Question 1

Intra-company analysis is based on comparisons with competitors.

Accepted Answer

A) True 
 B)False

Question 2

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the following selected financial information from Frankle Corp. Compute the company's working capital. $$\begin{array} { | l | r | } 
\hline & \
\hline \text { Current Assets } & 306,450 \
\hline \text { Plant assets } & 338,000 \
\hline \text { Current Liabilities } & 107,800 \
\hline \text { Net sales } & 676,000 \
\hline \text { Net Income } & 75,000 \
\hline
\end{array}$$

Accepted Answer

A)  $536,650. 
B)  $230,200. 
C)  $568,200. 
D)  $198,650. 
E)  $231,450. 
A)  $536,650. 
B)  $230,200. 
C)  $568,200. 
D)  $198,650. 
E)  $231,450.

Question 4

A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is the:

Accepted Answer

A)  Acid-test ratio. 
B)  Merchandise turnover. 
C)  Price earnings ratio. 
D)  Accounts receivable turnover. 
E)  Profit margin ratio. 
A)  Acid-test ratio. 
B)  Merchandise turnover. 
C)  Price earnings ratio. 
D)  Accounts receivable turnover. 
E)  Profit margin ratio.

Question 5

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 6

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000. The Return on total assets is:

Accepted Answer

A)  55.6%. 
B)  88.8%. 
C)  61.5%. 
D)  44.4%. 
E)  125.1%. 
A)  55.6%. 
B)  88.8%. 
C)  61.5%. 
D)  44.4%. 
E)  125.1%.

Question 7

The ability to provide financial rewards sufficient to attract and retain financing 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 8

External users of financial information:

Accepted Answer

A)  Are those individuals involved in managing and operating the company. 
B)  Include internal auditors and consultants. 
C)  Are not directly involved in operating the company. 
D)  Make strategic decisions for a company. 
E)  Make operating decisions for a company. 
A)  Are those individuals involved in managing and operating the company. 
B)  Include internal auditors and consultants. 
C)  Are not directly involved in operating the company. 
D)  Make strategic decisions for a company. 
E)  Make operating decisions for a company.

Question 9

The gross margin ratio, return on total assets, and basic earnings per share are all ________ ratios.

Accepted Answer

The answer of The gross margin ratio, return on total...

Question 10

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

Accepted Answer

A)  1.93%. 
B)  2.14%. 
C)  4.67%. 
D)  5.41%. 
E)  18.50%. 
A)  1.93%. 
B)  2.14%. 
C)  4.67%. 
D)  5.41%. 
E)  18.50%.

Question 11

________ financial statements are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

Accepted Answer

The answer of ________ financial statements are reports where financial...

Question 12

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

Accepted Answer

A) True 
 B)False

Question 13

A corporation reports the following year-end balance sheet data. The company's acid-test ratio equals: $$\begin{array} { l r l r } 
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \
\text { Accounts receivable } & 55,000 & \text { Lore-tern liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Corrnon stock } & 100,000 \
\text {Equipment} & \underline{145,000 }& \text { Retained earnings } & \underline{90,000} \
\text {Total assets}&\underline{ \$ 300,000 }& \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$

Accepted Answer

A)  0.58 
B)  1.27 
C)  2.07 
D)  0.37 
E)  0.63 
A)  0.58 
B)  1.27 
C)  2.07 
D)  0.37 
E)  0.63

Question 14

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accepted Answer

A) True 
 B)False

Question 15

A corporation reports the following year-end balance sheet data. The company's equity ratio equals: $$\begin{array} { | l | r| r| r | } 
\hline \text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \
\hline \text { Accounts receivable } & 55,000 & \text { Long-term liabilities } & 35,000 \
\hline \text { nnventory } & 60,000 & \text { Common stock } & 100,000 \
\hline \text { Equipment } & \underline { 145,000 } & \text { Retained earnings } & \underline { 90,000 } \
\hline\text { Total assets } &\underline{ \$ 300,000 }& \text { Total liabilities and equity } &\underline{ \$ 300,000 }\
\hline
\end{array}$$

Accepted Answer

A)  0.58 
B)  1.27 
C)  2.07 
D)  0.37 
E)  0.63 
A)  0.58 
B)  1.27 
C)  2.07 
D)  0.37 
E)  0.63

Question 16

Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2. $$\begin{array} { | l | r | r |} 
\hline & { \text { Year } 2 } &{ \text { Year 1 } } \
\hline \text { Total assets } & \$ 327,800 & \$ 301,000 \
\hline \text { Total liabilities } & 171,400 & 169,300 \
\hline \text { Total equity } &154,400&131,700\
\hline
\end{array}$$

Accepted Answer

A)  0.9. 
B)  1.1. 
C)  0.5. 
D)  1.9. 
E)  2.1. 
A)  0.9. 
B)  1.1. 
C)  0.5. 
D)  1.9. 
E)  2.1.

