Question 1

Return on equity measures the relationship between net income and average total assets.

Accepted Answer

A) True 
 B)False

Question 2

The price earnings ratio reflects the relationship of the current market price of a stock to its earnings per share.

Accepted Answer

A) True 
 B)False

Question 3

Illusions, Inc. has net sales of $950,000, net income of $71,000, average current assets of $42,000 average fixed assets of $164,000, and average total assets of $208,000. Illusions, Inc.'s total asset turnover ratio is: (Round your final answer to two decimal places.)

Accepted Answer

A) 0.22. 
B) 4.57. 
C) 5.79. 
D) 13.38. 
A) 0.22. 
B) 4.57. 
C) 5.79. 
D) 13.38.

Question 4

When an analyst compares a business with a similar business it is referred to as:

Accepted Answer

A) comparative analysis. 
B) mentoring. 
C) benchmarking. 
D) idolizing. 
A) comparative analysis. 
B) mentoring. 
C) benchmarking. 
D) idolizing.

Question 5

Market analysis ratios are used to determine if the business is:

Accepted Answer

A) Investing its money and using its assets efficiently 
B) Earning a net income or loss 
C) Generating enough net income to reward stockholders for use of their money 
D) Paying off its debts in a reasonable time frame 
A) Investing its money and using its assets efficiently 
B) Earning a net income or loss 
C) Generating enough net income to reward stockholders for use of their money 
D) Paying off its debts in a reasonable time frame

Question 6

Cordoba, Inc. reported the following for 2016:  
What is the dividend payout ratio for Cordoba, Inc.? (Round your final answer to two decimal places, X.XX%.)

Accepted Answer

A) 42.71% 
B) 10.79% 
C) 31.8% 
D) 1.71% 
A) 42.71% 
B) 10.79% 
C) 31.8% 
D) 1.71%

Question 7

Hook Corporation has a cost of goods sold of $1,800,000. The beginning merchandise inventory was $191,000 and the ending merchandise inventory is $209,000. Hook's inventory turnover ratio is: (Round your final answer to two decimal places.)

Accepted Answer

A) 9.42 times. 
B) 8.61 times. 
C) 9.00 times. 
D) 4.50 times. 
A) 9.42 times. 
B) 8.61 times. 
C) 9.00 times. 
D) 4.50 times.

Question 8

If Accounts Receivable turnover is 10.4, this means that from the date of:

Accepted Answer

A) purchase to the date of payment is approximately 35 days. 
B) sale to the date of receipt of payment is approximately 35 days. 
C) discount to the date of receipt of payment is approximately 35 days. 
D) invoice to the date of payment is approximately 35 days. 
A) purchase to the date of payment is approximately 35 days. 
B) sale to the date of receipt of payment is approximately 35 days. 
C) discount to the date of receipt of payment is approximately 35 days. 
D) invoice to the date of payment is approximately 35 days.

Question 9

The goal of the investing decision is to obtain money at the lowest possible cost.

Accepted Answer

A) True 
 B)False

Question 10

Market analysis ratios are used to evaluate a company's ability to generate profits.

Accepted Answer

A) True 
 B)False

Question 11

Other income (such as rental income)and other expenses (such as interest expense)are listed on the Income Statement immediately after:

Accepted Answer

A) gross profit. 
B) operating expenses. 
C) operating income. 
D) income tax expense. 
A) gross profit. 
B) operating expenses. 
C) operating income. 
D) income tax expense.

Question 12

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Accepted Answer

A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis. 
A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis.

Question 13

Mozart, Inc. has net sales of $1,000,000, net income of $68,000, average current assets of $39,000, average fixed assets of $167,000, and average total assets of $207,000. Mozart, Inc.'s return on assets is: (Round your final answer to the nearest percentage.)

Accepted Answer

A) 41%. 
B) 174%. 
C) 7%. 
D) 33%. 
A) 41%. 
B) 174%. 
C) 7%. 
D) 33%.

Question 14

Kitty-Lion Company has a beginning Accounts Receivable balance of $69,000 and an ending Accounts Receivable balance of $60,000. Sales are $249,000. Kitty-Lion's Accounts Receivable turnover rate is: (Round your final answer to two decimal places.)

Accepted Answer

A) 3.61. 
B) 4.15. 
C) 3.86. 
D) 1.93. 
A) 3.61. 
B) 4.15. 
C) 3.86. 
D) 1.93.

Question 15

Which of the following would NOT be a red flag in a financial statement analysis?

Accepted Answer

A) Increased Accounts Receivable turnover 
B) Decreased cash flow 
C) High debt ratio 
D) Low inventory turnover 
A) Increased Accounts Receivable turnover 
B) Decreased cash flow 
C) High debt ratio 
D) Low inventory turnover

Question 16

In a vertical analysis, an item is selected as the base amount and all other items are computed as a percentage of the base amount.

Accepted Answer

A) True 
 B)False

Question 17

The following is a common-sized Income Statement for Sydney and Caesar Companies.  
Which company has the biggest sales increase from 2015 to 2016?

Accepted Answer

A) Not enough information is given to assess the question. 
B) Sydney Company 
C) Caesar Company 
D) Too close to make a solid determination. 
A) Not enough information is given to assess the question. 
B) Sydney Company 
C) Caesar Company 
D) Too close to make a solid determination.

Question 18

Everyday business activities are reported in the Income Statement's:

Accepted Answer

A) continuing and discontinued operations section. 
B) discontinued operations section. 
C) continuing operations section. 
D) extraordinary items section. 
A) continuing and discontinued operations section. 
B) discontinued operations section. 
C) continuing operations section. 
D) extraordinary items section.

