Question 1

Write-downs and restructurings increase current operating income and decrease future income by shifting future costs to the future periods.

Accepted Answer

A) True 
 B)False

Question 2

Both diversified companies and conglomerates operate in a single,well-defined industry.

Accepted Answer

A) True 
 B)False

Question 3

A common measure of profitability is the

Accepted Answer

A) asset turnover. 
B) debt to equity ratio. 
C) current ratio. 
D) receivable turnover. 
A) asset turnover. 
B) debt to equity ratio. 
C) current ratio. 
D) receivable turnover.

Question 4

Form 10-QK refers to the annual report filed with the SEC.

Accepted Answer

A) True 
 B)False

Question 5

In a common-size income statement,each item is expressed as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 6

The quality of earnings refers to the substance of earnings and their sustainability into future periods.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following ratios uses the market price of a company's stock in the denominator?

Accepted Answer

A) Price/Earnings. 
B) Dividend yield 
C) Cash flow yield 
D) All of these choices. 
A) Price/Earnings. 
B) Dividend yield 
C) Cash flow yield 
D) All of these choices.

Question 8

Useful information,including details about a company's financial history,industry data,and credit ratings is available from

Accepted Answer

A) the SEC. 
B) Standard & Poor's. 
C) The Wall Street Journal. 
D) a company's website. 
A) the SEC. 
B) Standard & Poor's. 
C) The Wall Street Journal. 
D) a company's website.

Question 9

The return on assets and the asset turnover ratios are used to analyze

Accepted Answer

A) leverage. 
B) long-term solvency. 
C) profitability. 
D) liquidity. 
A) leverage. 
B) long-term solvency. 
C) profitability. 
D) liquidity.

Question 10

Which of the following is a market strength ratio?

Accepted Answer

A) Return on equity 
B) Dividend yield 
C) Debt to equity ratio 
D) Payables turnover 
A) Return on equity 
B) Dividend yield 
C) Debt to equity ratio 
D) Payables turnover

Question 11

A quick ratio that is about equal to the current ratio indicates that

Accepted Answer

A) inventories represent a large portion of current assets. 
B) the company has a low inventory turnover. 
C) inventories represent a small portion of current assets. 
D) the company has a high inventory turnover. 
A) inventories represent a large portion of current assets. 
B) the company has a low inventory turnover. 
C) inventories represent a small portion of current assets. 
D) the company has a high inventory turnover.

Question 12

As a rule of thumb,a business starts to have trouble when its current liabilities to net worth ratio exceeds 50%.

Accepted Answer

A) True 
 B)False

Question 13

The receivable turnover is useful in assessing the effectiveness of credit policies.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following situations severely limits the use of industry norms as standards of comparison?

Accepted Answer

A) The fact that little information exists on industry norms 
B) The existence of conglomerates 
C) The presentation of segmented information 
D) A downward turn in the economy 
A) The fact that little information exists on industry norms 
B) The existence of conglomerates 
C) The presentation of segmented information 
D) A downward turn in the economy

Question 15

A write-down of assets which results in a decrease in earnings may indicate that earnings will be poor in the future.

Accepted Answer

A) True 
 B)False

Question 16

The following information pertains to Patterson Corporation.Assume that all balance sheet amounts represent both average and ending figures.  
 
Patterson Corporation had 6,000 shares of common stock issued and outstanding.The market price of Patterson common stock on December 31,20x5,was $20.Patterson paid dividends of $0.90 per share during 20x5.
-What is the debt to equity ratio for this corporation? Round your answer to 1 decimal place.

Accepted Answer

A) 0.4 times 
B) 0.6 times 
C) 1.0 times 
D) 2.5 times 
A) 0.4 times 
B) 0.6 times 
C) 1.0 times 
D) 2.5 times

Question 17

Dividend yield is a liquidity ratio.

Accepted Answer

A) True 
 B)False

Question 18

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures.    
-What is the profit margin for this corporation? Round your answer to one decimal place.

Accepted Answer

A) 22.5 percent 
B) 30.0 percent 
C) 40.0 percent 
D) 53.3 percent 
A) 22.5 percent 
B) 30.0 percent 
C) 40.0 percent 
D) 53.3 percent

Question 19

The inventory turnover amount is needed to calculate the

Accepted Answer

A) days' sales uncollected. 
B) days' inventory on hand. 
C) receivables turnover. 
D) interest coverage ratio. 
A) days' sales uncollected. 
B) days' inventory on hand. 
C) receivables turnover. 
D) interest coverage ratio.

Question 20

Consistency requires

Accepted Answer

A) that the company use the same accounting procedures from period to period. 
B) that the company use the same accounting procedures as other companies in the same industry. 
C) that the company explain,in a note to the financial statements,the significant accounting policies used. 
D) All of these choices. 
A) that the company use the same accounting procedures from period to period. 
B) that the company use the same accounting procedures as other companies in the same industry. 
C) that the company explain,in a note to the financial statements,the significant accounting policies used. 
D) All of these choices.

Exam 14: Financial Statement Analysis

Write-downs and restructurings increase current operating income and decrease future income by shifting future costs to the future periods.

Both diversified companies and conglomerates operate in a single,well-defined industry.

A common measure of profitability is the

Form 10-QK refers to the annual report filed with the SEC.

In a common-size income statement,each item is expressed as a percentage of net income.

The quality of earnings refers to the substance of earnings and their sustainability into future periods.

Which of the following ratios uses the market price of a company's stock in the denominator?

Useful information,including details about a company's financial history,industry data,and credit ratings is available from

The return on assets and the asset turnover ratios are used to analyze

Which of the following is a market strength ratio?

A quick ratio that is about equal to the current ratio indicates that

As a rule of thumb,a business starts to have trouble when its current liabilities to net worth ratio exceeds 50%.

The receivable turnover is useful in assessing the effectiveness of credit policies.

Which of the following situations severely limits the use of industry norms as standards of comparison?

A write-down of assets which results in a decrease in earnings may indicate that earnings will be poor in the future.

Dividend yield is a liquidity ratio.

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures. -What is the profit margin for this corporation? Round your answer to one decimal place.

The inventory turnover amount is needed to calculate the

Consistency requires

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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