Question 1

A company reports the following:
Sales $2,400,000
Average total assets 1,500,000
Determine the ratio of sales to assets. Round your answer to one decimal place.

Accepted Answer

Ratio of sales to assets = Sal

Question 2

A company reports the following:
Sales $720,000
Average accounts receivable net) 45,000
Determine the a) accounts receivable turnover, and b) number of days' sales in receivables. Round your answer to one decimal place.

Accepted Answer

a) Accounts receivable turnover = Sales/

Question 3

What information is generally included in the Management Discussion and Analysis MD&A) section of a corporate annual report?

Accepted Answer

The MD&A section typically includes:
Man

Question 4

A company reports the following: $$\begin{array} { | l | c | } 
\hline \text { Net income } & \$ 350,000 \
\hline \text { Preferred dividends } & 50,000 \
\hline \text { Average stockholders' equity } & 1,000,000 \
\hline \text { Average common stockholders' equity } & 800,000 \
\hline
\end{array}$$ Determine the a) rate earned on stockholders' equity, and b) rate earned on common stockholders' equity. Round
to one decimal place.

Accepted Answer

a)Rate earned on stockholders' equity =

Question 5

-Based on the above data, what is the amount of working capital?

Accepted Answer

A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000 
A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000

Question 6

Assume the following sales data for a company: Current year $1,025,000
Preceding year 820,000
What is the percentage increase in sales from the preceding year to the current year?

Accepted Answer

A)  100% 
B)  25% 
C)  125% 
D)  75% 
A)  100% 
B)  25% 
C)  125% 
D)  75%

Question 7

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

Accepted Answer

A) True 
 B)False

Question 8

Selected data from the Carmen Company at year end are presented below:
Total assets
$2,000,000
Average total assets
2,200,000
Net income
250,000
Sales
1,300,000
Average common stockholders' equity
1,000,000
Net cash provided by operating activities
275,000
Shares of common stock outstanding
10,000
Calculate: a) ratio of sales to assets; b) rate earned on total assets; c) rate earned on common stockholders' equity and d) earnings per share on common stock. Assume the company had no preferred stock or interest expense. Round percentage values to one decimal place and dollar values to zero decimal place.

Accepted Answer

With the information provided,

Question 9

The percent of fixed assets to total assets is an example of

Accepted Answer

A)  vertical analysis 
B)  solvency analysis 
C)  profitability analysis 
D)  horizontal analysis 
A)  vertical analysis 
B)  solvency analysis 
C)  profitability analysis 
D)  horizontal analysis

Question 10

The balance sheets at the end of each of the first two years of operations indicate the following:  
-If net income is $250,000 and interest expense is $20,000 for Year 2, and the market price of common shares is $30, what is the price-earnings ratio on common stock for Year 2? Round intermediate calculation to two decimal places and final answers to one decimal place.)

Accepted Answer

A)  7.5 
B)  13.4 
C)  12.1 
D)  8.5 
A)  7.5 
B)  13.4 
C)  12.1 
D)  8.5

Question 11

Brock Company's financial information is listed below. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.   What is the current ratio?

Accepted Answer

A)  1.42 
B)  0.78 
C)  1.58 
D)  0.67 
A)  1.42 
B)  0.78 
C)  1.58 
D)  0.67

Question 12

A company can use comparisons of its financial data to the data of other companies and industry averages to evaluate its position.

Accepted Answer

A) True 
 B)False

Question 13

The following information was taken from the financial statement of Fox Resources for December 31 of the current fiscal year:

Accepted Answer

a)Earnings per share = Net income - Pref

Question 14

In a vertical analysis, the base for cost of goods sold is

Accepted Answer

A)  total selling expenses 
B)  sales 
C)  total expenses 
D)  gross profit 
A)  total selling expenses 
B)  sales 
C)  total expenses 
D)  gross profit

Question 15

Which of the following should be classified as an extraordinary item on the income statement?

Accepted Answer

A)  gain on a sale of a long-term investment 
B)  loss due to discontinued operations 
C)  restructuring charges 
D)  loss resulting from an infrequent natural disaster 
A)  gain on a sale of a long-term investment 
B)  loss due to discontinued operations 
C)  restructuring charges 
D)  loss resulting from an infrequent natural disaster

Question 16

The number of times interest expense is earned is computed as

Accepted Answer

A)  net income plus interest expense, divided by interest expense 
B)  income before income tax plus interest expense, divided by interest expense 
C)  net income divided by interest expense 
D)  income before income tax divided by interest expense 
A)  net income plus interest expense, divided by interest expense 
B)  income before income tax plus interest expense, divided by interest expense 
C)  net income divided by interest expense 
D)  income before income tax divided by interest expense

Question 17

The dividend yield rate is equal to the dividends per share divided by the par value per share of common stock.

Accepted Answer

A) True 
 B)False

Question 18

An advantage of the current ratio is that it considers the makeup of the current assets.

Accepted Answer

A) True 
 B)False

Question 19

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.

Accepted Answer

A) True 
 B)False

Question 20

Match each ratio that follows to its use items a-h). Items may be used more than once.
-rate earned on common stockholders' equity

Accepted Answer

A) assess the profitability of the assets 
B) assess the effectiveness in the use of assets 
C) indicate the ability to meet currently maturing obligations 
D) indicate the margin of safety to creditors 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders 
A) assess the profitability of the assets 
B) assess the effectiveness in the use of assets 
C) indicate the ability to meet currently maturing obligations 
D) indicate the margin of safety to creditors 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders

Exam 15: Financial Statement Analysis

A company reports the following: Sales $2,400,000 Average total assets 1,500,000 Determine the ratio of sales to assets. Round your answer to one decimal place.

A company reports the following: Sales $720,000 Average accounts receivable net) 45,000 Determine the a) accounts receivable turnover, and b) number of days' sales in receivables. Round your answer to one decimal place.

What information is generally included in the Management Discussion and Analysis MD&A) section of a corporate annual report?

A company reports the following: Net income \ 350,000 Preferred dividends 50,000 Average stockholders' equity 1,000,000 Average common stockholders' equity 800,000 Determine the a) rate earned on stockholders' equity, and b) rate earned on common stockholders' equity. Round to one decimal place.

-Based on the above data, what is the amount of working capital?

Assume the following sales data for a company: Current year $1,025,000 Preceding year 820,000 What is the percentage increase in sales from the preceding year to the current year?

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

The percent of fixed assets to total assets is an example of

Brock Company's financial information is listed below. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. What is the current ratio?

A company can use comparisons of its financial data to the data of other companies and industry averages to evaluate its position.

The following information was taken from the financial statement of Fox Resources for December 31 of the current fiscal year:

In a vertical analysis, the base for cost of goods sold is

Which of the following should be classified as an extraordinary item on the income statement?

The number of times interest expense is earned is computed as

The dividend yield rate is equal to the dividends per share divided by the par value per share of common stock.

An advantage of the current ratio is that it considers the makeup of the current assets.

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.

Match each ratio that follows to its use items a-h). Items may be used more than once. -rate earned on common stockholders' equity

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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