Question 17

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Accepted Answer

A) True 
 B)False

Question 18

The comparative balance sheet for Silverlight Co. is shown below. Express the balance sheet in common-size percentages.
 $\begin{array}{c}
\text {Silverlight Company}\
\text {Comparative Balance Sheets (in \$000)}\
\text {December \( 31,2016-2018 $}\
\begin{array}{|l|}
\hline \
\hline \text {Cash}\
\hline \text {Accounts receivable}\
\hline \text {Merchandise inventory}\
\hline \text {Plant assets (net)}\
\hline \text {Total assets}\
\hline\
\hline \text {Accounts payable}\
\hline \text {Bonds payable}\
\hline \text {Common stock}\
\hline\
 \text {Retained earnings}\
\hline \text {Total liabilities and equity}\
\hline 
\end{array}
\begin{array}{r|}
\hline \underline{2018}\
\hline\$49.6 \
\hline 74.4 \
\hline 148.8 \
\hline \$ 647.7 \
\hline \$ 620.0 \
\hline\
\hline \$ 117.8 \
\hline 130.2 \
\hline 266.6 \
\hline\
\underline{ 105.4 }\
\hline \underline{\$ 620.0}\
\hline 
\end{array}
\begin{array}{r|}
\hline \underline{2017 }\
\hline \$ \quad 34.2 \
\hline 85.5 \
\hline 125.4 \
\hline 324.9 \
\hline \$ 570.0 \
\hline\
\hline \$ 51.3 \
\hline 159.6 \
\hline 279.3 \
\hline\
\underline{79.8}\
\hline\underline{\$ 570.0}\
\hline 
\end{array}
\begin{array}{r|}
\hline \underline{2016} \
\hline \$ \quad 35.7 \
\hline 76.5 \
\hline 91 . 8\
\hline 306 . 0\
\hline \$ 510.0 \
\hline\
\hline \$ 76.5 \
\hline 107 . 1\
\hline 265.7\
\hline\
\underline{61.2}\
\hline\underline{\$ 5100}\
\hline 
\end{array}
\end{array}\)

Accepted Answer

None

Question 19

Suppliers use financial statement information in establishing credit terms.

Accepted Answer

A) True 
 B)False

Question 20

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

Accepted Answer

A) True 
 B)False

Intra-company analysis is based on comparisons with competitors.

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Refer to the following selected financial information from Frankle Corp. Compute the company's working capital. Current Assets 306,450 Plant assets 338,000 Current Liabilities 107,800 Net sales 676,000 Net Income 75,000

A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is the:

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

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000. The Return on total assets is:

The ability to provide financial rewards sufficient to attract and retain financing is called:

External users of financial information:

The gross margin ratio, return on total assets, and basic earnings per share are all ________ ratios.

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

________ financial statements are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2. Year 2 Year 1 Total assets \ 327,800 \ 301,000 Total liabilities 171,400 169,300 Total equity 154,400 131,700

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Suppliers use financial statement information in establishing credit terms.

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

Exam 13: Analysis of Financial Statements

Intra-company analysis is based on comparisons with competitors.

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Refer to the following selected financial information from Frankle Corp. Compute the company's working capital. Current Assets 306,450 Plant assets 338,000 Current Liabilities 107,800 Net sales 676,000 Net Income 75,000

A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is the:

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

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000. The Return on total assets is:

The ability to provide financial rewards sufficient to attract and retain financing is called:

External users of financial information:

The gross margin ratio, return on total assets, and basic earnings per share are all ________ ratios.

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

________ financial statements are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2. Year 2 Year 1 Total assets \ 327,800 \ 301,000 Total liabilities 171,400 169,300 Total equity 154,400 131,700

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Suppliers use financial statement information in establishing credit terms.

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters