Question 1

Which of the following ratios would not be affected by the choice of depreciation methods?

Accepted Answer

A) Working capital turnover 
B) Earnings per share of common stock 
C) Debt to equity 
D) Price-earnings ratio 
A) Working capital turnover 
B) Earnings per share of common stock 
C) Debt to equity 
D) Price-earnings ratio A

Question 2

The following information has been collected for Lloyd Turnbull Company:
   
Required:
Estimate the price per share for Lloyd Turnbull's common stock using the discounted free cash flow model.

Accepted Answer

At the end of 2017,the perpetuity of $4,392 per year forever has a present value of $36,600,computed as $4,392/0.12.
In order to add the perpetuity of $36,600 to the present value of the other free cash flows,it must be discounted back as a lump sum for three years to the end of 2014,resulting in the $26,051 shown above.

Question 3

What is the effect of the collection of accounts receivable on the current ratio and net working capital,respectively?

Accepted Answer

A

Question 4

Assume that you have just been hired as the controller of the Tonnage Manufacturing Company.In order to be fully apprised of the financial and operating condition of the company,you have decided to analyze several of the key accounts appearing on the company's financial statements.An account of obvious interest to you is the company's trade accounts receivable.
Identify specific attributes of the accounts receivable that you would examine as well as any ratios that might be useful to you in your analysis.

Accepted Answer

An analysis of the accounts receivable o

Question 5

A large body of scholarly literature exists relating to the subject of choices of accounting methods.The choice of depreciation methods is an example of these accounting choices.The choice of depreciation method affects several ratios.
Required:
1.Explain which financial statement ratios are affected by the choice of depreciation methods,with specific attention to the effects of straight-line vs.accelerated depreciation on the ratios.
2.Comment on the effects on financial statement users of the issues discussed in part 1.

Accepted Answer

1.The choice of depreciation methods aff

Question 6

The book value per share of common stock measures

Accepted Answer

A) liquidity. 
B) profitability. 
C) equity position and coverage. 
D) efficiency. 
A) liquidity. 
B) profitability. 
C) equity position and coverage. 
D) efficiency.

Question 7

Harvest Corporation's capital stock at December 31 consisted of the following: (a)Common stock,$2 par value; 100,000 shares authorized,issued,and outstanding.(b)10% noncumulative,nonconvertible preferred stock,$100 par value; 1,000 shares authorized,issued,and outstanding.
Harvest's common stock,which is listed on a major stock exchange,was quoted at $4 per share on December 31.Harvest's net income for the year ended December 31 was $50,000.The yearly preferred dividend was declared.No capital stock transactions occurred.What was the price- earnings ratio on Harvest's common stock at December 31?

Accepted Answer

A) 6 to 1 
B) 8 to 1 
C) 10 to 1 
D) 16 to 1 
A) 6 to 1 
B) 8 to 1 
C) 10 to 1 
D) 16 to 1

Question 8

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below:
    
-Refer to the Sculley Corporation information above.Sculley's account receivable turnover for 2014 is

Accepted Answer

A) 13.85. 
B) 10.00. 
C) 9.49. 
D) 7.78. 
A) 13.85. 
B) 10.00. 
C) 9.49. 
D) 7.78.

Question 9

Which of the following statements best describes the use of financial statement analysis?

Accepted Answer

A) Financial statement analysis techniques are merely guides to interpretation of financial data. 
B) Financial statement analysis can eliminate the risk in investment decisions. 
C) Measurements for a specific company should be compared only with data from past periods. 
D) All of these are correct. 
A) Financial statement analysis techniques are merely guides to interpretation of financial data. 
B) Financial statement analysis can eliminate the risk in investment decisions. 
C) Measurements for a specific company should be compared only with data from past periods. 
D) All of these are correct.

Question 10

Brookville Corporation's books disclosed the following information for the year ended December 31,2014:
 
Brookville's accounts receivable turnover is

Accepted Answer

A) 3.75 times. 
B) 4.35 times. 
C) 5.00 times. 
D) 5.80 times. 
A) 3.75 times. 
B) 4.35 times. 
C) 5.00 times. 
D) 5.80 times.

Question 11

The following information has been collected regarding Boonaroo Company:
   
Estimate a price per share for the stock of Boonaroo using the following equity valuation models:
1.Constant future dividends
2.Constant dividend growth
3.Price-earnings multiple

Accepted Answer

1.Constant Future Dividends:
Price = D/r

Question 12

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below:
    
-Refer to the Sculley Corporation information above.Sculley's merchandise inventory turnover for 2014 is

Accepted Answer

A) 3.43. 
B) 5.68. 
C) 6.63. 
D) 6.79. 
A) 3.43. 
B) 5.68. 
C) 6.63. 
D) 6.79.

Question 13

The following information has been collected for Enzo Company:
   
Required:
Estimate the price per share for Enzo Company's common stock using the discounted free cash flow model.

Accepted Answer

@#IMG-DLM& At the end of 2019,the perpetuity of $7

Question 14

Hermine Company wrote off an $700 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,000.The current ratio after the write-off of the uncollectible account

Accepted Answer

A) would be less than before the write-off of the account. 
B) would be greater than before the write-off of the account. 
C) would be the same as before the write-off of the account. 
D) cannot be determined with the information given. 
A) would be less than before the write-off of the account. 
B) would be greater than before the write-off of the account. 
C) would be the same as before the write-off of the account. 
D) cannot be determined with the information given.

