Question 1

A company has return on assets of 8%.Return on sales are 4%.The leverage ratio is 3.0.Following DuPont analysis,what is return on equity?

Accepted Answer

A) 4% 
B) 8% 
C) 24% 
D) 12% 
A) 4% 
B) 8% 
C) 24% 
D) 12%

Question 2

Financial analysis involves more than just looking at financial reports and doing some math.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following would be most helpful in the comparison of different size companies?

Accepted Answer

A) horizontal analysis 
B) comparison of their net incomes 
C) comparison of their working capital balances 
D) preparation of common-size financial statements 
A) horizontal analysis 
B) comparison of their net incomes 
C) comparison of their working capital balances 
D) preparation of common-size financial statements

Question 4

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

Accepted Answer

A) 3%. 
B) 33%. 
C) 10%. 
D) 22%. 
A) 3%. 
B) 33%. 
C) 10%. 
D) 22%.

Question 5

Trend percentages are a form of horizontal analysis that are computed only for balance sheet items.

Accepted Answer

A) True 
 B)False

Question 6

Zemanowski Company reports the following sales figures (in millions):   What is the trend percentage in 2017 if 2015 is the base year? (Round your final answer to the nearest whole percentage)

Accepted Answer

A) 109% 
B) 101% 
C) 104% 
D) 105% 
A) 109% 
B) 101% 
C) 104% 
D) 105%

Question 7

A firm's ability to pay current liabilities can be evaluated using the quick ratio and the current ratio.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) 35%. 
B) 39%. 
C) 34%. 
D) 50%. 
A) 35%. 
B) 39%. 
C) 34%. 
D) 50%.

Question 9

Marie's Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year-end balance of $580,000.Net credit sales for the year totaled $3,600,000.The average collection period of the receivables was: (Round any intermediary calculations to two decimal places and your final answer to the nearest day. )

Accepted Answer

A) 43 days. 
B) 59 days. 
C) 51 days. 
D) 8 days. 
A) 43 days. 
B) 59 days. 
C) 51 days. 
D) 8 days.

Question 10

Which of the following statements about financial ratios is FALSE?

Accepted Answer

A) When calculating return on assets,preferred dividends are subtracted from net income. 
B) When calculating return on equity,preferred dividends are subtracted from net income. 
C) When calculating the price-earnings ratio,preferred dividends are subtracted from market price per share. 
D) When calculating earnings per share,preferred dividends are subtracted from net income. 
A) When calculating return on assets,preferred dividends are subtracted from net income. 
B) When calculating return on equity,preferred dividends are subtracted from net income. 
C) When calculating the price-earnings ratio,preferred dividends are subtracted from market price per share. 
D) When calculating earnings per share,preferred dividends are subtracted from net income.

Question 11

You are using a leading competitor,Company B,for benchmarking your company,Company A.When benchmarking,the gross margin of Company A is expressed as a percentage of:

Accepted Answer

A) the net sales of Companies A and B. 
B) Company B's net sales. 
C) Company A's net income. 
D) Company A's net sales. 
A) the net sales of Companies A and B. 
B) Company B's net sales. 
C) Company A's net income. 
D) Company A's net sales.

Question 12

If a company has sales of $250 in 2019 and $225 in 2020,the percentage decrease from 2019 to 2020 is 10%.

Accepted Answer

A) True 
 B)False

Question 13

An auditors' report by independent accountants (auditors):

Accepted Answer

A) gives investors assurance that the company's financial statements conform to GAAP. 
B) ensures that the financial statements are error-free. 
C) gives investors assurance that the company's stock is a safe investment. 
D) is ultimately the responsibility of the management of the client company. 
A) gives investors assurance that the company's financial statements conform to GAAP. 
B) ensures that the financial statements are error-free. 
C) gives investors assurance that the company's stock is a safe investment. 
D) is ultimately the responsibility of the management of the client company.

Question 14

Hull Company reports the following data:   Based on the above data,what can be said about the Hull Company?

Accepted Answer

A) The company is controlling operating expenses. 
B) The company is doing better than the industry average. 
C) The company is losing control of operating expenses. 
D) The company is increasing sales over time. 
A) The company is controlling operating expenses. 
B) The company is doing better than the industry average. 
C) The company is losing control of operating expenses. 
D) The company is increasing sales over time.

