Question 1

The days' sales uncollected ratio measures a company's ability to manage its debt.

Accepted Answer

A) True 
 B)False

Question 2

Liquidity and efficiency are considered to be building blocks of financial statement analysis.

Accepted Answer

A) True 
 B)False

Question 3

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Accepted Answer

A) True 
 B)False

Question 4

The days' sales uncollected ratio is used to:

Accepted Answer

A)  Measure the amount of layaway sales for a period. 
B)  Identify the likelihood of collecting sales on account. 
C)  Estimate how much time is likely to pass before cash receipts from credit sales equal the amount of the existing accounts receivable. 
D)  Measure how many days of sales remain until the end of the year. 
E)  Determine the number of days that have passed without collecting on accounts receivable. 
A)  Measure the amount of layaway sales for a period. 
B)  Identify the likelihood of collecting sales on account. 
C)  Estimate how much time is likely to pass before cash receipts from credit sales equal the amount of the existing accounts receivable. 
D)  Measure how many days of sales remain until the end of the year. 
E)  Determine the number of days that have passed without collecting on accounts receivable.

Question 5

The acid-test ratio is current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.

Accepted Answer

A) True 
 B)False

Question 7

A trend percent is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

Accepted Answer

A) True 
 B)False

Question 8

BuyUS Inc. plans to issue 7%, $400,000, 10-year bonds in order to finance anexpansion. The expansion is expected to increase income before interest expense from$100,000 to $175,000. BuyUS has $1,000,000 in average common equity. Calculate the expected return on common shareholders' equity. ignore income taxes)

Accepted Answer

A)  43.8%. 
B)  57.1%. 
C)  14.7%. 
D)  7.0%. 
E)  20.0%. 
A)  43.8%. 
B)  57.1%. 
C)  14.7%. 
D)  7.0%. 
E)  20.0%.

Question 9

Comparative analysis is used to reveal patterns in data covering successive periods.

Accepted Answer

A) True 
 B)False

Question 10

The base amount for a common-size balance sheet is usually total assets.

Accepted Answer

A) True 
 B)False

Question 11

Days' sales in inventory:

Accepted Answer

A)  Is the number of days we can sell from inventory if no new items are purchased. 
B)  Is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
C)  Focuses on ending inventory and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
D)  Focuses on ending inventory. 
E)  All of these answers are correct. 
A)  Is the number of days we can sell from inventory if no new items are purchased. 
B)  Is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
C)  Focuses on ending inventory and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
D)  Focuses on ending inventory. 
E)  All of these answers are correct.

Question 12

Profitability is the ability to generate future revenues and meet long-term obligations.

Accepted Answer

A) True 
 B)False

Question 13

Chevron paid $2.10 in common dividends per share. Its earnings per share was $5.40, while its market price was $120 per share. The dividend yield was 38.9%

Accepted Answer

A) True 
 B)False

Question 14

The dividend yield is calculated by:

Accepted Answer

A)  Dividing the market price per share by cash dividends per share. 
B)  Dividing earnings per share by cash dividends per share. 
C)  Dividing cash dividends per share by earnings per share. 
D)  Dividing cash dividends per share by the market price per share. 
E)  Dividing cash dividends by retained earnings. 
A)  Dividing the market price per share by cash dividends per share. 
B)  Dividing earnings per share by cash dividends per share. 
C)  Dividing cash dividends per share by earnings per share. 
D)  Dividing cash dividends per share by the market price per share. 
E)  Dividing cash dividends by retained earnings.

Question 15

Trend analysis is also called:

Accepted Answer

A)  Financial analysis. 
B)  Index number analysis. 
C)  Trend percent analysis and index number analysis. 
D)  Financial analysis and index number analysis. 
E)  Trend percent analysis. 
A)  Financial analysis. 
B)  Index number analysis. 
C)  Trend percent analysis and index number analysis. 
D)  Financial analysis and index number analysis. 
E)  Trend percent analysis.

Question 16

The average number of times a company's inventory is sold during an accountingperiod, calculated by dividing cost of goods sold by the average merchandise inventory balance, is the:

Accepted Answer

A)  Merchandise turnover. 
B)  Current ratio. 
C)  Price-earnings ratio. 
D)  Days' sales uncollected. 
E)  Accounts receivable turnover. 
A)  Merchandise turnover. 
B)  Current ratio. 
C)  Price-earnings ratio. 
D)  Days' sales uncollected. 
E)  Accounts receivable turnover.

Question 17

The price-earnings ratio is calculated by dividing earnings per share by the market price per share.

Accepted Answer

A) True 
 B)False

Question 18

Total asset turnover can be calculated regardless of the type of company being evaluated.

Accepted Answer

A) True 
 B)False

Question 19

The common-size percent is calculated by:

Accepted Answer

A)  Dividing the base amount by the analysis amount. 
B)  Dividing the analysis amount by the base amount and multiplying the result by 100. 
C)  Dividing the base amount by the analysis amount and multiplying the result by 100. 
D)  Dividing the analysis amount by the base amount. 
E)  Subtracting the base amount from the analysis amount and multiplying the result by 100. 
A)  Dividing the base amount by the analysis amount. 
B)  Dividing the analysis amount by the base amount and multiplying the result by 100. 
C)  Dividing the base amount by the analysis amount and multiplying the result by 100. 
D)  Dividing the analysis amount by the base amount. 
E)  Subtracting the base amount from the analysis amount and multiplying the result by 100.

Question 20

Popeye Supply's current ratio is 3 to 1. Its quick ratio is 2 to 1. Popeye Supply is a good credit risk because the ratios reveal no liquidity problem.

Accepted Answer

A) True 
 B)False

The days' sales uncollected ratio measures a company's ability to manage its debt.

Liquidity and efficiency are considered to be building blocks of financial statement analysis.

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

The days' sales uncollected ratio is used to:

The acid-test ratio is current assets divided by current liabilities.

Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.

A trend percent is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

Comparative analysis is used to reveal patterns in data covering successive periods.

The base amount for a common-size balance sheet is usually total assets.

Days' sales in inventory:

Profitability is the ability to generate future revenues and meet long-term obligations.

Chevron paid $2.10 in common dividends per share. Its earnings per share was $5.40, while its market price was $120 per share. The dividend yield was 38.9%

The dividend yield is calculated by:

Trend analysis is also called:

The average number of times a company's inventory is sold during an accountingperiod, calculated by dividing cost of goods sold by the average merchandise inventory balance, is the:

The price-earnings ratio is calculated by dividing earnings per share by the market price per share.

Total asset turnover can be calculated regardless of the type of company being evaluated.

The common-size percent is calculated by:

Popeye Supply's current ratio is 3 to 1. Its quick ratio is 2 to 1. Popeye Supply is a good credit risk because the ratios reveal no liquidity problem.

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Filters

Exam 17: Analyzing Financial Statements

The days' sales uncollected ratio measures a company's ability to manage its debt.

Liquidity and efficiency are considered to be building blocks of financial statement analysis.

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

The days' sales uncollected ratio is used to:

The acid-test ratio is current assets divided by current liabilities.

Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.

A trend percent is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

Comparative analysis is used to reveal patterns in data covering successive periods.

The base amount for a common-size balance sheet is usually total assets.

Days' sales in inventory:

Profitability is the ability to generate future revenues and meet long-term obligations.

Chevron paid $2.10 in common dividends per share. Its earnings per share was $5.40, while its market price was $120 per share. The dividend yield was 38.9%

The dividend yield is calculated by:

Trend analysis is also called:

The average number of times a company's inventory is sold during an accountingperiod, calculated by dividing cost of goods sold by the average merchandise inventory balance, is the:

The price-earnings ratio is calculated by dividing earnings per share by the market price per share.

Total asset turnover can be calculated regardless of the type of company being evaluated.

The common-size percent is calculated by:

Popeye Supply's current ratio is 3 to 1. Its quick ratio is 2 to 1. Popeye Supply is a good credit risk because the ratios reveal no liquidity problem.

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Filters