Exam 22: Analyzing Financial Statements

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Asset turnover

An acid test (quick)ratio of 0.75 to 1 would indicate:

The lower the times interest earned ratio,the more likely it is that interest payments will be made.

Statements that are often used to compare similar businesses are called:

Noble Company's accounts receivable turnover was 24.6 in Year 1 and 18.2 in Year 2.This change in accounts receivable turnover indicates:

A statement presenting data from two or more consecutive periods is called a:

The income before taxes and interest expense of Barry Builders for the year just ended is $210,000.Their interest expense is $20,000 and their income taxes are $80,500.The number of times interest would be earned is:

If the average collection period is 35 days,this means:

Net income was $60,000 in Year 1 and $45,000 in Year 2.The percentage increase or decrease in net income was:

Using just a base year and one additional year is not sufficient to do a long-term trend analysis of accounts.

If current assets are $60,000 and current liabilities are $10,000,the current ratio is:

The reasons for changes in key ratios must be analyzed before drawing conclusions.

The revenue of Carol's Environmental Services for Years 1,2,and 3 are $40,000,$60,000 and $80,000,respectively.Year 1 is the base year.The trend percentage for Year 3 is:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Gross profit rate

Define two types of comparative income statements and compare the information provided by them.

Asset management ratios measure:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability - Asset Liquidity Management Debt Profitability Acid test ratio

In a common-size income statement,advertising expenses are 10%.This means that they are 10% of:

Scott Company had a current ratio of 2.57:1 in Year 1 and 2.76:1 in Year 2.This change in current ratio indicates:

If management wishes to measure how effectively the assets were used in generating a profit,they could use the: