Question 1

Internal users of financial information:

Accepted Answer

A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers, regulators, and the press. 
A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers, regulators, and the press.

Question 2

All of the following statements regarding a business segment are true except:

Accepted Answer

A) A business segment is a part of a company's operations that serves a particular product line. 
B) A segment has assets, liabilities, and financial results of operations that can be distinguished from those of other parts of the company. 
C) A company's gain or loss from selling or closing down a segment is reported separately. 
D) A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are combined and reported. 
E) A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately. 
A) A business segment is a part of a company's operations that serves a particular product line. 
B) A segment has assets, liabilities, and financial results of operations that can be distinguished from those of other parts of the company. 
C) A company's gain or loss from selling or closing down a segment is reported separately. 
D) A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are combined and reported. 
E) A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately.

Question 3

Selected balances from a company's financial statements are shown below.Calculate the following ratios for 2014:
(a)accounts receivable turnover
(b)inventory turnover
(c)days' sales uncollected
(d)days' sales in inventory
(d)profit margin.
(e)return on total assets.

Accepted Answer

The answer of Selected balances from a company's financial statements...

Question 4

The higher the accounts receivable turnover,the less quickly accounts receivable are collected.

Accepted Answer

A) True 
 B)False

Question 5

A company's sales in Year 1 were $280,000,and its sales in Year 2 were $341,600.Using Year 1 as the base year,what is the sales trend percent for Year 2?

Accepted Answer

$341,600/$

Question 6

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500.Using Year 1 as the base year,the sales trend percent for Year 2 is:

Accepted Answer

A) 87%. 
B) 100%. 
C) 115%. 
D) 15%. 
E) 13%. 
A) 87%. 
B) 100%. 
C) 115%. 
D) 15%. 
E) 13%.

Question 7

Financial statement analysis:

Accepted Answer

A) Is the application of analytical tools to general-purpose financial statements and related data for making business decisions. 
B) Involves transforming accounting data into useful information for decision-making. 
C) Helps users to make better decisions. 
D) Helps to reduce uncertainty in decision-making. 
E) All of the options are correct. 
A) Is the application of analytical tools to general-purpose financial statements and related data for making business decisions. 
B) Involves transforming accounting data into useful information for decision-making. 
C) Helps users to make better decisions. 
D) Helps to reduce uncertainty in decision-making. 
E) All of the options are correct.

Question 8

A company had a market price of $37.50 per share,earnings per share of $1.25,and dividends per share of $0.40.Its price-earnings ratio equals:

Accepted Answer

A) 3.1. 
B) 30.0. 
C) 93.8. 
D) 32.0. 
E) 3.3. 
A) 3.1. 
B) 30.0. 
C) 93.8. 
D) 32.0. 
E) 3.3.

Question 9

A good financial statement analysis report often includes the following sections:
 executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Accepted Answer

A) True 
 B)False

Question 10

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount,and in which the base amount is expressed as 100%,are called:

Accepted Answer

A) Comparative statements. 
B) Common-size comparative statements. 
C) General-purpose financial statements. 
D) Base line statements. 
E) Index statements. 
A) Comparative statements. 
B) Common-size comparative statements. 
C) General-purpose financial statements. 
D) Base line statements. 
E) Index statements.

Question 11

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.

Accepted Answer

A) True 
 B)False

Question 12

A rough guideline states that for a company with no discounts offered,days' sales uncollected should not exceed 1 1/3 times the days in its credit period.

Accepted Answer

A) True 
 B)False

Question 13

A company's calendar-year financial data are shown below.The company had total assets of $339,000 and total equity of $144,400 for the prior year.No additional shares of common stock were issued during the year.The December 31 market price per share is $49.50.Cash dividends of $19,500 were paid during the year.Calculate the following ratios for the company:
(a)profit margin ratio
(b)gross margin ratio
(c)return on total assets
(d)return on common stockholders' equity
(e)book value per common share
(f)basic earnings per share
(g)price earnings ratio
(h)dividend yield.

Accepted Answer

The answer of A company's calendar-year financial data are shown...

Question 14

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Accepted Answer

A) True 
 B)False

Question 15

The ability to meet short-term obligations and to efficiently generate revenues is called:

Accepted Answer

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

Question 16

The current ratio is calculated as current liabilities divided by current assets.

Accepted Answer

A) True 
 B)False

Question 17

Financial statement analysis may be used for personal investment decisions.

Accepted Answer

A) True 
 B)False

Question 18

Net sales divided by average total assets is the:

Accepted Answer

A) Profit margin. 
B) Total asset turnover. 
C) Current ratio. 
D) Sales return ratio. 
E) Return on total assets. 
A) Profit margin. 
B) Total asset turnover. 
C) Current ratio. 
D) Sales return ratio. 
E) Return on total assets.

Question 19

The return on total assets ratio is a profitability measure.

Accepted Answer

A) True 
 B)False

Question 20

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in dollar amounts and percents,are referred to as:

Accepted Answer

A) Period-to-period statements. 
B) Controlling statements. 
C) Successive statements. 
D) Comparative statements. 
E) Serial statements. 
A) Period-to-period statements. 
B) Controlling statements. 
C) Successive statements. 
D) Comparative statements. 
E) Serial statements.

Exam 17: Analysis of Financial Statements

Internal users of financial information:

All of the following statements regarding a business segment are true except:

Selected balances from a company's financial statements are shown below.Calculate the following ratios for 2014: (a)accounts receivable turnover (b)inventory turnover (c)days' sales uncollected (d)days' sales in inventory (d)profit margin. (e)return on total assets.

The higher the accounts receivable turnover,the less quickly accounts receivable are collected.

A company's sales in Year 1 were $280,000,and its sales in Year 2 were $341,600.Using Year 1 as the base year,what is the sales trend percent for Year 2?

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500.Using Year 1 as the base year,the sales trend percent for Year 2 is:

Financial statement analysis:

A company had a market price of $37.50 per share,earnings per share of $1.25,and dividends per share of $0.40.Its price-earnings ratio equals:

A good financial statement analysis report often includes the following sections: executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount,and in which the base amount is expressed as 100%,are called:

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.

A rough guideline states that for a company with no discounts offered,days' sales uncollected should not exceed 1 1/3 times the days in its credit period.

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

The ability to meet short-term obligations and to efficiently generate revenues is called:

The current ratio is calculated as current liabilities divided by current assets.

Financial statement analysis may be used for personal investment decisions.

Net sales divided by average total assets is the:

The return on total assets ratio is a profitability measure.

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in dollar amounts and percents,are referred to as:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters