Question 1

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

Accepted Answer

A) True 
 B)False  True

Question 2

The following information was taken from the financial statement of Fox Resources for December 31 of the current fiscal year:
​
​
   The net income was $600,000,and the declared dividends on the common stock were $125,000 for the current year.The market price of the common stock is $20 per share.
​
Calculate for the common stock:
(a)earnings per share
(b)the price-earnings ratio
(c)the dividends per share and the dividend yield
​
Round to one decimal place except earnings per share,which should be rounded to two decimal places.

Accepted Answer

The answer of The following information was taken from the...

Question 3

A company reported the following:
​
   Calculate the company's price-earnings ratio.Round your answer to one decimal place.

Accepted Answer

Price-earnings ratio = Market price per share of common stock / Earnings per share on common stock ​ Earnings per share on common stock = (Net income - Preferred dividends) / Shares of common stock outstanding Earnings per share = ($270,000 - $10,000) / 20,000 Earnings per share = $13.00 ​ Price-earnings ratio = $36.40 / $13.00 Price-earnings ratio = 2.8

Question 4

Match each ratio that follows to its use (items a-h).Items may be used more than once.
-earnings per share (EPS)on common stock

Accepted Answer

A) assess the profitability of the assets 
B) assess how effectively assets are used 
C) indicate the ability to pay current liabilities 
D) indicate how much of the company is financed by debt and equity 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders
   
A) assess the profitability of the assets 
B) assess how effectively assets are used 
C) indicate the ability to pay current liabilities 
D) indicate how much of the company is financed by debt and equity 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders

Question 5

The following information has been condensed from the December 31 balance sheets of Gabriel Co.:
​
   Round your answers to two decimal places.

Accepted Answer

The answer of The following information has been condensed from...

Question 6

Cash and accounts receivable for Adams Company are provided below:
​
   What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?

Accepted Answer

The answer of Cash and accounts receivable for Adams Company...

Question 7

The purpose of an audit is to

Accepted Answer

A)  determine whether or not a company is a good investment 
B)  render an opinion on the fairness of the statements 
C)  determine whether or not a company complies with corporate social responsibility 
D)  determine whether or not a company is a good credit risk 
A)  determine whether or not a company is a good investment 
B)  render an opinion on the fairness of the statements 
C)  determine whether or not a company complies with corporate social responsibility 
D)  determine whether or not a company is a good credit risk

Question 8

Match each ratio that follows to its use (items a-h).Items may be used more than once.
-return on total assets

Accepted Answer

A) assess the profitability of the assets 
B) assess how effectively assets are used 
C) indicate the ability to pay current liabilities 
D) indicate how much of the company is financed by debt and equity 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders
   
A) assess the profitability of the assets 
B) assess how effectively assets are used 
C) indicate the ability to pay current liabilities 
D) indicate how much of the company is financed by debt and equity 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders

Question 9

Percentage analyses,ratios,turnovers,and other measures of financial position and operating results are

Accepted Answer

A)  a substitute for sound judgment 
B)  useful analytical measures 
C)  enough information for analysis; industry information is not needed 
D)  unnecessary for analysis if industry information is available 
A)  a substitute for sound judgment 
B)  useful analytical measures 
C)  enough information for analysis; industry information is not needed 
D)  unnecessary for analysis if industry information is available

Question 10

What is the dividend yield for Diane Company?

Accepted Answer

A)  7.5% 
B)  0.75% 
C)  13.3% 
D)  1.3% 
A)  7.5% 
B)  0.75% 
C)  13.3% 
D)  1.3%

Question 11

Match each ratio that follows to its use (items a-h).Items may be used more than once.
-asset turnover ratio

Accepted Answer

A) assess the profitability of the assets 
B) assess how effectively assets are used 
C) indicate the ability to pay current liabilities 
D) indicate how much of the company is financed by debt and equity 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders
   
A) assess the profitability of the assets 
B) assess how effectively assets are used 
C) indicate the ability to pay current liabilities 
D) indicate how much of the company is financed by debt and equity 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders

Question 12

The ability of a business to pay its debts as they come due and to earn a reasonable net income is

Accepted Answer

A)  solvency and leverage 
B)  solvency and profitability 
C)  solvency and liquidity 
D)  solvency and equity 
A)  solvency and leverage 
B)  solvency and profitability 
C)  solvency and liquidity 
D)  solvency and equity

Question 13

Condensed data taken from the ledger of St.Louis Company at December 31,for the current and preceding years,are as follows:
​
   Prepare a comparative balance sheet,with horizontal analysis,for December 31,Year 2 and Year 1.(Round percents to one decimal point.)

