Question 1

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Accepted Answer

A) True 
 B)False

Question 2

Match each of the appropriate formulas with correct term.
-

Accepted Answer

A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio 
A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio

Question 3

Express the following balance sheets for Safety Company in common-size percentages.

Accepted Answer

The answer of Express the following balance sheets for Safety...

Question 4

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Accepted Answer

A) True 
 B)False

Question 5

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Accepted Answer

A) True 
 B)False

Question 6

Gains and losses that are neither unusual nor infrequent are reported as:

Accepted Answer

A) A separate line item when computing earnings per share. 
B) A prior period adjustment on the statement of retained earnings. 
C) A gain or loss from disposing of the discontinued segment's net assets. 
D) A gain or loss from operation of a discontinued segment. 
E) Part of continuing operations. 
A) A separate line item when computing earnings per share. 
B) A prior period adjustment on the statement of retained earnings. 
C) A gain or loss from disposing of the discontinued segment's net assets. 
D) A gain or loss from operation of a discontinued segment. 
E) Part of continuing operations.

Question 7

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Accepted Answer

A) True 
 B)False

Question 8

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

Accepted Answer

A) Period-to-period statements. 
B) Controlling statements. 
C) Successive statements. 
D) Comparative statements. 
E) Serial statements. 
A) Period-to-period statements. 
B) Controlling statements. 
C) Successive statements. 
D) Comparative statements. 
E) Serial statements.

Question 9

The current year-end balance sheet data for a company are shown below.Calculate the company's:
(a)working capital
(b)current ratio
(c)acid-test ratio.
Assets:

Accepted Answer

The answer of The current year-end balance sheet data for...

Question 10

Express the following income statement information in common-size percentages (round to nearest whole percent).Comment on the results.

Accepted Answer

@#IMG-DLM& Comments: Although a smaller percent of

Question 11

________ ratios include the price-earnings ratio and dividend yield.

Accepted Answer

The answer of ________ ratios include the price-earnings ratio and...

Question 12

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

Accepted Answer

A) −104% 
B) 100% 
C) −4.0 
D) 96% 
E) 4.2% 
A) −104% 
B) 100% 
C) −4.0 
D) 96% 
E) 4.2%

Question 13

The common-size percent is computed by:

Accepted Answer

A) Dividing the analysis amount by the base amount. 
B) Dividing the base amount by the analysis amount. 
C) Dividing the analysis amount by the base amount and multiplying the result by 100. 
D) Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E) Subtracting the base amount from the analysis amount and multiplying the result by 100. 
A) Dividing the analysis amount by the base amount. 
B) Dividing the base amount by the analysis amount. 
C) Dividing the analysis amount by the base amount and multiplying the result by 100. 
D) Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E) Subtracting the base amount from the analysis amount and multiplying the result by 100.

Question 14

Use the following selected information from Whitman Corp.
 
-To determine the Year 1 and Year 2 trend percentages for net sales using Year 1 as the base.

Accepted Answer

A) 36.4% for Year 2 and 41.1% for Year 1. 
B) 55.0% for Year 2 and 56.0% for Year 1. 
C) 119.4% for Year 2 and 100.0% for Year 1. 
D) 117.2% for Year 2 and 100.0% for Year 1. 
E) 65.1% for Year 2 and 64.6% for Year 1. 
A) 36.4% for Year 2 and 41.1% for Year 1. 
B) 55.0% for Year 2 and 56.0% for Year 1. 
C) 119.4% for Year 2 and 100.0% for Year 1. 
D) 117.2% for Year 2 and 100.0% for Year 1. 
E) 65.1% for Year 2 and 64.6% for Year 1.

Question 15

Match each of the appropriate formulas with correct term.
-

Accepted Answer

A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio 
A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio

Question 16

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the following selected financial information from Gomez Electronics.
 
-Compute the company's times interest earned for Year 2.

Accepted Answer

A) 6.9. 
B) 4.8. 
C) 5.8. 
D) 14.0. 
E) 7.9. 
A) 6.9. 
B) 4.8. 
C) 5.8. 
D) 14.0. 
E) 7.9.

Question 18

Earnings per share is calculated using income before interest and income taxes.

Accepted Answer

A) True 
 B)False

Question 19

To compute trend percentages the analyst should:

Accepted Answer

A) Select a base period,divide analysis period amount by the base period amount and multiply that amount by 100. 
B) Subtract the analysis period number from the base period number. 
C) Subtract the base period amount from the analysis period amount,divide the result by the analysis period amount,then multiply that amount by 100. 
D) Compare amounts across industries using Dun and Bradstreet. 
E) Compare amounts to a competitor. 
A) Select a base period,divide analysis period amount by the base period amount and multiply that amount by 100. 
B) Subtract the analysis period number from the base period number. 
C) Subtract the base period amount from the analysis period amount,divide the result by the analysis period amount,then multiply that amount by 100. 
D) Compare amounts across industries using Dun and Bradstreet. 
E) Compare amounts to a competitor.

Question 20

A good financial statement analysis report often includes the following sections: executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Accepted Answer

A) True 
 B)False

Exam 13: Analysis of Financial Statements

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Match each of the appropriate formulas with correct term. -

Express the following balance sheets for Safety Company in common-size percentages.

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Gains and losses that are neither unusual nor infrequent are reported as:

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

The current year-end balance sheet data for a company are shown below.Calculate the company's: (a)working capital (b)current ratio (c)acid-test ratio. Assets:

Express the following income statement information in common-size percentages (round to nearest whole percent).Comment on the results.

________ ratios include the price-earnings ratio and dividend yield.

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

The common-size percent is computed by:

Use the following selected information from Whitman Corp. -To determine the Year 1 and Year 2 trend percentages for net sales using Year 1 as the base.

Match each of the appropriate formulas with correct term. -

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Refer to the following selected financial information from Gomez Electronics. -Compute the company's times interest earned for Year 2.

Earnings per share is calculated using income before interest and income taxes.

To compute trend percentages the analyst should:

A good financial statement analysis report often includes the following sections: executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

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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