Question 1

The vertical analysis statement of Nobell Inc. is as below:   The figure 47.0% shown for gross profit in 2016 signifies that:

Accepted Answer

A) gross profit is equal to 47.0% of net income. 
B) gross profit is increased by 47.0% over the previous year. 
C) gross profit is 47.0% of net sales revenue. 
D) gross profit is 47.0% of cost of goods sold. 
A) gross profit is equal to 47.0% of net income. 
B) gross profit is increased by 47.0% over the previous year. 
C) gross profit is 47.0% of net sales revenue. 
D) gross profit is 47.0% of cost of goods sold.

Question 2

A common-size statement reports only percentages that appear in a:

Accepted Answer

A) horizontal analysis report. 
B) financial statement. 
C) vertical analysis report. 
D) ratio analysis report. 
A) horizontal analysis report. 
B) financial statement. 
C) vertical analysis report. 
D) ratio analysis report.

Question 3

The accounts receivable turnover is an indicator of the ability of a company to collect cash from its credit customers.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is the base amount when performing vertical analysis of a balance sheet?

Accepted Answer

A) total assets 
B) total cash and cash equivalents 
C) net income 
D) gross profit 
A) total assets 
B) total cash and cash equivalents 
C) net income 
D) gross profit

Question 5

If an analyst wants to see how assets of a company have changed from one year to the next, horizontal analysis must be used.

Accepted Answer

A) True 
 B)False

Question 6

The vertical analysis statement of Nobell Inc. is as below:   The figure 16.5% shown for net income in 2015 signifies that:

Accepted Answer

A) net income is 16.5% of net sales revenues. 
B) net income is increased by 16.5% over the previous year. 
C) net income is 16.5% of gross profit. 
D) net income is equal to 16.5 times of the income before income tax. 
A) net income is 16.5% of net sales revenues. 
B) net income is increased by 16.5% over the previous year. 
C) net income is 16.5% of gross profit. 
D) net income is equal to 16.5 times of the income before income tax.

Question 7

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

Accepted Answer

A) True 
 B)False

Question 8

The debt ratio is the ratio of total debt divided by total equity.

Accepted Answer

A) True 
 B)False

Question 9

The following is summary of information presented on the financial statements of a company on December 31, 2015.   What would a horizontal analysis report show with respect to net income?

Accepted Answer

A) both net income before income tax expense and net income are 45.45% of net sales revenue 
B) a $25,000 increase in net income 
C) a 45.45% increase in net income 
D) a 103% increase in net income 
A) both net income before income tax expense and net income are 45.45% of net sales revenue 
B) a $25,000 increase in net income 
C) a 45.45% increase in net income 
D) a 103% increase in net income

Question 10

An annual report provides information about a company's financial condition.

Accepted Answer

A) True 
 B)False

Question 11

Atlantis Inc. reported the following data:   The horizontal analysis report shows that the cost of goods sold has:

Accepted Answer

A) increased by 29.2%. 
B) decreased by 29.2%. 
C) increased by 53.2%. 
D) decreased by 53.2% 
A) increased by 29.2%. 
B) decreased by 29.2%. 
C) increased by 53.2%. 
D) decreased by 53.2%

Question 12

A company reports total assets of $850,000 and stockholders' equity of $500,000. Calculate the debt ratio.

Accepted Answer

A) 39.75% 
B) 41.18% 
C) 58.23% 
D) 40.00% 
A) 39.75% 
B) 41.18% 
C) 58.23% 
D) 40.00%

Question 13

The following is summary of information presented on the financial statements of a company on December 31, 2015.   What would a horizontal analysis report show with respect to current liabilities?

Accepted Answer

A) current liabilities are 38.46% of total capital 
B) a 50.00% increase in current liabilities 
C) a current ratio of .87 
D) a 33.33% increase in current liabilities 
A) current liabilities are 38.46% of total capital 
B) a 50.00% increase in current liabilities 
C) a current ratio of .87 
D) a 33.33% increase in current liabilities

Question 14

Atlantis Inc. has the following data:   Perform a vertical analysis of Atlantis's balance sheet for each year. Round your percentage answers to one decimal place.

Accepted Answer

Comparativ

Question 15

Gains and losses on the sale of plant assets are also reported as discontinued operations.

Accepted Answer

A) True 
 B)False

Question 16

Rate of return on common stockholders' equity shows how much income is earned for each $1 invested by the common shareholders.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following types of financial statement analysis would be used to see how a company's operating expenses as a percentage of net sales have changed from one year to the next?

Accepted Answer

A) vertical analysis 
B) horizontal analysis 
C) ratio analysis 
D) analysis of internal control system 
A) vertical analysis 
B) horizontal analysis 
C) ratio analysis 
D) analysis of internal control system

Question 18

Which of the following best describes trend analysis?

Accepted Answer

A) calculating key ratios to evaluate performance 
B) expressing each figure as a percentage of a budgeted figure 
C) comparing a company's financial statements with that of other companies 
D) expressing each year's figures as a percentage of the base year figures 
A) calculating key ratios to evaluate performance 
B) expressing each figure as a percentage of a budgeted figure 
C) comparing a company's financial statements with that of other companies 
D) expressing each year's figures as a percentage of the base year figures

Question 19

The following is summary of information presented on the financial statements of a company on December 31, 2015.   What would a horizontal analysis report show with respect to long-term liabilities?

Accepted Answer

A) long-term liabilities decreased by $30,000 
B) long-term liabilities decreased by 40% 
C) long-term liabilities decreased by 13.33% 
D) long-term liabilities decreased by $10,000 
A) long-term liabilities decreased by $30,000 
B) long-term liabilities decreased by 40% 
C) long-term liabilities decreased by 13.33% 
D) long-term liabilities decreased by $10,000

Question 20

An analysis of a financial statement that reveals the relationship of each statement item to its base amount, which is the 100% figure, is known as vertical analysis.

Accepted Answer

A) True 
 B)False

Exam 17: Financial Statement Analysis

The vertical analysis statement of Nobell Inc. is as below: The figure 47.0% shown for gross profit in 2016 signifies that:

A common-size statement reports only percentages that appear in a:

The accounts receivable turnover is an indicator of the ability of a company to collect cash from its credit customers.

Which of the following is the base amount when performing vertical analysis of a balance sheet?

If an analyst wants to see how assets of a company have changed from one year to the next, horizontal analysis must be used.

The vertical analysis statement of Nobell Inc. is as below: The figure 16.5% shown for net income in 2015 signifies that:

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

The debt ratio is the ratio of total debt divided by total equity.

The following is summary of information presented on the financial statements of a company on December 31, 2015. What would a horizontal analysis report show with respect to net income?

An annual report provides information about a company's financial condition.

Atlantis Inc. reported the following data: The horizontal analysis report shows that the cost of goods sold has:

A company reports total assets of $850,000 and stockholders' equity of $500,000. Calculate the debt ratio.

The following is summary of information presented on the financial statements of a company on December 31, 2015. What would a horizontal analysis report show with respect to current liabilities?

Atlantis Inc. has the following data: Perform a vertical analysis of Atlantis's balance sheet for each year. Round your percentage answers to one decimal place.

Gains and losses on the sale of plant assets are also reported as discontinued operations.

Rate of return on common stockholders' equity shows how much income is earned for each $1 invested by the common shareholders.

Which of the following types of financial statement analysis would be used to see how a company's operating expenses as a percentage of net sales have changed from one year to the next?

Which of the following best describes trend analysis?

The following is summary of information presented on the financial statements of a company on December 31, 2015. What would a horizontal analysis report show with respect to long-term liabilities?

An analysis of a financial statement that reveals the relationship of each statement item to its base amount, which is the 100% figure, is known as vertical analysis.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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