Question 1

Which of the following is not known as a liquidity ratio?

Accepted Answer

A) Debt-to-equity 
B) Quick ratio 
C) Current ratio 
D) Defensive-interval ratio 
A) Debt-to-equity 
B) Quick ratio 
C) Current ratio 
D) Defensive-interval ratio A

Question 2

The current ratio is one measure of the adequacy of a company's working capital.

Accepted Answer

A) True 
 B)False  False

Question 3

Ryan Company analyzed its financial statements for the year ended December 31.During its analysis, Ryan Company compared the accounts receivable balance from 2014 to 2013.This type of analysis is called:

Accepted Answer

A) Account comparison. 
B) Cross-sectional comparison. 
C) Longitudinal comparison. 
D) Sectional comparison. 
A) Account comparison. 
B) Cross-sectional comparison. 
C) Longitudinal comparison. 
D) Sectional comparison. C

Question 4

Quick assets, as usually defined, include:

Accepted Answer

A) cash and accounts receivable only. 
B) cash only. 
C) cash, accounts receivable, short-term investments in marketable securities, only. 
D) cash, accounts receivable, short-term investments in marketable securities, and inventories. 
E) None of these choices are correct. 
A) cash and accounts receivable only. 
B) cash only. 
C) cash, accounts receivable, short-term investments in marketable securities, only. 
D) cash, accounts receivable, short-term investments in marketable securities, and inventories. 
E) None of these choices are correct.

Question 5

Calculate the balance sheet item Marketable securities

Accepted Answer

Capital As

Question 6

Creditors would be most interested in a company's liquidity and solvency.

Accepted Answer

A) True 
 B)False

Question 7

Ratios that measure current position are useful for assessing the ability of a company to pay its short-term obligations.

Accepted Answer

A) True 
 B)False

Question 8

Upon reading the notes to the financial statements of KAR Ltd., you notice that the policies they have chosen tend to be deferring revenue but expensing operating costs as incurred.This approach leads you to believe that KAR Ltd.is employing a(n):

Accepted Answer

A) Profit maximization strategy. 
B) Income tax maximization strategy. 
C) Smoothing strategy. 
D) Income tax minimization strategy. 
A) Profit maximization strategy. 
B) Income tax maximization strategy. 
C) Smoothing strategy. 
D) Income tax minimization strategy.

Question 9

A high working capital ratio is always a favourable situation from the shareholders' viewpoint.

Accepted Answer

A) True 
 B)False

Question 10

ABC's net accounts receivable were $1,000 at December 31, 2013 and $1,200 at December 31, 2014.Net cash sales for 2014 were $400.The accounts receivable turnover for 2014 was 5.0.What were ABC's total net sales for 2014?

Accepted Answer

A) $5,900 
B) $6,400 
C) $6,000 
D) $11,000 
E) None of these choices are correct 
A) $5,900 
B) $6,400 
C) $6,000 
D) $11,000 
E) None of these choices are correct

Question 11

Historical analysis is part of a(n):

Accepted Answer

A) Industrial ratio. 
B) Longitudinal comparison. 
C) Historical ratio. 
D) Cross-sectional comparison. 
A) Industrial ratio. 
B) Longitudinal comparison. 
C) Historical ratio. 
D) Cross-sectional comparison.

Question 12

All of the following are decisions that may be made with financial statement analysis except:

Accepted Answer

A) share offering decisions. 
B) contractual decisions. 
C) lending decisions. 
D) share investment decisions. 
E) regulatory decisions. 
A) share offering decisions. 
B) contractual decisions. 
C) lending decisions. 
D) share investment decisions. 
E) regulatory decisions.

Question 13

What is the purpose of consolidated financial statements?

Accepted Answer

Many companies operate through the use o

Question 14

Published financial statements are always the best source of timely information on practically all financial items relevant to investors and creditors.

Accepted Answer

A) True 
 B)False

Question 15

A prospective investor in common shares is primary interested in the long-run profitability of the company.

Accepted Answer

A) True 
 B)False

Question 16

Return on total assets is generally considered to be a better measure of the overall profit performance of a business than is profit margin on sales.

Accepted Answer

A) True 
 B)False

Question 17

The decision to capitalize (as opposed to expense)a given expenditure will have a favourable effect on the debt-to-equity and debt-to-total-assets ratios.

