Question 1

The greater the times interest earned ratio,the greater the risk a company is exposed to.

Accepted Answer

A) True 
 B)False

Question 2

A company's calendar-year financial data are shown below.The company had total assets of $339,000 and total equity of $144,400 for the prior year.No additional shares of common stock were issued during the year.The December 31 market price per share is $49.50.Cash dividends of $19,500 were paid during the year.Calculate the following ratios for the company:
(a)debt ratio
(b)equity ratio
(c)debt-to-equity ratio
(d)times interest earned
(e)total asset turnover

Accepted Answer

The answer of A company's calendar-year financial data are shown...

Question 3

Profitability is the ability to provide financial rewards to attract and retain financing.

Accepted Answer

A) True 
 B)False

Question 4

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

Accepted Answer

A) 55.6%. 
B) 88.8%. 
C) 61.5%. 
D) 44.4%. 
E) 125.1%. 
A) 55.6%. 
B) 88.8%. 
C) 61.5%. 
D) 44.4%. 
E) 125.1%.

Question 5

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

Accepted Answer

A) Period-to-period statements. 
B) Controlling statements. 
C) Successive statements. 
D) Comparative statements. 
E) Serial statements. 
A) Period-to-period statements. 
B) Controlling statements. 
C) Successive statements. 
D) Comparative statements. 
E) Serial statements.

Question 6

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

Accepted Answer

A) True 
 B)False

Question 7

Net income divided by net sales is the:

Accepted Answer

A) Return on total assets. 
B) Profit margin. 
C) Current ratio. 
D) Total asset turnover. 
E) Days' sales in inventory. 
A) Return on total assets. 
B) Profit margin. 
C) Current ratio. 
D) Total asset turnover. 
E) Days' sales in inventory.

Question 8

Selected current year company information follows: Net income$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\$$15,953
Net sales$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$712,855
Total liabilities, begirning-year$~~~~~~~~~~~~~~~~~~~~~~$83,932
Total liabilities, end-of-year$~~~~~~~~~~~~~~~~~~~~~~~~~~$103,20
Total stockholders' equity, begirnirg-year$~~~~~~~~~$198,935
Total stockholders' equity, end-of-year$~~~~~~~~~~~~~$121,85

The total asset turnover is:

Accepted Answer

A) 2.24 times 
B) 2.81 times 
C) 3.64 times 
D) 4.67 times 
E) 6.28 times 
A) 2.24 times 
B) 2.81 times 
C) 3.64 times 
D) 4.67 times 
E) 6.28 times

Question 9

Annual cash dividends per share divided by market price per share is the:

Accepted Answer

A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share. 
A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share.

Question 10

A company with a low inventory turnover requires a smaller investment in inventory than one producing the same sales with a higher turnover.

Accepted Answer

A) True 
 B)False

Question 11

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Accepted Answer

A) True 
 B)False

Question 12

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

Accepted Answer

A) 0.65 times. 
B) 14.3 times. 
C) 28.6 times. 
D) 15.3 times. 
E) 16.3 times. 
A) 0.65 times. 
B) 14.3 times. 
C) 28.6 times. 
D) 15.3 times. 
E) 16.3 times.

Question 13

Current assets minus current liabilities is:

Accepted Answer

A) Profit margin. 
B) Financial leverage. 
C) Current ratio. 
D) Working capital. 
E) Quick assets. 
A) Profit margin. 
B) Financial leverage. 
C) Current ratio. 
D) Working capital. 
E) Quick assets.

Question 14

Net sales divided by Average accounts receivable,net is the:

Accepted Answer

A) Days' sales uncollected. 
B) Average accounts receivable ratio. 
C) Current ratio. 
D) Profit margin. 
E) Accounts receivable turnover ratio. 
A) Days' sales uncollected. 
B) Average accounts receivable ratio. 
C) Current ratio. 
D) Profit margin. 
E) Accounts receivable turnover ratio.

Question 15

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Accepted Answer

A) True 
 B)False

Question 16

Intra-company analysis is based on comparisons with competitors.

Accepted Answer

A) True 
 B)False

Question 17

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:

Accepted Answer

A) 141%. 
B) 71%. 
C) ($56,000). 
D) $56,000. 
E) 41%. 
A) 141%. 
B) 71%. 
C) ($56,000). 
D) $56,000. 
E) 41%.

Question 18

The current year-end balance sheet data for a company are shown below.Calculate the company's:
(a)working capital
(b)current ratio
(c)acid-test ratio.
Assets:
Cash $ 38,000
Marketable securities 45,000
Accounts receivable (net) 127,500
Merchandise inventory 149,500
Long-term investments 135,000
Plant assets (net) 517,500
Total assets $ 1,012,500
Liabilities and equity:
Accounts payable $ 148,700
Accrued liabilities 90,000
Notes payable (secured by plant assets)254,800
Common stock ($12 par) 180,000
Contributed capital in excess of par 135,000
Retained earnings 204,000
Total liabilities and equity $1,012,500

Accepted Answer

The answer of The current year-end balance sheet data for...

Question 19

The evaluation of company performance and financial condition includes evaluation of (1)past and current performance,(2)current financial position,and (3)future performance and risk.

Accepted Answer

A) True 
 B)False

Question 20

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Accepted Answer

A) True 
 B)False

The greater the times interest earned ratio,the greater the risk a company is exposed to.

Profitability is the ability to provide financial rewards to attract and retain financing.

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

Net income divided by net sales is the:

Annual cash dividends per share divided by market price per share is the:

A company with a low inventory turnover requires a smaller investment in inventory than one producing the same sales with a higher turnover.

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

Current assets minus current liabilities is:

Net sales divided by Average accounts receivable,net is the:

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Intra-company analysis is based on comparisons with competitors.

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:

The evaluation of company performance and financial condition includes evaluation of (1)past and current performance,(2)current financial position,and (3)future performance and risk.

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Applying Present and Future Values

Investments

International Operations

Filters

Exam 13: Analyzing and Interpreting Financial Statements

The greater the times interest earned ratio,the greater the risk a company is exposed to.

Profitability is the ability to provide financial rewards to attract and retain financing.

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

Net income divided by net sales is the:

Annual cash dividends per share divided by market price per share is the:

A company with a low inventory turnover requires a smaller investment in inventory than one producing the same sales with a higher turnover.

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

Current assets minus current liabilities is:

Net sales divided by Average accounts receivable,net is the:

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Intra-company analysis is based on comparisons with competitors.

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:

The evaluation of company performance and financial condition includes evaluation of (1)past and current performance,(2)current financial position,and (3)future performance and risk.

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Applying Present and Future Values

Investments

International Operations

Filters