Question 1

Szidon Company reports the following data:   Using benchmarking,what can be said about Szidon Company?

Accepted Answer

A) Szidon is inferior to the key competitor because the key competitor's net income percentage is higher. 
B) Szidon is superior to the key competitor because net income is higher. 
C) There is not enough information to make any conclusions. 
D) There is conflicting information so no conclusions can be reached. 
A) Szidon is inferior to the key competitor because the key competitor's net income percentage is higher. 
B) Szidon is superior to the key competitor because net income is higher. 
C) There is not enough information to make any conclusions. 
D) There is conflicting information so no conclusions can be reached.

Question 2

The balance sheet at December 31,2019 for Zumba Company follows:
   Additional information follows:
1.Net income for the year ended December 31,2019 is $2,020.
2.Cost of goods sold for the year ended December 31,2019 is $4,400.
3.Inventory on January 1,2019 is $1,800.
4.Accounts Receivable,net on January 1,2019 are $4,400.
5.Total assets on January 1,2019 are $20,000.
6.Net credit sales for the year ended December 31,2019 are $14,600.
7.Net income before interest and taxes for the year ended December 31,2019 is $4,800.
8.Interest expense for the year ended December 31,2019 is $550.
9.Total stockholders' equity on January 1,2019 is $3,500.
Compute the following ratios:
1.Current ratio
2.Quick ratio
3.Accounts receivable turnover
4.Days' inventory outstanding
5.Times interest earned
6.Return on assets
7.Return on equity

Accepted Answer

1.Current ratio = $7,900 ÷ $4,000 = 1.98

Question 3

To stockholders,the larger the net income,the greater the likelihood of:

Accepted Answer

A) dividends. 
B) the company will purchase treasury stock. 
C) the stock price decreasing. 
D) all of the above. 
A) dividends. 
B) the company will purchase treasury stock. 
C) the stock price decreasing. 
D) all of the above.

Question 4

MD&A stands for:

Accepted Answer

A) Management's Discussion and Analysis. 
B) Management's Decisions and Analysis. 
C) Marketing Discussion and Analysis. 
D) Marketing Decisions and Analysis. 
A) Management's Discussion and Analysis. 
B) Management's Decisions and Analysis. 
C) Marketing Discussion and Analysis. 
D) Marketing Decisions and Analysis.

Question 5

Wilhelm Company's gross profit percentages for the past 3 years are:   Based on the above data,what can be said about the Wilhelm Company?

Accepted Answer

A) The sales volume is decreasing. 
B) The company is decreasing the income tax expense. 
C) The company is controlling operating expenses. 
D) The company is controlling cost of goods sold. 
A) The sales volume is decreasing. 
B) The company is decreasing the income tax expense. 
C) The company is controlling operating expenses. 
D) The company is controlling cost of goods sold.

Question 6

Operating earnings are earnings from:

Accepted Answer

A) interest revenue. 
B) the company's core business. 
C) dividend revenue. 
D) all of the above. 
A) interest revenue. 
B) the company's core business. 
C) dividend revenue. 
D) all of the above.

Question 7

Benchmarking common size variables against a key competitor provides meaningful information only if the companies are similar in size.

Accepted Answer

A) True 
 B)False

Question 8

It is ________ and ________ to sell or buy shares of a company on the basis of information not available to the general public

Accepted Answer

A) lawful;ethical 
B) risky;unlawful 
C) risky;unethical 
D) unlawful;unethical 
A) lawful;ethical 
B) risky;unlawful 
C) risky;unethical 
D) unlawful;unethical

Question 9

Which of the following is typically used as the base in a vertical analysis of an income statement?

Accepted Answer

A) gross profit 
B) operating income 
C) net income 
D) net sales 
A) gross profit 
B) operating income 
C) net income 
D) net sales

Question 10

A measure of a company's ability to collect cash from credit customers is the:

Accepted Answer

A) accounts receivable turnover. 
B) days' payable outstanding. 
C) inventory turnover. 
D) cash conversion cycle. 
A) accounts receivable turnover. 
B) days' payable outstanding. 
C) inventory turnover. 
D) cash conversion cycle.

Question 11

An important component of earnings quality is the conservative recognition of net revenues.

Accepted Answer

A) True 
 B)False

Question 12

Reimer Company reports the following data:   When evaluating the results of operations,what can be said about Reimer Company?

Accepted Answer

A) Using vertical analysis,the company's profitability declined in 2018. 
B) Using horizontal analysis,the company's profitability declined in 2018. 
C) Using vertical analysis,the company's profitability declined in 2019. 
D) Using horizontal analysis,the company's profitability declined in 2019. 
A) Using vertical analysis,the company's profitability declined in 2018. 
B) Using horizontal analysis,the company's profitability declined in 2018. 
C) Using vertical analysis,the company's profitability declined in 2019. 
D) Using horizontal analysis,the company's profitability declined in 2019.

