Question 1

A company's net income as a percentage of sales is 15%.Using vertical analysis,the cost of goods sold as a percentage of sales must be 85%.

Accepted Answer

A) True 
 B)False  False

Question 2

Given the following data:   In vertical analysis,net income would be expressed as: (Round your final answer to the nearest whole percent)

Accepted Answer

A) 7%. 
B) 36%. 
C) 64%. 
D) 29%. 
A) 7%. 
B) 36%. 
C) 64%. 
D) 29%. A

Question 3

You are the CEO of Company A and you are using an industry leader (Leader Company)for benchmarking.Company A is much smaller than Leader Company in terms of total assets and total sales revenue.You should compare the:

Accepted Answer

A) gross profit of Company A to the gross profit of Leader Company. 
B) net income of Company A to the net income of Leader Company. 
C) net sales of Company A to the net sales of Leader Company. 
D) net income to net sales ratio of Company A to net income to net sales ratio of Leader Company. 
A) gross profit of Company A to the gross profit of Leader Company. 
B) net income of Company A to the net income of Leader Company. 
C) net sales of Company A to the net sales of Leader Company. 
D) net income to net sales ratio of Company A to net income to net sales ratio of Leader Company. D

Question 4

In the Management's Discussion and Analysis section of the annual report,you will find management's explanation for trends in sales.

Accepted Answer

A) True 
 B)False

Question 5

Declining income from operations indicates a slowdown in business activity.

Accepted Answer

A) True 
 B)False

Question 6

Learning about what's happening in the industry,markets,general economic conditions,trends in product development,and specific company strategies puts a company's numbers in context and helps you understand why they turned out as they did.

Accepted Answer

A) True 
 B)False

Question 7

The percentage change in any individual item shown on comparative financial statements is calculated by dividing the dollar amount of the change from the base period to the current period by:

Accepted Answer

A) the amount shown for the current period. 
B) the base-period amount. 
C) the average of the amounts shown for the base and the current periods. 
D) the amount estimated for the future period. 
A) the amount shown for the current period. 
B) the base-period amount. 
C) the average of the amounts shown for the base and the current periods. 
D) the amount estimated for the future period.

Question 8

Accounting data should paint a picture of the results of implementing a particular business strategy by a company.

Accepted Answer

A) True 
 B)False

Question 9

How is the leverage ratio calculated?

Accepted Answer

A) total debt divided by total assets 
B) total assets divided by total debt 
C) average total assets divided by average common stockholders' equity 
D) average total debt divided by average total assets 
A) total debt divided by total assets 
B) total assets divided by total debt 
C) average total assets divided by average common stockholders' equity 
D) average total debt divided by average total assets

Question 10

A thorough analysis of a company begins with understanding a company's business and industry.

Accepted Answer

A) True 
 B)False

Question 11

If a company has sales of $150 in 2018 and $225 in 2019,the percentage change from 2018 to 2019 is 50%.

Accepted Answer

A) True 
 B)False

Question 12

The primary focus of horizontal analysis is:

Accepted Answer

A) percentage changes in line items from comparative financial statements. 
B) the balance sheet only. 
C) the amount of individual financial statement line items as a percentage of some related total,such as total assets. 
D) the income statement only. 
A) percentage changes in line items from comparative financial statements. 
B) the balance sheet only. 
C) the amount of individual financial statement line items as a percentage of some related total,such as total assets. 
D) the income statement only.

Question 13

Mussa Corporation reports the following data:   In vertical analysis,the cost of goods sold percentage is closest to: (Round your final answer to the nearest whole percentage)

Accepted Answer

A) 37%. 
B) 59%. 
C) 63%. 
D) 170%. 
A) 37%. 
B) 59%. 
C) 63%. 
D) 170%.

Question 14

Operating earnings should NOT be separated from items that represent isolated or nonrecurring events,such as discontinued operations.

Accepted Answer

A) True 
 B)False

Question 15

A knowledgeable investor tries to assess:

Accepted Answer

A) earnings quality. 
B) accounts receivable. 
C) accounts payable. 
D) All of the above. 
A) earnings quality. 
B) accounts receivable. 
C) accounts payable. 
D) All of the above.

Question 16

The formula for the percentage change in a financial statement line item is the current year amount:

Accepted Answer

A) divided by the base year amount. 
B) minus the base year amount divided by the base year amount. 
C) minus the base year amount divided by current year amount. 
D) added to the base year amount divided by the base year amount. 
A) divided by the base year amount. 
B) minus the base year amount divided by the base year amount. 
C) minus the base year amount divided by current year amount. 
D) added to the base year amount divided by the base year amount.

Question 17

Dynasty Incorporated has the following data available at December 31,2019:
   Prepare a balance sheet with vertical analysis of for Dynasty.Round percentages to one decimal place.

