Question 1

Comparisons of financial data made within a company are called

Accepted Answer

A) intracompany comparisons. 
B) interior comparisons. 
C) intercompany comparisons. 
D) intramural comparisons. 
A) intracompany comparisons. 
B) interior comparisons. 
C) intercompany comparisons. 
D) intramural comparisons.

Question 2

Inventory turnover is calculated by dividing

Accepted Answer

A) cost of goods sold by the ending inventory. 
B) cost of goods sold by the beginning inventory. 
C) cost of goods sold by the average inventory. 
D) average inventory by cost of goods sold. 
A) cost of goods sold by the ending inventory. 
B) cost of goods sold by the beginning inventory. 
C) cost of goods sold by the average inventory. 
D) average inventory by cost of goods sold.

Question 3

Horizontal, vertical, and circular analyses are the most common tools of financial statement analysis.

Accepted Answer

A) True 
 B)False

Question 4

Ale Corporation had net income of $240,000 and paid dividends to common stockholders of $40,000 in 2014. The weighted average number of shares outstanding in 2014 was 60,000 shares. Ale Corporation's common stock is selling for $60 per share on the New York Stock Exchange. Ale Corporation's payout ratio for 2014 is

Accepted Answer

A) $0.71 per share. 
B) 25%. 
C) 16.7%. 
D) 8%. 
A) $0.71 per share. 
B) 25%. 
C) 16.7%. 
D) 8%.

Question 5

The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.   What is the return on assets for Rural?

Accepted Answer

A) 16% 
B) 9.7% 
C) 8% 
D) 17% 
A) 16% 
B) 9.7% 
C) 8% 
D) 17%

Question 6

Under which of the following cases may a percentage change be computed?

Accepted Answer

A) The trend of the balances is decreasing but all balances are positive. 
B) There is no balance in the base year. 
C) There is a positive balance in the base year and a negative balance in the subsequent year. 
D) There is a negative balance in the base year and a positive balance in the subsequent year. 
A) The trend of the balances is decreasing but all balances are positive. 
B) There is no balance in the base year. 
C) There is a positive balance in the base year and a negative balance in the subsequent year. 
D) There is a negative balance in the base year and a positive balance in the subsequent year.

Question 7

The acid-test ratio

Accepted Answer

A) is a quick calculation of an approximation of the current ratio. 
B) does not include all current liabilities in the calculation. 
C) does not include inventory as part of the numerator. 
D) does include prepaid expenses as part of the numerator. 
A) is a quick calculation of an approximation of the current ratio. 
B) does not include all current liabilities in the calculation. 
C) does not include inventory as part of the numerator. 
D) does include prepaid expenses as part of the numerator.

Question 8

Vertical analysis is useful in making comparisons of companies of different sizes.

Accepted Answer

A) True 
 B)False

Question 9

A solvency ratio measures the income or operating success of an enterprise for a given period of time.

Accepted Answer

A) True 
 B)False

Question 10

Inventory turnover measures the number of times on the average the inventory was sold during the period.

Accepted Answer

A) True 
 B)False

Question 11

The following amounts were taken from the financial statements of Leaf Company:   The profit margin ratio for 2015 is

Accepted Answer

A) 15.4%. 
B) 44.9%. 
C) 16.5%. 
D) 10.7%. 
A) 15.4%. 
B) 44.9%. 
C) 16.5%. 
D) 10.7%.

Question 12

The days in inventory is computed by multiplying inventory turnover by 365.

Accepted Answer

A) True 
 B)False

Question 13

From a creditor's point of view, the higher the total debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

Accepted Answer

A) True 
 B)False

Question 14

The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.     What is the return on common stockholders' equity for Rural?

Accepted Answer

A) 4.8% 
B) 8% 
C) 37.5% 
D) 16% 
A) 4.8% 
B) 8% 
C) 37.5% 
D) 16%

Question 15

Each of the following is included in computing the acid-test ratio except

Accepted Answer

A) cash. 
B) inventory. 
C) receivables. 
D) short-term investments. 
A) cash. 
B) inventory. 
C) receivables. 
D) short-term investments.

Question 16

A ratio can be expressed as a percentage, a rate, or a proportion.

Accepted Answer

A) True 
 B)False

Question 17

The following financial statement information is available for James Corporation:   The profit margin ratio for 2015 is

Accepted Answer

A) 15.4%. 
B) 47.9%. 
C) 32.1%. 
D) 13.5%. 
A) 15.4%. 
B) 47.9%. 
C) 32.1%. 
D) 13.5%.

Question 18

Saira, Inc. has the following income statement (in millions):   Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

Accepted Answer

A) 40% 
B) 60% 
C) 100% 
D) None of these answer choices are correct. 
A) 40% 
B) 60% 
C) 100% 
D) None of these answer choices are correct.

Question 19

Quasar Corporation had net income of $210,000 and paid dividends to common stockholders of $63,000 in 2015. The weighted average number of shares outstanding in 2015 was 50,000 shares. Quasar Corporation's common stock is selling for $30 per share on the New York Stock Exchange. Quasar Corporation's payout ratio for 2015 is

Accepted Answer

A) 24%. 
B) 30%. 
C) 26%. 
D) $3.33 per share. 
A) 24%. 
B) 30%. 
C) 26%. 
D) $3.33 per share.

Question 20

A stockholder is interested in the ability of a firm to

Accepted Answer

A) pay consistent dividends. 
B) appreciate in share price. 
C) survive over a long period. 
D) All of these answer choices are correct. 
A) pay consistent dividends. 
B) appreciate in share price. 
C) survive over a long period. 
D) All of these answer choices are correct.

Comparisons of financial data made within a company are called

Inventory turnover is calculated by dividing

Horizontal, vertical, and circular analyses are the most common tools of financial statement analysis.

The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on assets for Rural?

Under which of the following cases may a percentage change be computed?

The acid-test ratio

Vertical analysis is useful in making comparisons of companies of different sizes.

A solvency ratio measures the income or operating success of an enterprise for a given period of time.

Inventory turnover measures the number of times on the average the inventory was sold during the period.

The following amounts were taken from the financial statements of Leaf Company: The profit margin ratio for 2015 is

The days in inventory is computed by multiplying inventory turnover by 365.

From a creditor's point of view, the higher the total debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on common stockholders' equity for Rural?

Each of the following is included in computing the acid-test ratio except

A ratio can be expressed as a percentage, a rate, or a proportion.

The following financial statement information is available for James Corporation: The profit margin ratio for 2015 is

Saira, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

A stockholder is interested in the ability of a firm to

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Filters

Exam 14: Financial Statement Analysis

Comparisons of financial data made within a company are called

Inventory turnover is calculated by dividing

Horizontal, vertical, and circular analyses are the most common tools of financial statement analysis.

The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on assets for Rural?

Under which of the following cases may a percentage change be computed?

The acid-test ratio

Vertical analysis is useful in making comparisons of companies of different sizes.

A solvency ratio measures the income or operating success of an enterprise for a given period of time.

Inventory turnover measures the number of times on the average the inventory was sold during the period.

The following amounts were taken from the financial statements of Leaf Company: The profit margin ratio for 2015 is

The days in inventory is computed by multiplying inventory turnover by 365.

From a creditor's point of view, the higher the total debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on common stockholders' equity for Rural?

Each of the following is included in computing the acid-test ratio except

A ratio can be expressed as a percentage, a rate, or a proportion.

The following financial statement information is available for James Corporation: The profit margin ratio for 2015 is

Saira, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

A stockholder is interested in the ability of a firm to

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Filters