Question 1

Earnings per share are calculated only on income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 2

A company's sales in Year 1 were $280,000,and its sales in Year 2 were $341,600.Using Year 1 as the base year,what is the sales trend percent for Year 2?

Accepted Answer

$341,600/$

Question 3

$$\begin{array} { | l | l | } 
\hline \text { Interest expense } & \$ 9,100 \
\hline \text { Income tax expense } & 22,700 \
\hline \text { Net income after tax } & 56,500 \
\hline
\end{array}$$
-Refer to the following selected financial information from Graphics,Inc.Compute the company's times interest earned.

Accepted Answer

A)  6.2. 
B)  2.5. 
C)  8.7. 
D)  9.7. 
E)  3.7. 
A)  6.2. 
B)  2.5. 
C)  8.7. 
D)  9.7. 
E)  3.7.

Question 4

Use the financial data shown below to calculate the following ratios for the current year:
(a)Current ratio.
(b)Acid-test ratio.
(c)Accounts receivable turnover.
(d)Days' sales uncollected.
(e)Inventory turnover.
(f)Days' sales in inventory.
 $\text { Income statement data }$ 
Sales (all on credit)……………………………… $650,000
Cost of goods sold………………………………….425,000
Income before taxes………………………………..78,000
Net income………………………………………… 54,600
 $\begin{array}{|l|c|c|}
\hline&\text { Ending } & \text { Beginning } \
&\text { Balances } & \text { Balances }\
\hline \text { Cash } & 19,500 & 15,000 \
\hline \text { Accounts receivable (net) } & 65,000 & 60,000 \
\hline \text { Inventory } & 71,50 \mathrm{~d} & 64,500 \
\hline \text { Plant and equipment (net) } & 195,000 & 183,900 \
\hline \text { Total assets } & \$ 351.00 \mathrm{~d} & \$ 323,400 \
\hline \text { Current liabilities } & \$ 62,400 & \$ \quad 52,700 \
\hline\text { Long-term notes payable } & 97,500 & 100,000\
\hline
\end{array}$

Accepted Answer

(a)Current ratio:
($19,500 + $65,000 + $

Question 5

Match each of the following terms with the appropriate formulas.
-$\frac {\text { Total liabilities  }} { \text { Total assets} }$

Accepted Answer

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

Question 6

Identify and describe three common tools of financial statement analysis.

Accepted Answer

Three common tools of financial statemen

Question 7

Ratios must refer to economically important relationships,such as a sale price compared to its cost.

Accepted Answer

A) True 
 B)False

Question 8

The higher the accounts receivable turnover,the less quickly accounts receivable are collected.

Accepted Answer

A) True 
 B)False

Question 9

The standards for comparisons when interpreting measures from financial statement analysis include (1)________, (2)________, (3)________,and (4)________.

Accepted Answer

intra-company; compe

Question 10

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

Accepted Answer

percentage

Question 11

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

Accepted Answer

A)  87%. 
B)  100%. 
C)  115%. 
D)  15%. 
E)  13%. 
A)  87%. 
B)  100%. 
C)  115%. 
D)  15%. 
E)  13%.

Question 12

The following current year information is available from a manufacturing company:
 $$\begin{array} { | l | r |} 
\hline \text { Sales } & \$ 740,000 \
\hline \text { Gross profit on sales } & 276,000 \
\hline \text { Operating income } & 64,000 \
\hline \text { Income before taxes } & 44,000 \
\hline \text { Net income } & 33,600 \
\hline \text { Accounts Receivable, beginning-year } & 58,000 \
\hline \text { Accounts Receivable, end-of-year } & 72,000 \
\hline
\end{array}$$ 
Calculate the company's accounts receivable turnover and its days' sales uncollected.

Accepted Answer

Accounts receivable turnover =

Question 13

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Accepted Answer

A) True 
 B)False

Question 14

Match each of the following terms with the appropriate formulas.
-$\frac {\text {Cost of goods sold  }} { \text {Average inventory } }$

Accepted Answer

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

Question 15

A trend percent,or index number,is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

Accepted Answer

A) True 
 B)False

Question 16

General standards of comparisons,developed from experience,include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 17

The following information is available for the Starr Corporation:
 $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 750,000 \
\hline \text { Cost of goods sold } & 450,000 \
\hline \text { Gross profit } & 300,000 \
\hline \text { Operating income } & 85,000 \
\hline \text { Net income } & 42,000 \
\hline \text { Inventory, beginning-year } & 41,200 \
\hline \text { Inventory, end-of-year } & 48,800 \
\hline
\end{array}$$ 
Calculate the company's inventory turnover and its days' sales in inventory.