Question 13

A company's business section of the annual report provides vital information about the company's products,its marketing and promotion,sales and distribution strategies,product design and development,manufacturing and quality assurance,and inventory management.

Accepted Answer

A) True 
 B)False

Question 14

Trend percentages are a form of horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 15

In performing vertical analysis,the base for operating expenses is:

Accepted Answer

A) net sales. 
B) gross profit. 
C) net income. 
D) operating income. 
A) net sales. 
B) gross profit. 
C) net income. 
D) operating income.

Question 16

The description section of a company's business in an annual report does NOT generally include information about:

Accepted Answer

A) income taxes. 
B) the company's products. 
C) sales and distribution strategies. 
D) product design and development. 
A) income taxes. 
B) the company's products. 
C) sales and distribution strategies. 
D) product design and development.

Question 17

The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

Accepted Answer

A) True 
 B)False

Question 18

The amount of a company's net income earned for each share of its outstanding common stock is termed the:

Accepted Answer

A) return on equity. 
B) price/earnings ratio. 
C) earnings per share. 
D) dividend yield. 
A) return on equity. 
B) price/earnings ratio. 
C) earnings per share. 
D) dividend yield.

Question 19

Bryanwood Company reports the following data:   Based on the above information,what can be said about the company's business strategy?

Accepted Answer

A) The company has lost control of operating expenses. 
B) The company has reduced cost of goods sold in total dollar amount. 
C) The company has successfully undertaken some cost-cutting measures for operating expenses. 
D) The company has fewer sales in 2019 than 2018. 
A) The company has lost control of operating expenses. 
B) The company has reduced cost of goods sold in total dollar amount. 
C) The company has successfully undertaken some cost-cutting measures for operating expenses. 
D) The company has fewer sales in 2019 than 2018.

Question 20

Financial analysis helps mainly to identify the risks of various stocks and then to:

Accepted Answer

A) make selling decisions. 
B) manage the risk. 
C) make buying decisions. 
D) determine ratios. 
A) make selling decisions. 
B) manage the risk. 
C) make buying decisions. 
D) determine ratios.

Szidon Company reports the following data: Using benchmarking,what can be said about Szidon Company?

To stockholders,the larger the net income,the greater the likelihood of:

MD&A stands for:

Wilhelm Company's gross profit percentages for the past 3 years are: Based on the above data,what can be said about the Wilhelm Company?

Operating earnings are earnings from:

Benchmarking common size variables against a key competitor provides meaningful information only if the companies are similar in size.

It is and to sell or buy shares of a company on the basis of information not available to the general public

Which of the following is typically used as the base in a vertical analysis of an income statement?

A measure of a company's ability to collect cash from credit customers is the:

An important component of earnings quality is the conservative recognition of net revenues.

Reimer Company reports the following data: When evaluating the results of operations,what can be said about Reimer Company?

A company's business section of the annual report provides vital information about the company's products,its marketing and promotion,sales and distribution strategies,product design and development,manufacturing and quality assurance,and inventory management.

Trend percentages are a form of horizontal analysis.

In performing vertical analysis,the base for operating expenses is:

The description section of a company's business in an annual report does NOT generally include information about:

The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

The amount of a company's net income earned for each share of its outstanding common stock is termed the:

Bryanwood Company reports the following data: Based on the above information,what can be said about the company's business strategy?

Financial analysis helps mainly to identify the risks of various stocks and then to:

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

Szidon Company reports the following data: Using benchmarking,what can be said about Szidon Company?

To stockholders,the larger the net income,the greater the likelihood of:

MD&A stands for:

Wilhelm Company's gross profit percentages for the past 3 years are: Based on the above data,what can be said about the Wilhelm Company?

Operating earnings are earnings from:

Benchmarking common size variables against a key competitor provides meaningful information only if the companies are similar in size.

It is ________ and ________ to sell or buy shares of a company on the basis of information not available to the general public

Which of the following is typically used as the base in a vertical analysis of an income statement?

A measure of a company's ability to collect cash from credit customers is the:

An important component of earnings quality is the conservative recognition of net revenues.

Reimer Company reports the following data: When evaluating the results of operations,what can be said about Reimer Company?

A company's business section of the annual report provides vital information about the company's products,its marketing and promotion,sales and distribution strategies,product design and development,manufacturing and quality assurance,and inventory management.

Trend percentages are a form of horizontal analysis.

In performing vertical analysis,the base for operating expenses is:

The description section of a company's business in an annual report does NOT generally include information about:

The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

The amount of a company's net income earned for each share of its outstanding common stock is termed the:

Bryanwood Company reports the following data: Based on the above information,what can be said about the company's business strategy?

Financial analysis helps mainly to identify the risks of various stocks and then to:

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

It is and to sell or buy shares of a company on the basis of information not available to the general public