Question 15

Trend analysis using income statement data is widely used for predicting the future.

Accepted Answer

A) True 
 B)False

Question 16

The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

Accepted Answer

A) leverage. 
B) rate of return on total assets. 
C) debt ratio. 
D) times-interest-earned ratio. 
A) leverage. 
B) rate of return on total assets. 
C) debt ratio. 
D) times-interest-earned ratio.

Question 17

A company can be a risky investment if:

Accepted Answer

A) cash flows have increased. 
B) receivables are being collected early. 
C) there is too much debt. 
D) inventories are selling too quickly. 
A) cash flows have increased. 
B) receivables are being collected early. 
C) there is too much debt. 
D) inventories are selling too quickly.

Question 18

Horizontal analysis highlights changes in financial statement line items over time and provides a complete picture of a business.

Accepted Answer

A) True 
 B)False

Question 19

The quick ratio reflects the company's percentage of total assets financed with debt.

Accepted Answer

A) True 
 B)False

Question 20

The leverage ratio is a component of:

Accepted Answer

A) return on assets under DuPont analysis. 
B) return on equity under DuPont analysis. 
C) return on sales under DuPont analysis. 
D) total asset turnover under DuPont analysis. 
A) return on assets under DuPont analysis. 
B) return on equity under DuPont analysis. 
C) return on sales under DuPont analysis. 
D) total asset turnover under DuPont analysis.

A company has return on assets of 8%.Return on sales are 4%.The leverage ratio is 3.0.Following DuPont analysis,what is return on equity?

Financial analysis involves more than just looking at financial reports and doing some math.

Which of the following would be most helpful in the comparison of different size companies?

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

Trend percentages are a form of horizontal analysis that are computed only for balance sheet items.

Zemanowski Company reports the following sales figures (in millions): What is the trend percentage in 2017 if 2015 is the base year? (Round your final answer to the nearest whole percentage)

A firm's ability to pay current liabilities can be evaluated using the quick ratio and the current ratio.

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

Which of the following statements about financial ratios is FALSE?

You are using a leading competitor,Company B,for benchmarking your company,Company A.When benchmarking,the gross margin of Company A is expressed as a percentage of:

If a company has sales of $250 in 2019 and $225 in 2020,the percentage decrease from 2019 to 2020 is 10%.

An auditors' report by independent accountants (auditors):

Hull Company reports the following data: Based on the above data,what can be said about the Hull Company?

Trend analysis using income statement data is widely used for predicting the future.

The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

A company can be a risky investment if:

Horizontal analysis highlights changes in financial statement line items over time and provides a complete picture of a business.

The quick ratio reflects the company's percentage of total assets financed with debt.

The leverage ratio is a component of:

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 has return on assets of 8%.Return on sales are 4%.The leverage ratio is 3.0.Following DuPont analysis,what is return on equity?

Financial analysis involves more than just looking at financial reports and doing some math.

Which of the following would be most helpful in the comparison of different size companies?

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

Trend percentages are a form of horizontal analysis that are computed only for balance sheet items.

Zemanowski Company reports the following sales figures (in millions): What is the trend percentage in 2017 if 2015 is the base year? (Round your final answer to the nearest whole percentage)

A firm's ability to pay current liabilities can be evaluated using the quick ratio and the current ratio.

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

Which of the following statements about financial ratios is FALSE?

You are using a leading competitor,Company B,for benchmarking your company,Company A.When benchmarking,the gross margin of Company A is expressed as a percentage of:

If a company has sales of $250 in 2019 and $225 in 2020,the percentage decrease from 2019 to 2020 is 10%.

An auditors' report by independent accountants (auditors):

Hull Company reports the following data: Based on the above data,what can be said about the Hull Company?

Trend analysis using income statement data is widely used for predicting the future.

The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

A company can be a risky investment if:

Horizontal analysis highlights changes in financial statement line items over time and provides a complete picture of a business.

The quick ratio reflects the company's percentage of total assets financed with debt.

The leverage ratio is a component of:

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