Accepted Answer

@#IMG-DLM& Computations:
Total current assets: 900

Question 18

A vertical analysis is primarily concerned with:

Accepted Answer

A) the dollar amount of the change in various financial statement line items from year to year. 
B) individual financial statement line items expressed as a percentage of a base (which represents 100%). 
C) percentage changes in the balances of line items from comparative financial statements. 
D) the change in key financial statement ratios over a specified period of time. 
A) the dollar amount of the change in various financial statement line items from year to year. 
B) individual financial statement line items expressed as a percentage of a base (which represents 100%). 
C) percentage changes in the balances of line items from comparative financial statements. 
D) the change in key financial statement ratios over a specified period of time.

Question 19

How is the cash conversion cycle computed?

Accepted Answer

A) days' inventory outstanding + days' sales outstanding - days' payable outstanding. 
B) days' inventory outstanding - days' sales outstanding - days' payable outstanding. 
C) days' inventory outstanding - days' sales outstanding + days' payable outstanding. 
D) days' inventory outstanding + days' sales outstanding + days' payable outstanding. 
A) days' inventory outstanding + days' sales outstanding - days' payable outstanding. 
B) days' inventory outstanding - days' sales outstanding - days' payable outstanding. 
C) days' inventory outstanding - days' sales outstanding + days' payable outstanding. 
D) days' inventory outstanding + days' sales outstanding + days' payable outstanding.

Question 20

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory.

Accepted Answer

A) True 
 B)False

A company's net income as a percentage of sales is 15%.Using vertical analysis,the cost of goods sold as a percentage of sales must be 85%.

Given the following data: In vertical analysis,net income would be expressed as: (Round your final answer to the nearest whole percent)

You are the CEO of Company A and you are using an industry leader (Leader Company)for benchmarking.Company A is much smaller than Leader Company in terms of total assets and total sales revenue.You should compare the:

In the Management's Discussion and Analysis section of the annual report,you will find management's explanation for trends in sales.

Declining income from operations indicates a slowdown in business activity.

Learning about what's happening in the industry,markets,general economic conditions,trends in product development,and specific company strategies puts a company's numbers in context and helps you understand why they turned out as they did.

The percentage change in any individual item shown on comparative financial statements is calculated by dividing the dollar amount of the change from the base period to the current period by:

Accounting data should paint a picture of the results of implementing a particular business strategy by a company.

How is the leverage ratio calculated?

A thorough analysis of a company begins with understanding a company's business and industry.

If a company has sales of $150 in 2018 and $225 in 2019,the percentage change from 2018 to 2019 is 50%.

The primary focus of horizontal analysis is:

Mussa Corporation reports the following data: In vertical analysis,the cost of goods sold percentage is closest to: (Round your final answer to the nearest whole percentage)

Operating earnings should NOT be separated from items that represent isolated or nonrecurring events,such as discontinued operations.

A knowledgeable investor tries to assess:

The formula for the percentage change in a financial statement line item is the current year amount:

Dynasty Incorporated has the following data available at December 31,2019: Prepare a balance sheet with vertical analysis of for Dynasty.Round percentages to one decimal place.

A vertical analysis is primarily concerned with:

How is the cash conversion cycle computed?

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Investments

Time Value of Money

Filters

Exam 12: Financial Statement Analysis

A company's net income as a percentage of sales is 15%.Using vertical analysis,the cost of goods sold as a percentage of sales must be 85%.

Given the following data: In vertical analysis,net income would be expressed as: (Round your final answer to the nearest whole percent)

You are the CEO of Company A and you are using an industry leader (Leader Company)for benchmarking.Company A is much smaller than Leader Company in terms of total assets and total sales revenue.You should compare the:

In the Management's Discussion and Analysis section of the annual report,you will find management's explanation for trends in sales.

Declining income from operations indicates a slowdown in business activity.

Learning about what's happening in the industry,markets,general economic conditions,trends in product development,and specific company strategies puts a company's numbers in context and helps you understand why they turned out as they did.

The percentage change in any individual item shown on comparative financial statements is calculated by dividing the dollar amount of the change from the base period to the current period by:

Accounting data should paint a picture of the results of implementing a particular business strategy by a company.

How is the leverage ratio calculated?

A thorough analysis of a company begins with understanding a company's business and industry.

If a company has sales of $150 in 2018 and $225 in 2019,the percentage change from 2018 to 2019 is 50%.

The primary focus of horizontal analysis is:

Mussa Corporation reports the following data: In vertical analysis,the cost of goods sold percentage is closest to: (Round your final answer to the nearest whole percentage)

Operating earnings should NOT be separated from items that represent isolated or nonrecurring events,such as discontinued operations.

A knowledgeable investor tries to assess:

The formula for the percentage change in a financial statement line item is the current year amount:

Dynasty Incorporated has the following data available at December 31,2019: Prepare a balance sheet with vertical analysis of for Dynasty.Round percentages to one decimal place.

A vertical analysis is primarily concerned with:

How is the cash conversion cycle computed?

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Investments

Time Value of Money

Filters