Question 1

The ability to meet short-term obligations and to efficiently generate revenues is called:

Accepted Answer

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

Question 2

Selected current year company information follows: $$\begin{array} { l | r } 
\text { Net income } & \$ 15,953 \
\hline \text { Net sales } & 712,855 \
\hline \text { Total liabilities, beginning-year } & 83,932 \
\hline \text { Total liabilities, end-of-year } & 103,201 \
\hline \text { Total stockholders' equity, beginning-year .... } & 198,935 \
\hline \text { Total stockholders' equity, end-of-year } & 121,851
\end{array}$$ The total asset turnover is:

Accepted Answer

A)  2.81 times 
B)  6.28 times 
C)  3.64 times 
D)  2.24 times 
E)  4.67 times 
A)  2.81 times 
B)  6.28 times 
C)  3.64 times 
D)  2.24 times 
E)  4.67 times

Question 3

One of several ratios that reflects solvency includes the:

Accepted Answer

A)  Days' sales in inventory. 
B)  Total asset turnover. 
C)  Acid-test ratio. 
D)  Current ratio. 
E)  Times interest earned ratio. 
A)  Days' sales in inventory. 
B)  Total asset turnover. 
C)  Acid-test ratio. 
D)  Current ratio. 
E)  Times interest earned ratio.

Question 4

Refer to the following selected financial information from Shakley's Incorporated. Compute the company's times interest earned for Year 2. $$\begin{array} { | l | r | r | } 
\hline & { \text { Year 2 } } &  { \text { Year 1 } } \
\hline \text { Net sales } & \$ 478,500 & \$ 426,250 \
\hline \text { Cost of goods sold } & 276,300 & 250,120 \
\hline \text { Interest expense } & 9,700 & 10,700 \
\hline \text { Net income before tax } & 67,250 & 52,680 \
\hline \text { Net income after tax } & 46,050 & 39,900 \
\hline \text { Total assets } & 317,100 & 288,000 \
\hline \text { Total liabilities } & 181,400 & 167,300 \
\hline \text { Total equity } & 135,700 & 120,700 \
\hline
\end{array}$$

Accepted Answer

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

Question 5

Horizontal analysis:

Accepted Answer

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

Question 6

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Accepted Answer

A) True 
 B)False

Question 7

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

Accepted Answer

A)  $0.36 million. 
B)  $2.3 million. 
C)  $0.25 million. 
D)  $2.7 million. 
E)  $1.1 million. 
A)  $0.36 million. 
B)  $2.3 million. 
C)  $0.25 million. 
D)  $2.7 million. 
E)  $1.1 million.

Question 8

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

Accepted Answer

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

Question 9

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Accepted Answer

A)  Inventory turnover ratio. 
B)  Days' sales in inventory. 
C)  Current ratio. 
D)  Profit margin. 
E)  Total asset turnover. 
A)  Inventory turnover ratio. 
B)  Days' sales in inventory. 
C)  Current ratio. 
D)  Profit margin. 
E)  Total asset turnover.

Question 10

All of the following statements regarding a business segment are true except:

Accepted Answer

A)  A company's gain or loss from selling or closing down a segment is reported separately. 
B)  A business segment is a part of a company's operations that serves a particular product line. 
C)  A segment has assets, liabilities, and financial results of operations that can be distinguished from those of other parts of the company. 
D)  A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately. 
E)  The income tax effects of a discontinued segment are combined with income tax from continuing operations. 
A)  A company's gain or loss from selling or closing down a segment is reported separately. 
B)  A business segment is a part of a company's operations that serves a particular product line. 
C)  A segment has assets, liabilities, and financial results of operations that can be distinguished from those of other parts of the company. 
D)  A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately. 
E)  The income tax effects of a discontinued segment are combined with income tax from continuing operations.

Question 11

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Accepted Answer

A)  12.73%. 
B)  7.85%. 
C)  .0785%. 
D)  7850%. 
E)  1273%. 
A)  12.73%. 
B)  7.85%. 
C)  .0785%. 
D)  7850%. 
E)  1273%.

Question 12

External users of financial information:

Accepted Answer

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

Question 13

Quick assets divided by current liabilities is the:

Accepted Answer

A)  Working capital ratio. 
B)  Acid-test ratio. 
C)  Quick asset turnover ratio. 
D)  Current ratio. 
E)  Current liability turnover ratio. 
A)  Working capital ratio. 
B)  Acid-test ratio. 
C)  Quick asset turnover ratio. 
D)  Current ratio. 
E)  Current liability turnover ratio.

Question 14

What is the purpose of a good financial statement analysis report? What are the key components?

Accepted Answer

A good financial statement analysis repo

Question 15

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accepted Answer

A) True 
 B)False

The ability to meet short-term obligations and to efficiently generate revenues is called:

One of several ratios that reflects solvency includes the:

Horizontal analysis:

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

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

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

All of the following statements regarding a business segment are true except:

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

External users of financial information:

Quick assets divided by current liabilities is the:

What is the purpose of a good financial statement analysis report? What are the key components?

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

Exam 17: Analysis of Financial Statements

The ability to meet short-term obligations and to efficiently generate revenues is called:

One of several ratios that reflects solvency includes the:

Horizontal analysis:

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

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

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

All of the following statements regarding a business segment are true except:

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

External users of financial information:

Quick assets divided by current liabilities is the:

What is the purpose of a good financial statement analysis report? What are the key components?

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters