Question 1

In performing a vertical analysis for a service company, the base for salaries expense is

Accepted Answer

A)  total selling expenses. 
B)  revenues. 
C)  total revenues. 
D)  total expenses. 
A)  total selling expenses. 
B)  revenues. 
C)  total revenues. 
D)  total expenses.

Question 2

If the average collection period is 50 days, what is the receivables turnover?

Accepted Answer

A)  6.64 times 
B)  7.30 times 
C)  3.65 times 
D)  None of these 
A)  6.64 times 
B)  7.30 times 
C)  3.65 times 
D)  None of these

Question 3

The total revenue figures for Dabous & Sons Construction Company are as follows: $\begin{array} {| l| l| l| l| l| l|  }
\hline  &2014&2013&2012&2011&2010\
\hline \text { Revenue }&\$19,690&\$10,350&\$9,692&\$9,984&\$9,496\
\hline 
\end{array}$
 Instructions 
a. Using Horizontal analysis calculate the percentage of change from the base year amount, assuming 2010 is the base year.
b. Using Horizontal analysis, calculate the percentage change for each year.

Accepted Answer

The answer of The total revenue figures for Dabous &...

Question 4

Gross profit margin is the profit of a company divided by its net sales.

Accepted Answer

A) True 
 B)False

Question 5

The income statement for Woodford Corporation for the year ended December 31, 2014 appears below:  
 *Includes $30,000 of interest expense and $16,000 of income tax expense.
Additional information:
1. The weighted average number of common shares issued on December 31, 2014 were 50,000 shares.
2. The market price of Woodford's shares was $18 at the end of 2014.
3. Cash dividends of $10,000 were paid, $6,000 of which were paid to preferred shareholders.
Instructions
a. Calculate the following ratios for 2014:
i. earnings per share
ii. price-earnings
iii. interest coverage
iv. total dividend payout
b. Comment on the above ratios, assuming the averages for the industry in which Woodford operates are as follows:
(i) earnings per share $1.20
(ii) price-earnings 10 times
(iii) interest coverage 2.2 times
(iv) dividend payout ratio 15%

Accepted Answer

a.
 @#IMG-DLM& b. The earnings per share of Woodfo

Question 6

Horizontal analysis is used mainly in

Accepted Answer

A)  linear analysis. 
B)  intercompany analysis. 
C)  common size analysis. 
D)  intracompany analysis. 
A)  linear analysis. 
B)  intercompany analysis. 
C)  common size analysis. 
D)  intracompany analysis.

Question 7

A company has a receivables turnover ratio of 10. The average gross receivables during the period are $400,000. What is the amount of net credit sales for the period?

Accepted Answer

A)  $40,000 
B)  $4,000,000 
C)  $480,000 
D)  Cannot be determined from the information given 
A)  $40,000 
B)  $4,000,000 
C)  $480,000 
D)  Cannot be determined from the information given

Question 8

Vertical analysis is also known as

Accepted Answer

A)  perpendicular analysis. 
B)  common size analysis. 
C)  trend analysis. 
D)  straight-line analysis. 
A)  perpendicular analysis. 
B)  common size analysis. 
C)  trend analysis. 
D)  straight-line analysis.

Question 9

Investors will want to assess the probability of receiving a dividend and the growth potential of the share price of the company.

Accepted Answer

A) True 
 B)False

Question 10

The debt to total assets ratio measures

Accepted Answer

A)  the company's profitability. 
B)  whether interest can be paid on debt in the current year. 
C)  the proportion of interest paid relative to dividends paid. 
D)  the percentage of the total assets provided by creditors. 
A)  the company's profitability. 
B)  whether interest can be paid on debt in the current year. 
C)  the proportion of interest paid relative to dividends paid. 
D)  the percentage of the total assets provided by creditors.

Question 11

Earnings per share is only expressed in terms of the common shares, not the preferred shares.

Accepted Answer

A) True 
 B)False

Question 12

Industry averages are used to compare companies within the same industry.

Accepted Answer

A) True 
 B)False

Question 13

The following ratios have been calculated for Peters Limited for 2014:   The 2014 financial statements for Peters Limited with missing information follows:   Instructions
Use the above ratios and information from the Peters Limited financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show calculations that support your answers.

Accepted Answer

The answer of The following ratios have been calculated for...

Question 14

Investors would most likely favour a company with which of the following ratios if they wished to purchase shares for the purpose of capital appreciation (growth)?

