Question 1

Inventory turnover would most likely be highest for which of the following?

Accepted Answer

A) Home builder 
B) Grocery store 
C) Car dealership 
D) Heavy equipment dealer 
A) Home builder 
B) Grocery store 
C) Car dealership 
D) Heavy equipment dealer

Question 2

The current ratio for a company with current assets of $78,000,quick assets of $42,000,total assets of $177,000 current liabilities of $60,000 and net sales of $90,000 would be:

Accepted Answer

A) 0)70. 
B) 2)95. 
C) 1)30. 
D) 1)50. 
A) 0)70. 
B) 2)95. 
C) 1)30. 
D) 1)50.

Question 3

Which of the following is NOT part of what a company's business model describes?

Accepted Answer

A) What products the company sells 
B) How the company creates a competitive advantage 
C) Who the company sells to 
D) What the company does 
A) What products the company sells 
B) How the company creates a competitive advantage 
C) Who the company sells to 
D) What the company does

Question 4

Earnings per share and dividends per share are indicators of a company's ability to reward stockholders for the use of their money.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The revenue of Systems Design,Inc.for the years 2012,2013,and 2014 are $75,000,$100,000 and $200,000,respectively.If 2012 is the base year,the trend percentage for 2013 is:

Accepted Answer

A) 33%. 
B) 100%. 
C) 133%. 
D) (62.5%). 
A) 33%. 
B) 100%. 
C) 133%. 
D) (62.5%).

Question 7

Computing trend percentages over a period of years helps to indicate the direction in which the business is going.

Accepted Answer

A) True 
 B)False

Question 8

Island Industries reported Net Sales of $306,000,Cost of Goods Sold of $192,600,Operating Expenses of $58,900,and Income Tax Expense of 12,300.Island Industries' gross profit margin percentage was:

Accepted Answer

A) 37.06. 
B) 13.79. 
C) 62.94. 
D) 17.81. 
A) 37.06. 
B) 13.79. 
C) 62.94. 
D) 17.81.

Question 9

For vertical analysis purposes,the base item on the Balance Sheet is:

Accepted Answer

A) total assets. 
B) total equity. 
C) total liabilities. 
D) net equity. 
A) total assets. 
B) total equity. 
C) total liabilities. 
D) net equity.

Question 10

Evergreen Industrial reported the following for 2012:
 
What is the dividend payout ratio for Evergreen Industrial?

Accepted Answer

A) 37.50% 
B) 160.0% 
C) 62.50% 
D) 35.50% 
A) 37.50% 
B) 160.0% 
C) 62.50% 
D) 35.50%

Question 11

The formula "net income divided by average Stockholders' Equity" yields:

Accepted Answer

A) return on equity. 
B) return on assets. 
C) earnings per share. 
D) return on sales. 
A) return on equity. 
B) return on assets. 
C) earnings per share. 
D) return on sales.

Question 12

Evergreen Industrial reported the following for 2012:
 
What are the earnings per share for Evergreen Industrial(to the nearest cent)?

Accepted Answer

A) $0.15/share 
B) $0.24/share 
C) $0.09/share 
D) $0.28/share 
A) $0.15/share 
B) $0.24/share 
C) $0.09/share 
D) $0.28/share

Question 13

Which of the following ratios helps to evaluate how well a company is earning profit with the money shareholders have invested?

Accepted Answer

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

Question 14

The following is a common-sized Income Statement for Sigma and Chi Companies.
 
Which company has the best cost of goods sold percentage?

Accepted Answer

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

Question 15

If Shore Legal Supply's net sales increased from $40,000 to $80,000 and its operating expenses increased from $30,000 to $50,000,the vertical analysis based on net sales would show the following for operating expenses for the two periods (to the nearest tenth of a percent):

Accepted Answer

A) 75.0% and 62.5%. 
B) 62.5% and 75.0%. 
C) 133.3% and 160.0%. 
D) 160.0% and 133.3%. 
A) 75.0% and 62.5%. 
B) 62.5% and 75.0%. 
C) 133.3% and 160.0%. 
D) 160.0% and 133.3%.

Question 16

Financial analysis is the process of using a company's financial information to evaluate whether or not the company is creating value.

