Question 1

When analyzing a company's debt-to-equity ratio, if the ratio has a value that is equal to one, then the company has

Accepted Answer

A)  Less debt than equity 
B)  More debt than equity 
C)  Equal amounts of debt and equity 
D)  None of these are correct 
A)  Less debt than equity 
B)  More debt than equity 
C)  Equal amounts of debt and equity 
D)  None of these are correct

Question 2

Which of the following is a measure of the liquid position of a corporation?

Accepted Answer

A)  Price earnings ratio 
B)  Debt ratio 
C)  Current ratio 
D)  Asset turnover 
A)  Price earnings ratio 
B)  Debt ratio 
C)  Current ratio 
D)  Asset turnover

Question 3

The following data came from the financial statements of the Cheviot Company:
  
-Refer to Exhibit 14-4. Compute the asset turnover (round to two decimal places).

Accepted Answer

A)  1.25 
B)  1.40 
C)  1.50 
D)  1.60 
A)  1.25 
B)  1.40 
C)  1.50 
D)  1.60

Question 4

Which ratio represents how many times a company replenishes its inventory during the year?

Accepted Answer

A)  Average collection period for accounts receivable 
B)  Accounts receivable turnover 
C)  Inventory turnover 
D)  Fixed asset turnover 
A)  Average collection period for accounts receivable 
B)  Accounts receivable turnover 
C)  Inventory turnover 
D)  Fixed asset turnover

Question 5

Which of the following ratios is used to measure the profit earned on each dollar of sales in a firm?

Accepted Answer

A)  Current ratio 
B)  Asset turnover 
C)  Return on sales 
D)  Return on equity 
A)  Current ratio 
B)  Asset turnover 
C)  Return on sales 
D)  Return on equity

Question 6

Which of the following statements best describes financial statement analysis?

Accepted Answer

A)  Financial statement analysis involves relationships and trends. 
B)  Financial statement analysis evaluates future performance. 
C)  Measurements for a specific company should be compared only with the past. 
D)  All of these are correct. 
A)  Financial statement analysis involves relationships and trends. 
B)  Financial statement analysis evaluates future performance. 
C)  Measurements for a specific company should be compared only with the past. 
D)  All of these are correct.

Question 7

The following data came from the financial statements of Petrini Company:
  
-Refer to Exhibit 14-6. Given the information above, compute the debt-to-equity ratio (rounded to two decimal places) for Petrini Company.

Accepted Answer

A)  0.86 
B)  1.86 
C)  1.16 
D)  0.54 
A)  0.86 
B)  1.86 
C)  1.16 
D)  0.54

Question 8

When analyzing financial statements, diagnosis is

Accepted Answer

A)  The prediction of how a business will perform in the future 
B)  The identification of the trends in past numbers 
C)  The prediction of how many employees will lose their jobs in the coming year 
D)  The identification of where a business has problems 
A)  The prediction of how a business will perform in the future 
B)  The identification of the trends in past numbers 
C)  The prediction of how many employees will lose their jobs in the coming year 
D)  The identification of where a business has problems

Question 9

Selected information for Isaac Company is as follows:
  
-Refer to Exhibit 14-1. Isaac's return on sales, rounded to the nearest percentage point, is

Accepted Answer

A)  20 percent. 
B)  21 percent. 
C)  26 percent. 
D)  40 percent. 
A)  20 percent. 
B)  21 percent. 
C)  26 percent. 
D)  40 percent.

Question 10

The ratio that indicates if a borrowing company will be able to meet its required interest payments is the

Accepted Answer

A)  Current ratio 
B)  Debt-to-equity ratio 
C)  Price-earnings ratio 
D)  Times interest earned ratio 
A)  Current ratio 
B)  Debt-to-equity ratio 
C)  Price-earnings ratio 
D)  Times interest earned ratio

Question 11

The ratio that reflects the mix of sources of financing for a company is the

Accepted Answer

A)  Current ratio 
B)  Debt-to-equity ratio 
C)  Price-earnings ratio 
D)  Times interest earned ratio 
A)  Current ratio 
B)  Debt-to-equity ratio 
C)  Price-earnings ratio 
D)  Times interest earned ratio

Question 12

Which of the following is one of the purposes of financial statement analysis?

Accepted Answer

A)  Diagnosis 
B)  Prognosis 
C)  Both diagnosis and prognosis 
D)  Neither diagnosis nor prognosis 
A)  Diagnosis 
B)  Prognosis 
C)  Both diagnosis and prognosis 
D)  Neither diagnosis nor prognosis

Question 13

Which of the following ratios is calculated using numbers from both the income statement and the balance sheet?

Accepted Answer

A)  Current ratio 
B)  Price-earnings ratio 
C)  Return on equity 
D)  Return on sales 
A)  Current ratio 
B)  Price-earnings ratio 
C)  Return on equity 
D)  Return on sales

Question 14

When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then the company has

Accepted Answer

A)  No debt 
B)  More debt than equity 
C)  Equal amounts of debt and equity 
D)  No stockholders' equity 
A)  No debt 
B)  More debt than equity 
C)  Equal amounts of debt and equity 
D)  No stockholders' equity

Question 15

In a common-size balance sheet, each item on the balance sheet is typically expressed as a percentage of

Accepted Answer

A)  Assets 
B)  Net income 
C)  Equity 
D)  Sales revenue 
A)  Assets 
B)  Net income 
C)  Equity 
D)  Sales revenue

Question 16

The income statement and balance sheet for the W. Gretsky Company for the year ended December 31, 2012, is presented below:

Accepted Answer

The answer of The income statement and balance sheet for...

Question 17

Selected information for Alastair Company is as follows:
  
-Refer to Exhibit 14-3. What is the percentage that would be given to sales revenue on a common-size income statement (round to the nearest percent)?

Accepted Answer

A)  20 percent. 
B)  49 percent 
C)  77 percent 
D)  100 percent 
A)  20 percent. 
B)  49 percent 
C)  77 percent 
D)  100 percent

Question 18

The particular analytical measures chosen to analyze a company may be influenced by all BUT which one of the following?

Accepted Answer

A)  Industry type 
B)  Capital structure 
C)  Diversity of business operations 
D)  Product quality or service effectiveness 
A)  Industry type 
B)  Capital structure 
C)  Diversity of business operations 
D)  Product quality or service effectiveness

Question 19

Selected financial statement numbers for Frederick Company are given below:
  
-Refer to Exhibit 14-5. Using the information above, calculate Frederick's accounts receivable turnover (round to two decimal places).

Accepted Answer

A)  13.39 times 
B)  66.94 times 
C)  3.67 times 
D)  8.64 times 
A)  13.39 times 
B)  66.94 times 
C)  3.67 times 
D)  8.64 times

Question 20

The following data came from the financial statements of the Cheviot Company:
 
- Refer to Exhibit 14-4. Compute the asset-to-equity ratio (round to two decimal places).

Accepted Answer

A)  1.20 
B)  1.40 
C)  1.25 
D)  1.15 
A)  1.20 
B)  1.40 
C)  1.25 
D)  1.15

Exam 14: Analyzing Financial Statements

When analyzing a company's debt-to-equity ratio, if the ratio has a value that is equal to one, then the company has

Which of the following is a measure of the liquid position of a corporation?

The following data came from the financial statements of the Cheviot Company: -Refer to Exhibit 14-4. Compute the asset turnover (round to two decimal places).

Which ratio represents how many times a company replenishes its inventory during the year?

Which of the following ratios is used to measure the profit earned on each dollar of sales in a firm?

Which of the following statements best describes financial statement analysis?

The following data came from the financial statements of Petrini Company: -Refer to Exhibit 14-6. Given the information above, compute the debt-to-equity ratio (rounded to two decimal places) for Petrini Company.

When analyzing financial statements, diagnosis is

Selected information for Isaac Company is as follows: -Refer to Exhibit 14-1. Isaac's return on sales, rounded to the nearest percentage point, is

The ratio that indicates if a borrowing company will be able to meet its required interest payments is the

The ratio that reflects the mix of sources of financing for a company is the

Which of the following is one of the purposes of financial statement analysis?

Which of the following ratios is calculated using numbers from both the income statement and the balance sheet?

When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then the company has

In a common-size balance sheet, each item on the balance sheet is typically expressed as a percentage of

The income statement and balance sheet for the W. Gretsky Company for the year ended December 31, 2012, is presented below:

Selected information for Alastair Company is as follows: -Refer to Exhibit 14-3. What is the percentage that would be given to sales revenue on a common-size income statement (round to the nearest percent)?

The particular analytical measures chosen to analyze a company may be influenced by all BUT which one of the following?

Selected financial statement numbers for Frederick Company are given below: -Refer to Exhibit 14-5. Using the information above, calculate Frederick's accounts receivable turnover (round to two decimal places).

The following data came from the financial statements of the Cheviot Company: - Refer to Exhibit 14-4. Compute the asset-to-equity ratio (round to two decimal places).

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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