debt-to-equity ratio
G.Fixed asset turnover ratio

Accepted Answer

A.Net profit margin = $25,000 ÷ $400,000

Question 16

Carolina Company computed the following ratios for a two-year period:
   A.Comment on the trend of each of the ratios from 2018 to 2019.State concerns or possible implications brought to light by each ratio.
B.State an overall opinion of the company's near future with suggestions for improvement.

Accepted Answer

Requirement A:
1.The current ratio has d

Question 17

Return on equity (ROE)by the Du Pont model provides insight with respect to a company's use of its assets.

Accepted Answer

A) True 
 B)False

Question 18

The records of Marshall Company include the following:  
- The return on equity is closest to:

Accepted Answer

A) 21.1% 
B) 10.2% 
C) 16.4% 
D) 17.1% 
A) 21.1% 
B) 10.2% 
C) 16.4% 
D) 17.1%

Question 19

Which of the following is used to measure how efficiently a company uses the resources at its disposal?

Accepted Answer

A) Solvency ratios. 
B) Asset turnover ratios 
C) Market ratios. 
D) Liquidity ratios. 
A) Solvency ratios. 
B) Asset turnover ratios 
C) Market ratios. 
D) Liquidity ratios.

Question 20

Dividend yield is calculated by dividing dividends per share by earnings per share and measures the current dividend return to investors.

Accepted Answer

A) True 
 B)False

Financial analysis is a mechanical and mathematical process of evaluating information reported in financial statements.

When considering an investment,which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment?

Equity capital is considered less risky because dividend payments are always at the company's discretion and are not legally enforceable until declared.

Which of the following ratios increases when cash is collected on an account receivable?

Which of the following statements is false?

Which of the following is not a measure of solvency?

The records of Marshall Company include the following: -The return on assets (calculated using the modified method discussed in the text)is closest to:

Baron Company reported the following data: - The cash ratio is closest to:

Which of the following transactions will increase the quality of income ratio?

Bailey Corporation reported the following information for 2019: What is Bailey's debt-to-equity ratio?

Agnes Company reported the following data: - What was the average number of days to sell inventory? (Assume 365 days in a year. )

Packers Corporation reported the following data for the year ended December 31,2019: Calculate each of the following ratios: A.Net profit margin B.Return on assets C.Return on equity D.Earnings per share E.Price/earnings ratio F.Debt-to-equity ratio G.Fixed asset turnover ratio

Carolina Company computed the following ratios for a two-year period: A.Comment on the trend of each of the ratios from 2018 to 2019.State concerns or possible implications brought to light by each ratio. B.State an overall opinion of the company's near future with suggestions for improvement.

Return on equity (ROE)by the Du Pont model provides insight with respect to a company's use of its assets.

The records of Marshall Company include the following: - The return on equity is closest to:

Which of the following is used to measure how efficiently a company uses the resources at its disposal?

Dividend yield is calculated by dividing dividends per share by earnings per share and measures the current dividend return to investors.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 13: Analyzing Financial Statements

Financial analysis is a mechanical and mathematical process of evaluating information reported in financial statements.

When considering an investment,which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment?

Equity capital is considered less risky because dividend payments are always at the company's discretion and are not legally enforceable until declared.

Which of the following ratios increases when cash is collected on an account receivable?

Which of the following statements is false?

Which of the following is not a measure of solvency?

The records of Marshall Company include the following: -The return on assets (calculated using the modified method discussed in the text)is closest to:

Baron Company reported the following data: - The cash ratio is closest to:

Which of the following transactions will increase the quality of income ratio?

Bailey Corporation reported the following information for 2019: What is Bailey's debt-to-equity ratio?

Agnes Company reported the following data: - What was the average number of days to sell inventory? (Assume 365 days in a year. )

Packers Corporation reported the following data for the year ended December 31,2019: Calculate each of the following ratios: A.Net profit margin B.Return on assets C.Return on equity D.Earnings per share E.Price/earnings ratio F.Debt-to-equity ratio G.Fixed asset turnover ratio

Carolina Company computed the following ratios for a two-year period: A.Comment on the trend of each of the ratios from 2018 to 2019.State concerns or possible implications brought to light by each ratio. B.State an overall opinion of the company's near future with suggestions for improvement.

Return on equity (ROE)by the Du Pont model provides insight with respect to a company's use of its assets.

The records of Marshall Company include the following: - The return on equity is closest to:

Which of the following is used to measure how efficiently a company uses the resources at its disposal?

Dividend yield is calculated by dividing dividends per share by earnings per share and measures the current dividend return to investors.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

Filters