Question 1

Back Company sold merchandise on credit.Its gross profit ratio is 23%.The effect of this transaction is that the

Accepted Answer

A) earnings per share decreased 
B) current ratio was unchanged 
C) debt-to-equity ratio increased 
D) earnings per share increased 
A) earnings per share decreased 
B) current ratio was unchanged 
C) debt-to-equity ratio increased 
D) earnings per share increased

Question 2

Since inflation is an important consideration in analyzing financial statements, the FASB requires the submission of all financial statements in an inflation-adjusted format to the SEC.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following yields the return on assets ratio?

Accepted Answer

A) return on common stockholders' equity) x asset turnover) 
B) return on sales) x asset turnover) 
C) profit margin) x return on sales) 
D) profit margin) x asset turnover) 
A) return on common stockholders' equity) x asset turnover) 
B) return on sales) x asset turnover) 
C) profit margin) x return on sales) 
D) profit margin) x asset turnover)

Question 4

Which combination of ratios will best analyze Stetson's income statement performance?

Accepted Answer

A) Earnings per share, gross profit, and profit margin ratio 
B) Gross profit ratio, return on common stockholders' equity ratio, debt-to-equity ratio 
C) Debt-to-equity ratio, gross profit ratio, and profit margin ratio 
D) Current ratio, gross profit ratio, and return on common stockholders' equity ratio 
A) Earnings per share, gross profit, and profit margin ratio 
B) Gross profit ratio, return on common stockholders' equity ratio, debt-to-equity ratio 
C) Debt-to-equity ratio, gross profit ratio, and profit margin ratio 
D) Current ratio, gross profit ratio, and return on common stockholders' equity ratio

Question 5

Since almost all debts require payment with quick assets, the quick ratio is more useful than the cash flow from operations to current liabilities ratio.

Accepted Answer

A) True 
 B)False

Question 6

Various organizations publish summaries of selected ratios organized by industry for a sample of U.S.companies.

Accepted Answer

A) True 
 B)False

Question 7

The cash-to-cash operating cycle is the number of days' sales in

Accepted Answer

A) receivables and working capital. 
B) receivables and plant assets. 
C) inventory and receivables. 
D) inventory and plant assets. 
A) receivables and working capital. 
B) receivables and plant assets. 
C) inventory and receivables. 
D) inventory and plant assets.

Question 8

The acid-test ratio is a stricter test of a company's ability to pay its current debts as they are due than the current ratio is.

Accepted Answer

A) True 
 B)False

Question 9

The following items appear on the balance sheet of The Piano Company at the end of 2016 and 2015:   Between 2015 and 2016

Accepted Answer

A) The Piano Company's debt-to-equity ratio and current ratio both increased. 
B) The Piano Company's debt-to-equity ratio and current ratio both decreased. 
C) The Piano Company's debt-to-equity ratio increased and its debt-to-total assets ratio decreased. 
D) The Piano Company's debt-to-equity ratio decreased and its debt-to-total assets ratio increased. 
A) The Piano Company's debt-to-equity ratio and current ratio both increased. 
B) The Piano Company's debt-to-equity ratio and current ratio both decreased. 
C) The Piano Company's debt-to-equity ratio increased and its debt-to-total assets ratio decreased. 
D) The Piano Company's debt-to-equity ratio decreased and its debt-to-total assets ratio increased.

Question 10

Would a banker be more interested in the liquidity or the profitability of a company? Explain.

Accepted Answer

A banker is more interested in the likel

Question 11

, or an increase in the level of prices, is another important consideration in analyzing financial statements.

Accepted Answer

The answer of , or an increase in the level...

Question 12

Which of the following is a total dollar measure of liquidity?

Accepted Answer

A) accounts receivable turnover ratio 
B) cash to cash operating cycle 
C) number of days' sales in inventory 
D) working capital 
A) accounts receivable turnover ratio 
B) cash to cash operating cycle 
C) number of days' sales in inventory 
D) working capital

Question 13

Crimson Company declared and paid $1,000,000 in dividends to the common stockholders.The effect of this transaction is that the

Accepted Answer

A) earnings per share decreased 
B) current ratio increased 
C) debt-to-equity ratio increased 
D) earnings per share increased 
A) earnings per share decreased 
B) current ratio increased 
C) debt-to-equity ratio increased 
D) earnings per share increased

Question 14

Auto Industries Company reported the following on its income statement:   If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?

Accepted Answer

A) 5 times 
B) 8 times 
C) 5.25 times 
D) 6.25 times 
A) 5 times 
B) 8 times 
C) 5.25 times 
D) 6.25 times

Question 15

A company that uses leverage is attempting to earn an overall return that is higher than the cost of funds received from

Accepted Answer

A) preferred and common stockholders. 
B) common stockholders only. 
C) preferred stockholders and borrowed funds. 
D) borrowed funds only. 
A) preferred and common stockholders. 
B) common stockholders only. 
C) preferred stockholders and borrowed funds. 
D) borrowed funds only.