Accepted Answer

Inventory turnover = $450,000/

Question 18

Rajan Company's most recent balance sheet reported total assets of $1.9 million,total liabilities of $0.8 million,and total equity of $1.1 million.Its Debt to equity ratio is:

Accepted Answer

A)  0.42 
B)  0.58 
C)  1.38 
D)  0.73 
E)  1.00 
A)  0.42 
B)  0.58 
C)  1.38 
D)  0.73 
E)  1.00

Question 19

Match each of the following terms with the appropriate definitions.
-A statement with data for two or more successive accounting periods placed in side-by-side columns,often with changes shown in dollar amounts and percentages.

Accepted Answer

A) Financial statement analysis 
B) Common-size financial statement 
C) Horizontal analysis 
D) Comparative financial statement 
E) Liquidity and efficiency
F)Market prospects
G)Debt to equity ratio
H)Solvency
I)Vertical analysis
J)Profitability 
A) Financial statement analysis 
B) Common-size financial statement 
C) Horizontal analysis 
D) Comparative financial statement 
E) Liquidity and efficiency
F)Market prospects
G)Debt to equity ratio
H)Solvency
I)Vertical analysis
J)Profitability

Question 20

Martinez Corporation reported Net sales of $765,000 and Net income of $142,000.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%.

Earnings per share are calculated only on income from continuing operations.

A company's sales in Year 1 were $280,000,and its sales in Year 2 were $341,600.Using Year 1 as the base year,what is the sales trend percent for Year 2?

Interest expense \ 9,100 Income tax expense 22,700 Net income after tax 56,500 -Refer to the following selected financial information from Graphics,Inc.Compute the company's times interest earned.

Match each of the following terms with the appropriate formulas. - $\frac {\text { Total liabilities }} { \text { Total assets} }$

Identify and describe three common tools of financial statement analysis.

Ratios must refer to economically important relationships,such as a sale price compared to its cost.

The higher the accounts receivable turnover,the less quickly accounts receivable are collected.

The standards for comparisons when interpreting measures from financial statement analysis include (1), (2), (3),and (4).

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

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Match each of the following terms with the appropriate formulas. - $\frac {\text {Cost of goods sold }} { \text {Average inventory } }$

A trend percent,or index number,is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

General standards of comparisons,developed from experience,include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Rajan Company's most recent balance sheet reported total assets of $1.9 million,total liabilities of $0.8 million,and total equity of $1.1 million.Its Debt to equity ratio is:

Match each of the following terms with the appropriate definitions. -A statement with data for two or more successive accounting periods placed in side-by-side columns,often with changes shown in dollar amounts and percentages.

Martinez Corporation reported Net sales of $765,000 and Net income of $142,000.The Profit margin is:

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 13: Analysis of Financial Statements

Earnings per share are calculated only on income from continuing operations.

A company's sales in Year 1 were $280,000,and its sales in Year 2 were $341,600.Using Year 1 as the base year,what is the sales trend percent for Year 2?

Interest expense \ 9,100 Income tax expense 22,700 Net income after tax 56,500 -Refer to the following selected financial information from Graphics,Inc.Compute the company's times interest earned.

Match each of the following terms with the appropriate formulas. - Total liabilities Total assets\frac {\text { Total liabilities }} { \text { Total assets} } Total assets Total liabilities ​

Identify and describe three common tools of financial statement analysis.

Ratios must refer to economically important relationships,such as a sale price compared to its cost.

The higher the accounts receivable turnover,the less quickly accounts receivable are collected.

The standards for comparisons when interpreting measures from financial statement analysis include (1)________, (2)________, (3)________,and (4)________.

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

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Match each of the following terms with the appropriate formulas. - Cost of goods sold Average inventory \frac {\text {Cost of goods sold }} { \text {Average inventory } }Average inventory Cost of goods sold ​

A trend percent,or index number,is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

General standards of comparisons,developed from experience,include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Rajan Company's most recent balance sheet reported total assets of $1.9 million,total liabilities of $0.8 million,and total equity of $1.1 million.Its Debt to equity ratio is:

Match each of the following terms with the appropriate definitions. -A statement with data for two or more successive accounting periods placed in side-by-side columns,often with changes shown in dollar amounts and percentages.

Martinez Corporation reported Net sales of $765,000 and Net income of $142,000.The Profit margin is:

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Match each of the following terms with the appropriate formulas. - $\frac {\text { Total liabilities }} { \text { Total assets} }$

The standards for comparisons when interpreting measures from financial statement analysis include (1), (2), (3),and (4).

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

Match each of the following terms with the appropriate formulas. - $\frac {\text {Cost of goods sold }} { \text {Average inventory } }$