Question 15

Diane Singer has just been assigned as the senior accountant on the audit of Pottery Manufacturing Company.Diane currently is planning the audit and has been considering what procedures to perform in examining the company's inventories of raw materials,work-in-process,and finished goods.She has determined that the calculation of certain ratios and other financial analysis techniques will prove useful to her in deciding how to approach the audit of the company's inventory accounts.
Identify the ratios to be calculated and the factors to be considered in Diane's analysis of the company's inventory accounts.

Accepted Answer

Diane should consider the following in h

Question 16

Which of the following ratios does NOT measure liquidity?

Accepted Answer

A) Current ratio 
B) Quick ratio 
C) Working capital to total assets 
D) Debt to equity 
A) Current ratio 
B) Quick ratio 
C) Working capital to total assets 
D) Debt to equity

Question 17

A measure of profitability analysis is

Accepted Answer

A) times interest earned. 
B) cash flow per share. 
C) quick ratio. 
D) dividend payout ratio. 
A) times interest earned. 
B) cash flow per share. 
C) quick ratio. 
D) dividend payout ratio.

Question 18

Selected information from the accounting records of Thackary Company is as follows:
 
Thackary's inventory turnover for 2014 is

Accepted Answer

A) 7.50 times. 
B) 6.665 times. 
C) 4.44times. 
D) 2.22 times. 
A) 7.50 times. 
B) 6.665 times. 
C) 4.44times. 
D) 2.22 times.

Question 19

Selected financial data of Nicholas Corporation for the year ended December 31,2014,is presented below:
 
Common stock dividends were $120,000.The times-interest-earned ratio is

Accepted Answer

A) 2.9 to 1. 
B) 3.6 to 1. 
C) 4.3 to 1. 
D) 5.3 to 1. 
A) 2.9 to 1. 
B) 3.6 to 1. 
C) 4.3 to 1. 
D) 5.3 to 1.

Question 20

Selected information for Henriot Company is as follows:
 
Henriot's return on common stockholder's equity,rounded to the nearest percentage point,for 2014 is

Accepted Answer

A) 20 percent. 
B) 21 percent. 
C) 28 percent. 
D) 40 percent. 
A) 20 percent. 
B) 21 percent. 
C) 28 percent. 
D) 40 percent.

Which of the following ratios would not be affected by the choice of depreciation methods?

The following information has been collected for Lloyd Turnbull Company: Required: Estimate the price per share for Lloyd Turnbull's common stock using the discounted free cash flow model.

What is the effect of the collection of accounts receivable on the current ratio and net working capital,respectively?

The book value per share of common stock measures

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below: -Refer to the Sculley Corporation information above.Sculley's account receivable turnover for 2014 is

Which of the following statements best describes the use of financial statement analysis?

Brookville Corporation's books disclosed the following information for the year ended December 31,2014: Brookville's accounts receivable turnover is

The following information has been collected regarding Boonaroo Company: Estimate a price per share for the stock of Boonaroo using the following equity valuation models: 1.Constant future dividends 2.Constant dividend growth 3.Price-earnings multiple

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below: -Refer to the Sculley Corporation information above.Sculley's merchandise inventory turnover for 2014 is

The following information has been collected for Enzo Company: Required: Estimate the price per share for Enzo Company's common stock using the discounted free cash flow model.

Hermine Company wrote off an $700 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,000.The current ratio after the write-off of the uncollectible account

Which of the following ratios does NOT measure liquidity?

A measure of profitability analysis is

Selected information from the accounting records of Thackary Company is as follows: Thackary's inventory turnover for 2014 is

Selected financial data of Nicholas Corporation for the year ended December 31,2014,is presented below: Common stock dividends were $120,000.The times-interest-earned ratio is

Selected information for Henriot Company is as follows: Henriot's return on common stockholder's equity,rounded to the nearest percentage point,for 2014 is

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Filters

Exam 23: Analysis of Financial Statements

Which of the following ratios would not be affected by the choice of depreciation methods?

The following information has been collected for Lloyd Turnbull Company: Required: Estimate the price per share for Lloyd Turnbull's common stock using the discounted free cash flow model.

What is the effect of the collection of accounts receivable on the current ratio and net working capital,respectively?

The book value per share of common stock measures

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below: -Refer to the Sculley Corporation information above.Sculley's account receivable turnover for 2014 is

Which of the following statements best describes the use of financial statement analysis?

Brookville Corporation's books disclosed the following information for the year ended December 31,2014: Brookville's accounts receivable turnover is

The following information has been collected regarding Boonaroo Company: Estimate a price per share for the stock of Boonaroo using the following equity valuation models: 1.Constant future dividends 2.Constant dividend growth 3.Price-earnings multiple

Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below: -Refer to the Sculley Corporation information above.Sculley's merchandise inventory turnover for 2014 is

The following information has been collected for Enzo Company: Required: Estimate the price per share for Enzo Company's common stock using the discounted free cash flow model.

Hermine Company wrote off an $700 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,000.The current ratio after the write-off of the uncollectible account

Which of the following ratios does NOT measure liquidity?

A measure of profitability analysis is

Selected information from the accounting records of Thackary Company is as follows: Thackary's inventory turnover for 2014 is

Selected financial data of Nicholas Corporation for the year ended December 31,2014,is presented below: Common stock dividends were $120,000.The times-interest-earned ratio is

Selected information for Henriot Company is as follows: Henriot's return on common stockholder's equity,rounded to the nearest percentage point,for 2014 is

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Filters