Question 1

External users of financial information:

Accepted Answer

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

Question 2

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Accepted Answer

A) True 
 B)False

Question 3

Horizontal analysis:

Accepted Answer

A) Is a method used to evaluate changes in financial data across time. 
B) Is also called vertical analysis. 
C) Is the presentation of financial ratios. 
D) Is a tool used to evaluate financial statement items relative to industry statistics. 
E) Evaluates financial data across industries. 
A) Is a method used to evaluate changes in financial data across time. 
B) Is also called vertical analysis. 
C) Is the presentation of financial ratios. 
D) Is a tool used to evaluate financial statement items relative to industry statistics. 
E) Evaluates financial data across industries.

Question 4

The purposes of financial statement analysis include all of the following except:

Accepted Answer

A) Providing information to improve efficiency and effectiveness. 
B) Providing information for managing and operating the company. 
C) Helping external users assess performance. 
D) Helping the board of directors monitor management's performance. 
E) Assuring that the company will not be the subject of an IRS audit. 
A) Providing information to improve efficiency and effectiveness. 
B) Providing information for managing and operating the company. 
C) Helping external users assess performance. 
D) Helping the board of directors monitor management's performance. 
E) Assuring that the company will not be the subject of an IRS audit.

Question 5

The dollar change for a comparative financial statement item is calculated by:

Accepted Answer

A) Subtracting the analysis period amount from the fair value amount. 
B) Subtracting the base period amount from the analysis period amount. 
C) Subtracting the analysis period amount from the base period amount,dividing the result by the base period amount,then multiplying that amount by 100. 
D) Subtracting the base period amount from the analysis period amount,dividing the result by the base period amount,then multiplying that amount by 100. 
E) Subtracting the base period amount from the analysis amount,then dividing the result by the base amount 
A) Subtracting the analysis period amount from the fair value amount. 
B) Subtracting the base period amount from the analysis period amount. 
C) Subtracting the analysis period amount from the base period amount,dividing the result by the base period amount,then multiplying that amount by 100. 
D) Subtracting the base period amount from the analysis period amount,dividing the result by the base period amount,then multiplying that amount by 100. 
E) Subtracting the base period amount from the analysis amount,then dividing the result by the base amount

Question 6

Selected current year end financial information for a company is presented below.Calculate the following company ratios:
(a)Profit margin.
(b)Total asset turnover.
(c)Return on total assets.
(d)Return on common stockholders' equity (assume the company has no preferred stock).

Accepted Answer

(a)Profit margin = ($325,000/$4,700,000)

Question 7

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Accepted Answer

A) True 
 B)False

Question 8

Ratios may be expressed as (1)________,(2)________,or (3)________.

Accepted Answer

percentages; rates;

Question 9

Intra-company analysis compares a company's current performance to its own prior performance.

Accepted Answer

A) True 
 B)False

Question 10

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Accepted Answer

A) True 
 B)False

Question 11

Comparative calendar-year financial data for a company are shown below.Calculate the following ratios for the company for Year 2:
(a)accounts receivable turnover
(b)day's sales uncollected
(c)inventory turnover
(d)days' sales in inventory

Accepted Answer

The answer of Comparative calendar-year financial data for a company...

Question 12

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick)ratio is:

Accepted Answer

A) 1.4 : 1. 
B) 0.77 : 1. 
C) 0.54 : 1. 
D) 1 : 1. 
E) 0.64 : 1. 
A) 1.4 : 1. 
B) 0.77 : 1. 
C) 0.54 : 1. 
D) 1 : 1. 
E) 0.64 : 1.

Question 13

Zhang Company reported Cost of goods sold of $835,000,average Inventory of $41,750,and Net sales of $2,338,000.The Inventory turnover ratio is:

Accepted Answer

A) 0.5 times. 
B) 418 times. 
C) 20 times. 
D) 56 times. 
E) 19 times. 
A) 0.5 times. 
B) 418 times. 
C) 20 times. 
D) 56 times. 
E) 19 times.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

General-purpose financial statements include the (1)________,(2)________,(3)________,(4)________ and (5)________.

Accepted Answer

income statement; balance shee

Question 16

The building blocks of financial statement analysis do not include:

Accepted Answer

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

Question 17

Annual cash dividends per share divided by market price per share is the:

Accepted Answer

A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share. 
A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share.

Question 18

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 19

A financial statement analysis report does not include:

Accepted Answer

A) An auditor statement. 
B) An analysis overview. 
C) An executive summary. 
D) Qualitative and quantitative key factors. 
E) Inferences such as forecasts. 
A) An auditor statement. 
B) An analysis overview. 
C) An executive summary. 
D) Qualitative and quantitative key factors. 
E) Inferences such as forecasts.

Question 20

Explain the purpose of financial statement analysis for both external and internal users.

Accepted Answer

The purpose of financial statement analy

Exam 13: Analysis of Financial Statements

External users of financial information:

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Horizontal analysis:

The purposes of financial statement analysis include all of the following except:

The dollar change for a comparative financial statement item is calculated by:

Selected current year end financial information for a company is presented below.Calculate the following company ratios: (a)Profit margin. (b)Total asset turnover. (c)Return on total assets. (d)Return on common stockholders' equity (assume the company has no preferred stock).

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Ratios may be expressed as (1)________,(2)________,or (3)________.

Intra-company analysis compares a company's current performance to its own prior performance.

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Comparative calendar-year financial data for a company are shown below.Calculate the following ratios for the company for Year 2: (a)accounts receivable turnover (b)day's sales uncollected (c)inventory turnover (d)days' sales in inventory

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick)ratio is:

Zhang Company reported Cost of goods sold of $835,000,average Inventory of $41,750,and Net sales of $2,338,000.The Inventory turnover ratio is:

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

General-purpose financial statements include the (1)________,(2)________,(3)________,(4)________ and (5)________.

The building blocks of financial statement analysis do not include:

Annual cash dividends per share divided by market price per share is the:

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

A financial statement analysis report does not include:

Explain the purpose of financial statement analysis for both external and internal users.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and 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

Time Value of Money

Investments

Lean Principles and Accounting

Filters

Ratios may be expressed as (1),(2),or (3).

General-purpose financial statements include the (1),(2),(3),(4) and (5).