Question 19

S & C Company's operating income for the year was $106,000. The interest expense was $14,600 and the income tax expense was $8,200. S & C Company's interest coverage ratio for the year is: (Round your final answer to two decimal places.)

Accepted Answer

A) 7.26. 
B) 0.14. 
C) 12.93. 
D) 4.65. 
A) 7.26. 
B) 0.14. 
C) 12.93. 
D) 4.65.

Question 20

If management wishes to evaluate the delinquency of charge customers, they could use the:

Accepted Answer

A) rate of return on total assets. 
B) rate of return on equity. 
C) Accounts Receivable turnover. 
D) quick ratio. 
A) rate of return on total assets. 
B) rate of return on equity. 
C) Accounts Receivable turnover. 
D) quick ratio.

Return on equity measures the relationship between net income and average total assets.

The price earnings ratio reflects the relationship of the current market price of a stock to its earnings per share.

Illusions, Inc. has net sales of $950,000, net income of $71,000, average current assets of $42,000 average fixed assets of $164,000, and average total assets of $208,000. Illusions, Inc.'s total asset turnover ratio is: (Round your final answer to two decimal places.)

When an analyst compares a business with a similar business it is referred to as:

Market analysis ratios are used to determine if the business is:

Cordoba, Inc. reported the following for 2016: What is the dividend payout ratio for Cordoba, Inc.? (Round your final answer to two decimal places, X.XX%.)

Hook Corporation has a cost of goods sold of $1,800,000. The beginning merchandise inventory was $191,000 and the ending merchandise inventory is $209,000. Hook's inventory turnover ratio is: (Round your final answer to two decimal places.)

If Accounts Receivable turnover is 10.4, this means that from the date of:

The goal of the investing decision is to obtain money at the lowest possible cost.

Market analysis ratios are used to evaluate a company's ability to generate profits.

Other income (such as rental income)and other expenses (such as interest expense)are listed on the Income Statement immediately after:

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Mozart, Inc. has net sales of $1,000,000, net income of $68,000, average current assets of $39,000, average fixed assets of $167,000, and average total assets of $207,000. Mozart, Inc.'s return on assets is: (Round your final answer to the nearest percentage.)

Kitty-Lion Company has a beginning Accounts Receivable balance of $69,000 and an ending Accounts Receivable balance of $60,000. Sales are $249,000. Kitty-Lion's Accounts Receivable turnover rate is: (Round your final answer to two decimal places.)

Which of the following would NOT be a red flag in a financial statement analysis?

In a vertical analysis, an item is selected as the base amount and all other items are computed as a percentage of the base amount.

The following is a common-sized Income Statement for Sydney and Caesar Companies. Which company has the biggest sales increase from 2015 to 2016?

Everyday business activities are reported in the Income Statement's:

S & C Company's operating income for the year was $106,000. The interest expense was $14,600 and the income tax expense was $8,200. S & C Company's interest coverage ratio for the year is: (Round your final answer to two decimal places.)

If management wishes to evaluate the delinquency of charge customers, they could use the:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Filters

Exam 12: Financial Statement Analysis

Return on equity measures the relationship between net income and average total assets.

The price earnings ratio reflects the relationship of the current market price of a stock to its earnings per share.

Illusions, Inc. has net sales of $950,000, net income of $71,000, average current assets of $42,000 average fixed assets of $164,000, and average total assets of $208,000. Illusions, Inc.'s total asset turnover ratio is: (Round your final answer to two decimal places.)

When an analyst compares a business with a similar business it is referred to as:

Market analysis ratios are used to determine if the business is:

Cordoba, Inc. reported the following for 2016: What is the dividend payout ratio for Cordoba, Inc.? (Round your final answer to two decimal places, X.XX%.)

Hook Corporation has a cost of goods sold of $1,800,000. The beginning merchandise inventory was $191,000 and the ending merchandise inventory is $209,000. Hook's inventory turnover ratio is: (Round your final answer to two decimal places.)

If Accounts Receivable turnover is 10.4, this means that from the date of:

The goal of the investing decision is to obtain money at the lowest possible cost.

Market analysis ratios are used to evaluate a company's ability to generate profits.

Other income (such as rental income)and other expenses (such as interest expense)are listed on the Income Statement immediately after:

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Mozart, Inc. has net sales of $1,000,000, net income of $68,000, average current assets of $39,000, average fixed assets of $167,000, and average total assets of $207,000. Mozart, Inc.'s return on assets is: (Round your final answer to the nearest percentage.)

Kitty-Lion Company has a beginning Accounts Receivable balance of $69,000 and an ending Accounts Receivable balance of $60,000. Sales are $249,000. Kitty-Lion's Accounts Receivable turnover rate is: (Round your final answer to two decimal places.)

Which of the following would NOT be a red flag in a financial statement analysis?

In a vertical analysis, an item is selected as the base amount and all other items are computed as a percentage of the base amount.

The following is a common-sized Income Statement for Sydney and Caesar Companies. Which company has the biggest sales increase from 2015 to 2016?

Everyday business activities are reported in the Income Statement's:

S & C Company's operating income for the year was $106,000. The interest expense was $14,600 and the income tax expense was $8,200. S & C Company's interest coverage ratio for the year is: (Round your final answer to two decimal places.)

If management wishes to evaluate the delinquency of charge customers, they could use the:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Filters