Accepted Answer

A) True 
 B)False

Question 17

Determining the percentage changes in line items on financial statements for two consecutive years is called horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 18

The debt ratio is the relationship between:

Accepted Answer

A) current assets and current liabilities. 
B) current assets and total liabilities. 
C) total assets and total liabilities. 
D) total assets and current liabilities. 
A) current assets and current liabilities. 
B) current assets and total liabilities. 
C) total assets and total liabilities. 
D) total assets and current liabilities.

Question 19

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 20

Common-size statements should NOT be used to compare a company's performance against a company of a different size.

Accepted Answer

A) True 
 B)False

Inventory turnover would most likely be highest for which of the following?

The current ratio for a company with current assets of $78,000,quick assets of $42,000,total assets of $177,000 current liabilities of $60,000 and net sales of $90,000 would be:

Which of the following is NOT part of what a company's business model describes?

Earnings per share and dividends per share are indicators of a company's ability to reward stockholders for the use of their money.

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

The revenue of Systems Design,Inc.for the years 2012,2013,and 2014 are $75,000,$100,000 and $200,000,respectively.If 2012 is the base year,the trend percentage for 2013 is:

Computing trend percentages over a period of years helps to indicate the direction in which the business is going.

Island Industries reported Net Sales of $306,000,Cost of Goods Sold of $192,600,Operating Expenses of $58,900,and Income Tax Expense of 12,300.Island Industries' gross profit margin percentage was:

For vertical analysis purposes,the base item on the Balance Sheet is:

Evergreen Industrial reported the following for 2012: What is the dividend payout ratio for Evergreen Industrial?

The formula "net income divided by average Stockholders' Equity" yields:

Evergreen Industrial reported the following for 2012: What are the earnings per share for Evergreen Industrial(to the nearest cent)?

Which of the following ratios helps to evaluate how well a company is earning profit with the money shareholders have invested?

The following is a common-sized Income Statement for Sigma and Chi Companies. Which company has the best cost of goods sold percentage?

If Shore Legal Supply's net sales increased from $40,000 to $80,000 and its operating expenses increased from $30,000 to $50,000,the vertical analysis based on net sales would show the following for operating expenses for the two periods (to the nearest tenth of a percent):

Financial analysis is the process of using a company's financial information to evaluate whether or not the company is creating value.

Determining the percentage changes in line items on financial statements for two consecutive years is called horizontal analysis.

The debt ratio is the relationship between:

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

Common-size statements should NOT be used to compare a company's performance against a company of a different size.

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

Inventory turnover would most likely be highest for which of the following?

The current ratio for a company with current assets of $78,000,quick assets of $42,000,total assets of $177,000 current liabilities of $60,000 and net sales of $90,000 would be:

Which of the following is NOT part of what a company's business model describes?

Earnings per share and dividends per share are indicators of a company's ability to reward stockholders for the use of their money.

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

The revenue of Systems Design,Inc.for the years 2012,2013,and 2014 are $75,000,$100,000 and $200,000,respectively.If 2012 is the base year,the trend percentage for 2013 is:

Computing trend percentages over a period of years helps to indicate the direction in which the business is going.

Island Industries reported Net Sales of $306,000,Cost of Goods Sold of $192,600,Operating Expenses of $58,900,and Income Tax Expense of 12,300.Island Industries' gross profit margin percentage was:

For vertical analysis purposes,the base item on the Balance Sheet is:

Evergreen Industrial reported the following for 2012: What is the dividend payout ratio for Evergreen Industrial?

The formula "net income divided by average Stockholders' Equity" yields:

Evergreen Industrial reported the following for 2012: What are the earnings per share for Evergreen Industrial(to the nearest cent)?

Which of the following ratios helps to evaluate how well a company is earning profit with the money shareholders have invested?

The following is a common-sized Income Statement for Sigma and Chi Companies. Which company has the best cost of goods sold percentage?

If Shore Legal Supply's net sales increased from $40,000 to $80,000 and its operating expenses increased from $30,000 to $50,000,the vertical analysis based on net sales would show the following for operating expenses for the two periods (to the nearest tenth of a percent):

Financial analysis is the process of using a company's financial information to evaluate whether or not the company is creating value.

Determining the percentage changes in line items on financial statements for two consecutive years is called horizontal analysis.

The debt ratio is the relationship between:

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

Common-size statements should NOT be used to compare a company's performance against a company of a different size.

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