Question 1

Tools comparing a company's financial condition and performance to a base amount are:

Accepted Answer

A)  Investment analysis. 
B)  Horizontal analysis. 
C)  Vertical analysis. 
D)  Ratio analysis. 
E)  Financial analysis. 
A)  Investment analysis. 
B)  Horizontal analysis. 
C)  Vertical analysis. 
D)  Ratio analysis. 
E)  Financial analysis.

Question 2

The pledged assets to secured liabilities measures whether or not the pledged assets of the debtor provide adequate security for secured creditors.

Accepted Answer

A) True 
 B)False

Question 3

Guidelines rules of thumb) are developed from:

Accepted Answer

A)  Past experience and relations between financial items. 
B)  Relations between financial items. 
C)  Past experience. 
D)  Analysis of competitors. 
E)  Industry statistics. 
A)  Past experience and relations between financial items. 
B)  Relations between financial items. 
C)  Past experience. 
D)  Analysis of competitors. 
E)  Industry statistics.

Question 4

Quickcom has net sales of $135,000 and average accounts receivable of $67,000. What is the accounts receivable turnover for the period?

Accepted Answer

A)  1,825. 
B)  2. 
C)  73. 
D)  20. 
E)  25. 
A)  1,825. 
B)  2. 
C)  73. 
D)  20. 
E)  25.

Question 5

FastForward had $3,000 of profit for October. Total revenues were $10,000. Calculate the profit margin.

Accepted Answer

A)  45%. 
B)  15%. 
C)  30%. 
D)  $7,000. 
E)  $1,500. 
A)  45%. 
B)  15%. 
C)  30%. 
D)  $7,000. 
E)  $1,500.

Question 6

An advantage of common-size statements is that they reflect the relative sizes of companies under analysis.

Accepted Answer

A) True 
 B)False

Question 7

Financial statement analysis lessens the need for expert judgment.

Accepted Answer

A) True 
 B)False

Question 8

The formula for times interest earned is:

Accepted Answer

A)  profit- Interest expense - Income taxes divided by Interest expense. 
B)  profit+ Interest expense + Income taxes divided by Interest expense. 
C)  profit+ Interest expense - Income taxes divided by Interest expense. 
D)  Interest expense divided by profit + Interest expense + Income taxes expense. 
E)  profit- Interest expense + Income taxes divided by Interest expense. 
A)  profit- Interest expense - Income taxes divided by Interest expense. 
B)  profit+ Interest expense + Income taxes divided by Interest expense. 
C)  profit+ Interest expense - Income taxes divided by Interest expense. 
D)  Interest expense divided by profit + Interest expense + Income taxes expense. 
E)  profit- Interest expense + Income taxes divided by Interest expense.

Question 9

Accounts receivable turnover is calculated by dividing net sales by average accounts receivable.

Accepted Answer

A) True 
 B)False

Question 10

Kreuger Corp has earnings per share of $4.50, dividends per share of $0.85, and a market price of $64.75. Its dividend yield is 21.4%.

Accepted Answer

A) True 
 B)False

Question 11

Holding Co. had cost of goods sold of $600,000. Its ending inventory was $200,000. Therefore its days' sales in inventory was 90 days.

Accepted Answer

A) True 
 B)False

Question 12

Off the Record's current ratio is .9 to 1. The industry average current ratio is 1.2. Off the Record does not have a problem in covering liabilities because of its strong sales andposition in its industry.

Accepted Answer

A) True 
 B)False

Question 13

Targot's current assets were $16,825. Its quick assets were $11,220. Its current liabilities were $13,190. The quick ratio is:

Accepted Answer

A)  0.85. 
B)  1.18. 
C)  0.65. 
D)  0.78. 
E)  1.28. 
A)  0.85. 
B)  1.18. 
C)  0.65. 
D)  0.78. 
E)  1.28.

Question 14

The ability to meet positive market expectations relates to which of the following building blocks of financial statement analysis:

Accepted Answer

A)  Liquidity and solvency. 
B)  Liquidity and efficiency. 
C)  Market. 
D)  Creditworthiness. 
E)  Profitability. 
A)  Liquidity and solvency. 
B)  Liquidity and efficiency. 
C)  Market. 
D)  Creditworthiness. 
E)  Profitability.

Question 15

Liquidity problems are likely to exist for a company when its acid-test ratio:

Accepted Answer

A)  Is both less than the industry average and lower than 1 to 1. 
B)  Is higher than 1 to 1. 
C)  Is less than the industry average. 
D)  Is 1 to 1. 
E)  Is lower than 1 to 1. 
A)  Is both less than the industry average and lower than 1 to 1. 
B)  Is higher than 1 to 1. 
C)  Is less than the industry average. 
D)  Is 1 to 1. 
E)  Is lower than 1 to 1.

Question 16

Sleep Sack had net sales of $650,500, its cost of goods sold was $357,000, and its profit was $13,750. The gross margin ratio was 45.1%.

Accepted Answer

A) True 
 B)False

Question 17

Lottery Corp had a market price of $56.50, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio was:

Accepted Answer

A)  48.6. 
B)  3.1. 
C)  51.2 
D)  45.2. 
E)  49.3. 
A)  48.6. 
B)  3.1. 
C)  51.2 
D)  45.2. 
E)  49.3.

Question 18

Stride Rite has liabilities of $112 million and total assets of $350 million. Its debt ratio is 30.4%.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is false when describing the debt ratio?

Accepted Answer

A)  A relatively high ratio is desirable. 
B)  Many factors such as company's age, stability, profitability, and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
C)  The ratio might be used to help determine if a company could be capable of increasing its income by going into further debt. 
D)  It is of use to both internal and external users of accounting information. 
E)  The dividing line between a high and low ratio varies from industry to industry. 
A)  A relatively high ratio is desirable. 
B)  Many factors such as company's age, stability, profitability, and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
C)  The ratio might be used to help determine if a company could be capable of increasing its income by going into further debt. 
D)  It is of use to both internal and external users of accounting information. 
E)  The dividing line between a high and low ratio varies from industry to industry.

Question 20

Total asset turnover is calculated by dividing average total assets by net sales.

Accepted Answer

A) True 
 B)False

Tools comparing a company's financial condition and performance to a base amount are:

The pledged assets to secured liabilities measures whether or not the pledged assets of the debtor provide adequate security for secured creditors.

Guidelines rules of thumb) are developed from:

Quickcom has net sales of $135,000 and average accounts receivable of $67,000. What is the accounts receivable turnover for the period?

FastForward had $3,000 of profit for October. Total revenues were $10,000. Calculate the profit margin.

An advantage of common-size statements is that they reflect the relative sizes of companies under analysis.

Financial statement analysis lessens the need for expert judgment.

The formula for times interest earned is:

Accounts receivable turnover is calculated by dividing net sales by average accounts receivable.

Kreuger Corp has earnings per share of $4.50, dividends per share of $0.85, and a market price of $64.75. Its dividend yield is 21.4%.

Holding Co. had cost of goods sold of $600,000. Its ending inventory was $200,000. Therefore its days' sales in inventory was 90 days.

Off the Record's current ratio is .9 to 1. The industry average current ratio is 1.2. Off the Record does not have a problem in covering liabilities because of its strong sales andposition in its industry.

Targot's current assets were $16,825. Its quick assets were $11,220. Its current liabilities were $13,190. The quick ratio is:

The ability to meet positive market expectations relates to which of the following building blocks of financial statement analysis:

Liquidity problems are likely to exist for a company when its acid-test ratio:

Sleep Sack had net sales of $650,500, its cost of goods sold was $357,000, and its profit was $13,750. The gross margin ratio was 45.1%.

Lottery Corp had a market price of $56.50, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio was:

Stride Rite has liabilities of $112 million and total assets of $350 million. Its debt ratio is 30.4%.

Which of the following statements is false when describing the debt ratio?

Total asset turnover is calculated by dividing average total assets by net sales.

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

Tools comparing a company's financial condition and performance to a base amount are:

The pledged assets to secured liabilities measures whether or not the pledged assets of the debtor provide adequate security for secured creditors.

Guidelines rules of thumb) are developed from:

Quickcom has net sales of $135,000 and average accounts receivable of $67,000. What is the accounts receivable turnover for the period?

FastForward had $3,000 of profit for October. Total revenues were $10,000. Calculate the profit margin.

An advantage of common-size statements is that they reflect the relative sizes of companies under analysis.

Financial statement analysis lessens the need for expert judgment.

The formula for times interest earned is:

Accounts receivable turnover is calculated by dividing net sales by average accounts receivable.

Kreuger Corp has earnings per share of $4.50, dividends per share of $0.85, and a market price of $64.75. Its dividend yield is 21.4%.

Holding Co. had cost of goods sold of $600,000. Its ending inventory was $200,000. Therefore its days' sales in inventory was 90 days.

Off the Record's current ratio is .9 to 1. The industry average current ratio is 1.2. Off the Record does not have a problem in covering liabilities because of its strong sales andposition in its industry.

Targot's current assets were $16,825. Its quick assets were $11,220. Its current liabilities were $13,190. The quick ratio is:

The ability to meet positive market expectations relates to which of the following building blocks of financial statement analysis:

Liquidity problems are likely to exist for a company when its acid-test ratio:

Sleep Sack had net sales of $650,500, its cost of goods sold was $357,000, and its profit was $13,750. The gross margin ratio was 45.1%.

Lottery Corp had a market price of $56.50, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio was:

Stride Rite has liabilities of $112 million and total assets of $350 million. Its debt ratio is 30.4%.

Which of the following statements is false when describing the debt ratio?

Total asset turnover is calculated by dividing average total assets by net sales.

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