Question 1

The financing period

Accepted Answer

A) is the time it takes to purchase inventory,sell it,and collect the sales. 
B) defines how much additional financing the company must have to support its operations. 
C) is calculated as days' sales uncollected minus days' inventory on hand minus days' payable. 
D) measures a company's short-term debt-paying ability. 
A) is the time it takes to purchase inventory,sell it,and collect the sales. 
B) defines how much additional financing the company must have to support its operations. 
C) is calculated as days' sales uncollected minus days' inventory on hand minus days' payable. 
D) measures a company's short-term debt-paying ability.

Question 2

Which of the following best describes the payables turnover?

Accepted Answer

A) Cost of goods sold/Average accounts payable 
B) Cost of goods sold +/-Change in inventory/Average accounts payable 
C) Average accounts payable/Cost of goods sold 
D) Average accounts payable/Cost of goods sold +/- Change in inventory 
A) Cost of goods sold/Average accounts payable 
B) Cost of goods sold +/-Change in inventory/Average accounts payable 
C) Average accounts payable/Cost of goods sold 
D) Average accounts payable/Cost of goods sold +/- Change in inventory

Question 3

Determining the percentage change in an item from one year to the next is a type of horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 4

The lower the current ratio,the more likely the company will be able to meet its liabilities.

Accepted Answer

A) True 
 B)False

Question 5

What is horizontal analysis,and why is it useful in performing financial performance measurement?

Accepted Answer

Horizontal analysis is the computation o

Question 6

Payables turnover measures the relative size of accounts payable.

Accepted Answer

A) True 
 B)False

Question 7

When using an index number,one sets the most recent number in a series equal to 100.

Accepted Answer

A) True 
 B)False

Question 8

In a common-size income statement,net sales is represented by 100 percent.

Accepted Answer

A) True 
 B)False

Question 9

In a common-size financial statement,a designation of 25 percent could not be given to

Accepted Answer

A) total stockholders' equity. 
B) cost of goods sold. 
C) net earnings. 
D) total assets. 
A) total stockholders' equity. 
B) cost of goods sold. 
C) net earnings. 
D) total assets.

Question 10

The number of days' payable is determined by dividing

Accepted Answer

A) the number of days in a year by the payables turnover. 
B) the number of days in a year by average accounts payable. 
C) cost of goods sold by average accounts payable. 
D) inventory by average accounts payable. 
A) the number of days in a year by the payables turnover. 
B) the number of days in a year by average accounts payable. 
C) cost of goods sold by average accounts payable. 
D) inventory by average accounts payable.

Question 11

It is in the best interests of a company to base executive compensation on multiple performance measures.

Accepted Answer

A) True 
 B)False

Question 12

Ratio analysis is useful only if the ratio states a meaningful relationship between two numbers.

Accepted Answer

A) True 
 B)False

Question 13

Inventory turnover is a measure of liquidity that focuses on the relative size of inventory.

Accepted Answer

A) True 
 B)False

Question 14

The following information pertains to Constance Corporation:
   Calculate the asset turnover ratio for 20x5.Round your answer to two decimal places.

Accepted Answer

0.35 times {$45,000

Question 15

In a common-size financial statement,which of the following is given a designation of 100 percent?

Accepted Answer

A) Cost of goods sold 
B) Total assets 
C) Total liabilities 
D) Net income 
A) Cost of goods sold 
B) Total assets 
C) Total liabilities 
D) Net income

Question 16

What is vertical analysis,and why is it useful in performing financial performance measurement?

Accepted Answer

Vertical analysis will show what percent

Question 17

Which of the following is a profitability ratio?

Accepted Answer

A) Return on equity 
B) Days' inventory on hand 
C) Price/Earnings ratio 
D) Quick ratio 
A) Return on equity 
B) Days' inventory on hand 
C) Price/Earnings ratio 
D) Quick ratio

Question 18

The following data pertain to McBride Corporation:
   
Calculate the amount of net sales reported for 20x5.Use 365 days per year.

Accepted Answer

$1,668,800 {365 @#LAT-DLM& 35

Question 19

Publicly held corporations must file annual reports with the SEC.All such reports are available

Accepted Answer

A) only to the SEC,the company's owners and management,and the company's auditors. 
B) only to other SEC companies and the issuing company's owners and management. 
C) only to the SEC,the company's management,and the company's auditors. 
D) to the general public. 
A) only to the SEC,the company's owners and management,and the company's auditors. 
B) only to other SEC companies and the issuing company's owners and management. 
C) only to the SEC,the company's management,and the company's auditors. 
D) to the general public.

Question 20

Eva Gomez is considering investing money in the common stock of Casa Corporation.She has obtained the annual report of the company and calculated the ratios presented in your text.Eva knows that her calculations are accurate,but does not know if the ratios indicate favorable or unfavorable things about the company.What three standards of comparison are available to Eva? What would each of the standards tell her about her ratios?

Accepted Answer

Three commonly used standards of compari

Exam 14: Financial Statement Analysis

The financing period

Which of the following best describes the payables turnover?

Determining the percentage change in an item from one year to the next is a type of horizontal analysis.

The lower the current ratio,the more likely the company will be able to meet its liabilities.

What is horizontal analysis,and why is it useful in performing financial performance measurement?

Payables turnover measures the relative size of accounts payable.

When using an index number,one sets the most recent number in a series equal to 100.

In a common-size income statement,net sales is represented by 100 percent.

In a common-size financial statement,a designation of 25 percent could not be given to

The number of days' payable is determined by dividing

It is in the best interests of a company to base executive compensation on multiple performance measures.

Ratio analysis is useful only if the ratio states a meaningful relationship between two numbers.

Inventory turnover is a measure of liquidity that focuses on the relative size of inventory.

The following information pertains to Constance Corporation: Calculate the asset turnover ratio for 20x5.Round your answer to two decimal places.

In a common-size financial statement,which of the following is given a designation of 100 percent?

What is vertical analysis,and why is it useful in performing financial performance measurement?

Which of the following is a profitability ratio?

The following data pertain to McBride Corporation: Calculate the amount of net sales reported for 20x5.Use 365 days per year.

Publicly held corporations must file annual reports with the SEC.All such reports are available

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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