Accepted Answer

A) True 
 B)False

Question 18

Upon reading the notes to the financial statements of KAR Ltd., you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

Accepted Answer

A) Income tax minimization strategy. 
B) Profit maximization strategy. 
C) Smoothing strategy. 
D) Income tax maximization strategy. 
A) Income tax minimization strategy. 
B) Profit maximization strategy. 
C) Smoothing strategy. 
D) Income tax maximization strategy.

Question 19

Vertical analysis of financial statements refers to a comparison of amounts which are expressed in terms of a base amount that is from a:

Accepted Answer

A) previous time period. 
B) financial summary. 
C) specific amount that is on the same financial statement. 
D) either previous time period or common size statement. 
E) common size statement. 
A) previous time period. 
B) financial summary. 
C) specific amount that is on the same financial statement. 
D) either previous time period or common size statement. 
E) common size statement.

Question 20

A company which offers "n/30" credit terms would be expected to have a receivable turnover of about 12 times a year.

Accepted Answer

A) True 
 B)False

Which of the following is not known as a liquidity ratio?

The current ratio is one measure of the adequacy of a company's working capital.

Ryan Company analyzed its financial statements for the year ended December 31.During its analysis, Ryan Company compared the accounts receivable balance from 2014 to 2013.This type of analysis is called:

Quick assets, as usually defined, include:

Calculate the balance sheet item Marketable securities

Creditors would be most interested in a company's liquidity and solvency.

Ratios that measure current position are useful for assessing the ability of a company to pay its short-term obligations.

Upon reading the notes to the financial statements of KAR Ltd., you notice that the policies they have chosen tend to be deferring revenue but expensing operating costs as incurred.This approach leads you to believe that KAR Ltd.is employing a(n):

A high working capital ratio is always a favourable situation from the shareholders' viewpoint.

ABC's net accounts receivable were $1,000 at December 31, 2013 and $1,200 at December 31, 2014.Net cash sales for 2014 were $400.The accounts receivable turnover for 2014 was 5.0.What were ABC's total net sales for 2014?

Historical analysis is part of a(n):

All of the following are decisions that may be made with financial statement analysis except:

What is the purpose of consolidated financial statements?

Published financial statements are always the best source of timely information on practically all financial items relevant to investors and creditors.

A prospective investor in common shares is primary interested in the long-run profitability of the company.

Return on total assets is generally considered to be a better measure of the overall profit performance of a business than is profit margin on sales.

The decision to capitalize (as opposed to expense)a given expenditure will have a favourable effect on the debt-to-equity and debt-to-total-assets ratios.

Upon reading the notes to the financial statements of KAR Ltd., you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

Vertical analysis of financial statements refers to a comparison of amounts which are expressed in terms of a base amount that is from a:

A company which offers "n/30" credit terms would be expected to have a receivable turnover of about 12 times a year.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Filters

Exam 22: Financial Statement Analysis

Which of the following is not known as a liquidity ratio?

The current ratio is one measure of the adequacy of a company's working capital.

Ryan Company analyzed its financial statements for the year ended December 31.During its analysis, Ryan Company compared the accounts receivable balance from 2014 to 2013.This type of analysis is called:

Quick assets, as usually defined, include:

Calculate the balance sheet item Marketable securities

Creditors would be most interested in a company's liquidity and solvency.

Ratios that measure current position are useful for assessing the ability of a company to pay its short-term obligations.

Upon reading the notes to the financial statements of KAR Ltd., you notice that the policies they have chosen tend to be deferring revenue but expensing operating costs as incurred.This approach leads you to believe that KAR Ltd.is employing a(n):

A high working capital ratio is always a favourable situation from the shareholders' viewpoint.

ABC's net accounts receivable were $1,000 at December 31, 2013 and $1,200 at December 31, 2014.Net cash sales for 2014 were $400.The accounts receivable turnover for 2014 was 5.0.What were ABC's total net sales for 2014?

Historical analysis is part of a(n):

All of the following are decisions that may be made with financial statement analysis except:

What is the purpose of consolidated financial statements?

Published financial statements are always the best source of timely information on practically all financial items relevant to investors and creditors.

A prospective investor in common shares is primary interested in the long-run profitability of the company.

Return on total assets is generally considered to be a better measure of the overall profit performance of a business than is profit margin on sales.

The decision to capitalize (as opposed to expense)a given expenditure will have a favourable effect on the debt-to-equity and debt-to-total-assets ratios.

Upon reading the notes to the financial statements of KAR Ltd., you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

Vertical analysis of financial statements refers to a comparison of amounts which are expressed in terms of a base amount that is from a:

A company which offers "n/30" credit terms would be expected to have a receivable turnover of about 12 times a year.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Filters