Accepted Answer

A)  a low payout ratio 
B)  a low price-earnings ratio 
C)  a high payout ratio 
D)  a high free cash flow 
A)  a low payout ratio 
B)  a low price-earnings ratio 
C)  a high payout ratio 
D)  a high free cash flow

Question 15

The CEO and CFO of a publically traded company must ensure and personally declare that the reported financial information is

Accepted Answer

A)  accurate. 
B)  relevant. 
C)  understandable. 
D)  all of the above. 
A)  accurate. 
B)  relevant. 
C)  understandable. 
D)  all of the above.

Question 16

The vertical percentage formula divides the analysis amount by the base amount.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the gross profit margin combined with a decrease in the profit margin indicates to investors that the company's

Accepted Answer

A)  sales decreased during the period. 
B)  cost of goods sold increased during the period. 
C)  profit increased during the period. 
D)  operating expenses increased during the period. 
A)  sales decreased during the period. 
B)  cost of goods sold increased during the period. 
C)  profit increased during the period. 
D)  operating expenses increased during the period.

Question 18

A supplier to a company would be most interested in the

Accepted Answer

A)  asset turnover. 
B)  profit margin. 
C)  current ratio. 
D)  earnings per share. 
A)  asset turnover. 
B)  profit margin. 
C)  current ratio. 
D)  earnings per share.

Question 19

Intercompany comparisons are useful for understanding a company's

Accepted Answer

A)  short-term goals. 
B)  ability to repay debt. 
C)  competitive position. 
D)  changes in financial relationships. 
A)  short-term goals. 
B)  ability to repay debt. 
C)  competitive position. 
D)  changes in financial relationships.

Question 20

Comparative information taken from the London Antiques Corporation financial statements is shown below: $\begin{array}{lrr}
&2014&2013\
\text { 1. Notes receivable } & \$ 80,000 & \$-0- \
\text { 2. Accounts receivable } & 182,000 & 140,000 \
\text { 3. Retained earnings } & 49,000 & (40,000) \
\text { 4. Sales } & 930,000 & 750,000 \
\text { 5. Operating expenses } & 170,000 & 200,000 \
\text { 6. Income taxes payable } & 95,000 & 70,000
\end{array}$ Instructions
Using horizontal analysis, show the percentage change from 2013 to 2014 with 2013 as the base year.

Accepted Answer

1. Base year is zero. Not possible to ca

In performing a vertical analysis for a service company, the base for salaries expense is

If the average collection period is 50 days, what is the receivables turnover?

Gross profit margin is the profit of a company divided by its net sales.

Horizontal analysis is used mainly in

A company has a receivables turnover ratio of 10. The average gross receivables during the period are $400,000. What is the amount of net credit sales for the period?

Vertical analysis is also known as

Investors will want to assess the probability of receiving a dividend and the growth potential of the share price of the company.

The debt to total assets ratio measures

Earnings per share is only expressed in terms of the common shares, not the preferred shares.

Industry averages are used to compare companies within the same industry.

Investors would most likely favour a company with which of the following ratios if they wished to purchase shares for the purpose of capital appreciation (growth)?

The CEO and CFO of a publically traded company must ensure and personally declare that the reported financial information is

The vertical percentage formula divides the analysis amount by the base amount.

An increase in the gross profit margin combined with a decrease in the profit margin indicates to investors that the company's

A supplier to a company would be most interested in the

Intercompany comparisons are useful for understanding a company's

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Investments

Filters

Exam 17: Financial Statement Analysis

In performing a vertical analysis for a service company, the base for salaries expense is

If the average collection period is 50 days, what is the receivables turnover?

Gross profit margin is the profit of a company divided by its net sales.

Horizontal analysis is used mainly in

A company has a receivables turnover ratio of 10. The average gross receivables during the period are $400,000. What is the amount of net credit sales for the period?

Vertical analysis is also known as

Investors will want to assess the probability of receiving a dividend and the growth potential of the share price of the company.

The debt to total assets ratio measures

Earnings per share is only expressed in terms of the common shares, not the preferred shares.

Industry averages are used to compare companies within the same industry.

Investors would most likely favour a company with which of the following ratios if they wished to purchase shares for the purpose of capital appreciation (growth)?

The CEO and CFO of a publically traded company must ensure and personally declare that the reported financial information is

The vertical percentage formula divides the analysis amount by the base amount.

An increase in the gross profit margin combined with a decrease in the profit margin indicates to investors that the company's

A supplier to a company would be most interested in the

Intercompany comparisons are useful for understanding a company's

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Investments

Filters