Question 16

Which of the following formulas gives the inventory turnover ratio?

Accepted Answer

A) Net credit sales/Average inventory 
B) Average inventory/Net credit sales 
C) Cost of goods sold/Average inventory 
D) Average inventory/Cost of goods sold 
A) Net credit sales/Average inventory 
B) Average inventory/Net credit sales 
C) Cost of goods sold/Average inventory 
D) Average inventory/Cost of goods sold

Question 17

Which of the following considerations is most important for a stockholder when evaluating whether to purchase stock in a company?

Accepted Answer

A) Will earnings per share be distributed to stockholders? 
B) Will the company earn a fair return on the amount invested by the stockholders? 
C) Will the key ratios be reported on the balance sheet? 
D) Will cash flows from operations exceed the amount of net income for the period? 
A) Will earnings per share be distributed to stockholders? 
B) Will the company earn a fair return on the amount invested by the stockholders? 
C) Will the key ratios be reported on the balance sheet? 
D) Will cash flows from operations exceed the amount of net income for the period?

Question 18

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is:
___________________.

Accepted Answer

The answer of In a vertical analysis, the base, or...

Question 19

The number of days' sales in inventory is the same as a company's accounting cycle.

Accepted Answer

A) True 
 B)False

Question 20

Which profitability ratio requires the use of earnings per share and the current market price?

Accepted Answer

A) Return on common stockholders' equity 
B) Dividend payout ratio 
C) Dividend yield ratio 
D) Price/earnings ratio 
A) Return on common stockholders' equity 
B) Dividend payout ratio 
C) Dividend yield ratio 
D) Price/earnings ratio

Back Company sold merchandise on credit.Its gross profit ratio is 23%.The effect of this transaction is that the

Since inflation is an important consideration in analyzing financial statements, the FASB requires the submission of all financial statements in an inflation-adjusted format to the SEC.

Which of the following yields the return on assets ratio?

Which combination of ratios will best analyze Stetson's income statement performance?

Since almost all debts require payment with quick assets, the quick ratio is more useful than the cash flow from operations to current liabilities ratio.

Various organizations publish summaries of selected ratios organized by industry for a sample of U.S.companies.

The cash-to-cash operating cycle is the number of days' sales in

The acid-test ratio is a stricter test of a company's ability to pay its current debts as they are due than the current ratio is.

The following items appear on the balance sheet of The Piano Company at the end of 2016 and 2015: Between 2015 and 2016

Would a banker be more interested in the liquidity or the profitability of a company? Explain.

, or an increase in the level of prices, is another important consideration in analyzing financial statements.

Which of the following is a total dollar measure of liquidity?

Crimson Company declared and paid $1,000,000 in dividends to the common stockholders.The effect of this transaction is that the

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?

A company that uses leverage is attempting to earn an overall return that is higher than the cost of funds received from

Which of the following formulas gives the inventory turnover ratio?

Which of the following considerations is most important for a stockholder when evaluating whether to purchase stock in a company?

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

The number of days' sales in inventory is the same as a company's accounting cycle.

Which profitability ratio requires the use of earnings per share and the current market price?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International Financial Reporting Standards

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Exam 13: Financial Statement Analysis

Back Company sold merchandise on credit.Its gross profit ratio is 23%.The effect of this transaction is that the

Since inflation is an important consideration in analyzing financial statements, the FASB requires the submission of all financial statements in an inflation-adjusted format to the SEC.

Which of the following yields the return on assets ratio?

Which combination of ratios will best analyze Stetson's income statement performance?

Since almost all debts require payment with quick assets, the quick ratio is more useful than the cash flow from operations to current liabilities ratio.

Various organizations publish summaries of selected ratios organized by industry for a sample of U.S.companies.

The cash-to-cash operating cycle is the number of days' sales in

The acid-test ratio is a stricter test of a company's ability to pay its current debts as they are due than the current ratio is.

The following items appear on the balance sheet of The Piano Company at the end of 2016 and 2015: Between 2015 and 2016

Would a banker be more interested in the liquidity or the profitability of a company? Explain.

, or an increase in the level of prices, is another important consideration in analyzing financial statements.

Which of the following is a total dollar measure of liquidity?

Crimson Company declared and paid $1,000,000 in dividends to the common stockholders.The effect of this transaction is that the

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?

A company that uses leverage is attempting to earn an overall return that is higher than the cost of funds received from

Which of the following formulas gives the inventory turnover ratio?

Which of the following considerations is most important for a stockholder when evaluating whether to purchase stock in a company?

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

The number of days' sales in inventory is the same as a company's accounting cycle.

Which profitability ratio requires the use of earnings per share and the current market price?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International Financial Reporting Standards

Filters