Accepted Answer

The answer of Condensed data taken from the ledger of...

Question 14

The current ratio is

Accepted Answer

A)  used to evaluate a company's liquidity and short-term debt paying ability 
B)  a solvency measure that indicates the margin of safety for bondholders 
C)  calculated by dividing current liabilities by current assets 
D)  calculated by subtracting current liabilities from current assets 
A)  used to evaluate a company's liquidity and short-term debt paying ability 
B)  a solvency measure that indicates the margin of safety for bondholders 
C)  calculated by dividing current liabilities by current assets 
D)  calculated by subtracting current liabilities from current assets

Question 15

A financial statement showing each item on the statement as a percentage of one key item on the statement is called a common-sized financial statement.

Accepted Answer

A) True 
 B)False

Question 16

Based on the data for Harding Company,what is the amount of working capital?

Accepted Answer

A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000 
A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000

Question 17

The following information was taken from Slater Company's balance sheet:
​
   Determine the company's (a)ratio of fixed assets to long-term liabilities,and (b)ratio of liabilities to stockholders' equity.Round your answer to one decimal place.

Accepted Answer

The answer of The following information was taken from Slater...

Question 18

Based on the following data,what is the accounts receivable turnover?

Accepted Answer

A)  17.5 
B)  2.6 
C)  20.0 
D)  15.5 
A)  17.5 
B)  2.6 
C)  20.0 
D)  15.5

Question 19

Based on the following data for the current year,what is the inventory turnover?

Accepted Answer

A)  2.7 
B)  9.7 
C)  2.5 
D)  3.0 
A)  2.7 
B)  9.7 
C)  2.5 
D)  3.0

Question 20

The percent of fixed assets to total assets is an example of

Accepted Answer

A)  vertical analysis 
B)  solvency analysis 
C)  profitability analysis 
D)  horizontal analysis 
A)  vertical analysis 
B)  solvency analysis 
C)  profitability analysis 
D)  horizontal analysis

Exam 14: Financial Statement Analysis

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

A company reported the following: ​ Calculate the company's price-earnings ratio.Round your answer to one decimal place.

Match each ratio that follows to its use (items a-h).Items may be used more than once. -earnings per share (EPS)on common stock

The following information has been condensed from the December 31 balance sheets of Gabriel Co.: ​ Round your answers to two decimal places.

Cash and accounts receivable for Adams Company are provided below: ​ What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?

The purpose of an audit is to

Match each ratio that follows to its use (items a-h).Items may be used more than once. -return on total assets

Percentage analyses,ratios,turnovers,and other measures of financial position and operating results are

What is the dividend yield for Diane Company?

Match each ratio that follows to its use (items a-h).Items may be used more than once. -asset turnover ratio

The ability of a business to pay its debts as they come due and to earn a reasonable net income is

Condensed data taken from the ledger of St.Louis Company at December 31,for the current and preceding years,are as follows: ​ Prepare a comparative balance sheet,with horizontal analysis,for December 31,Year 2 and Year 1.(Round percents to one decimal point.)

The current ratio is

A financial statement showing each item on the statement as a percentage of one key item on the statement is called a common-sized financial statement.

Based on the data for Harding Company,what is the amount of working capital?

The following information was taken from Slater Company's balance sheet: ​ Determine the company's (a)ratio of fixed assets to long-term liabilities,and (b)ratio of liabilities to stockholders' equity.Round your answer to one decimal place.

Based on the following data,what is the accounts receivable turnover?

Based on the following data for the current year,what is the inventory turnover?

The percent of fixed assets to total assets is an example of

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Filters

A company reported the following: Calculate the company's price-earnings ratio.Round your answer to one decimal place.

The following information has been condensed from the December 31 balance sheets of Gabriel Co.: Round your answers to two decimal places.

Cash and accounts receivable for Adams Company are provided below: What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?

Condensed data taken from the ledger of St.Louis Company at December 31,for the current and preceding years,are as follows: Prepare a comparative balance sheet,with horizontal analysis,for December 31,Year 2 and Year 1.(Round percents to one decimal point.)

The following information was taken from Slater Company's balance sheet: Determine the company's (a)ratio of fixed assets to long-term liabilities,and (b)ratio of liabilities to stockholders' equity.Round your answer to one decimal place.