Question 1

Net income divided by average total assets is:

Accepted Answer

A) Profit margin. 
B) Total asset turnover. 
C) Return on total assets. 
D) Days' income in assets. 
E) Current ratio. 
A) Profit margin. 
B) Total asset turnover. 
C) Return on total assets. 
D) Days' income in assets. 
E) Current ratio.

Question 2

Working capital is computed as current liabilities minus current assets.

Accepted Answer

A) True 
 B)False

Question 3

Guidelines (rules-of-thumb)are general standards of comparison developed from:

Accepted Answer

A) Industry guidelines. 
B) Past experience. 
C) Analysis of competitors. 
D) Relations between financial items. 
E) Dun and Bradstreet. 
A) Industry guidelines. 
B) Past experience. 
C) Analysis of competitors. 
D) Relations between financial items. 
E) Dun and Bradstreet.

Question 4

Use the following information from the current year financial statements of a company to calculate the ratios below:
(a)Current ratio.
(b)Accounts receivable turnover.(Assume the prior year's accounts receivable balance was $100,000.)
(c)Days' sales uncollected.
(d)Inventory turnover.(Assume the prior year's inventory was $50,200.)
(e)Times interest earned ratio.
(f)Return on common stockholders' equity.(Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.)
(g)Earnings per share (assuming the corporation only has common stock outstanding).
(h)Price earnings ratio.(Assume the company's stock is selling for $26 per share.)
(i)Divided yield ratio.(Assume that the company paid $1.25 per share in cash dividends.)

Accepted Answer

(a)
 @#IMG-DLM& Current ratio = $239,100/$96,000 =

Question 5

A company's calendar-year financial data are shown below.The company had total assets of $339,000 and total equity of $144,400 for the prior year.No additional shares of common stock were issued during the year.The December 31 market price per share is $49.50.Cash dividends of $19,500 were paid during the year.Calculate the following ratios for the company:
(a)profit margin ratio
(b)gross margin ratio
(c)return on total assets
(d)return on common stockholders' equity
(e)book value per common share
(f)basic earnings per share
(g)price earnings ratio
(h)dividend yield.

Accepted Answer

The answer of A company's calendar-year financial data are shown...

Question 6

Jones Corp.reported current assets of $193,000,current liabilities of $137,000,and total liabilities of $275,714 on its most recent balance sheet.The current ratio is:

Accepted Answer

A) 1.4 : 1. 
B) 0.7 : 1. 
C) 0.3 : 1. 
D) 1 : 1. 
E) 0.4 : 1. 
A) 1.4 : 1. 
B) 0.7 : 1. 
C) 0.3 : 1. 
D) 1 : 1. 
E) 0.4 : 1.

Question 7

An example of an intracompany comparison is comparing Apple's profit margin to the industry's profit margin.

Accepted Answer

A) True 
 B)False

Question 8

A corporation reports the following year-end balance sheet data.
 
-The company's equity ratio equals:

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 9

Martinez Corporation reported net sales of $765,000,net income of $142,000,and total assets of $7,634,409.The profit margin is:

Accepted Answer

A) 539.0%. 
B) 5.39%. 
C) 81.4%. 
D) 1.86%. 
E) 18.56%. 
A) 539.0%. 
B) 5.39%. 
C) 81.4%. 
D) 1.86%. 
E) 18.56%.

Question 10

Industry standards for financial statement analysis:

Accepted Answer

A) Are based on a single competitor's financial performance. 
B) Are set by the government. 
C) Are used to compare a company's performance to industry performance. 
D) Are based on rules of thumb. 
E) Compare a company's income with its prior year's income. 
A) Are based on a single competitor's financial performance. 
B) Are set by the government. 
C) Are used to compare a company's performance to industry performance. 
D) Are based on rules of thumb. 
E) Compare a company's income with its prior year's income.

Question 11

Market prospects are the ability to generate positive market expectations.

Accepted Answer

A) True 
 B)False

Question 12

The evaluation of company performance and financial condition focuses solely on past performance.

Accepted Answer

A) True 
 B)False

Question 13

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000.What is the company's return on common stockholders' equity?

Accepted Answer

($120,000

Question 14

The return on total assets ratio is a profitability measure.

Accepted Answer

A) True 
 B)False

Question 15

Internal users of financial information:

Accepted Answer

A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers,regulators,and the press. 
A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers,regulators,and the press.

Question 16

Refer to the following selected financial information from Gomez Electronics.
 
-Compute the company's return on total assets for Year 2.

Accepted Answer

A) 9.6%. 
B) 15.2%. 
C) 2.6%. 
D) 22.2%. 
E) 14.5%. 
A) 9.6%. 
B) 15.2%. 
C) 2.6%. 
D) 22.2%. 
E) 14.5%.

Question 17

Describe the purpose of vertical financial statement analysis and how it is applied.

Accepted Answer

Vertical analysis is used to evaluate in

Question 18

The measurement of key relationships between financial statement items is known as ________.

Accepted Answer

The answer of The measurement of key relationships between financial...

Question 19

The following selected financial information for a company was reported for the current year end.Calculate the following company ratios:
(a)Accounts receivable turnover.
(b)Inventory turnover.
(c)Days' sales uncollected

Accepted Answer

(a)Accounts receivable turnover = $1,000

Question 20

Profitability is the ability to generate positive market expectations.

Accepted Answer

A) True 
 B)False

Exam 13: Analysis of Financial Statements

Net income divided by average total assets is:

Working capital is computed as current liabilities minus current assets.

Guidelines (rules-of-thumb)are general standards of comparison developed from:

Jones Corp.reported current assets of $193,000,current liabilities of $137,000,and total liabilities of $275,714 on its most recent balance sheet.The current ratio is:

An example of an intracompany comparison is comparing Apple's profit margin to the industry's profit margin.

A corporation reports the following year-end balance sheet data. -The company's equity ratio equals:

Martinez Corporation reported net sales of $765,000,net income of $142,000,and total assets of $7,634,409.The profit margin is:

Industry standards for financial statement analysis:

Market prospects are the ability to generate positive market expectations.

The evaluation of company performance and financial condition focuses solely on past performance.

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000.What is the company's return on common stockholders' equity?

The return on total assets ratio is a profitability measure.

Internal users of financial information:

Refer to the following selected financial information from Gomez Electronics. -Compute the company's return on total assets for Year 2.

Describe the purpose of vertical financial statement analysis and how it is applied.

The measurement of key relationships between financial statement items is known as ________.

The following selected financial information for a company was reported for the current year end.Calculate the following company ratios: (a)Accounts receivable turnover. (b)Inventory turnover. (c)Days' sales uncollected

Profitability is the ability to generate positive market expectations.

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

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