Question 1

In horizontal analysis,the base year is the most current year being examined.

Accepted Answer

A) True 
 B)False

Question 2

a.Indicate the effect of a purchase of merchandise on account (on credit)on each of the following items.Use "Increase," "Decrease," or "No effect" to express your answer for each,and place your answers in the spaces provided.Assume that the first two ratios exceeded 1.0 before the transaction.
  
b.Indicate the effect of a payment of an account payable on each of the following items.Assume that the first two ratios exceeded 1.0 before the transaction.Use "Increase," "Decrease," or "No effect" to express your answer for each,and place your answers in the spaces provided.

Accepted Answer

The answer of a.Indicate the effect of a purchase of...

Question 3

Liquidity ratios are an indication of a company's

Accepted Answer

A) ability to effectively employ its resources. 
B) overall debt to equity position. 
C) overall debt position. 
D) ability to pay bills when they are due and to meet unexpected needs for cash. 
A) ability to effectively employ its resources. 
B) overall debt to equity position. 
C) overall debt position. 
D) ability to pay bills when they are due and to meet unexpected needs for cash.

Question 4

The most complete financial newspaper in the United States is The Wall Street Journal.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following describes the profit margin ratio?

Accepted Answer

A) Average total assets divided by net income 
B) Net income plus income tax expense divided by average total assets 
C) Average total assets divided by net revenue 
D) Net income divided by net revenue 
A) Average total assets divided by net income 
B) Net income plus income tax expense divided by average total assets 
C) Average total assets divided by net revenue 
D) Net income divided by net revenue

Question 6

The following selected amounts were extracted from the financial statements of Alma Corporation.
 Prepare a trend analysis for net sales,cost of goods sold,and gross margin.(Round answers to the nearest tenth of 1 percent. )Use Year 1 as the base year.

Accepted Answer

The answer of The following selected amounts were extracted from...

Question 7

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 8

It is possible for horizontal analysis to indicate an increase in revenues from one year to another and a decrease in net income.

Accepted Answer

A) True 
 B)False

Question 9

Quality of earnings is affected by all of the following except

Accepted Answer

A) executive compensation. 
B) accounting methods. 
C) accounting estimates. 
D) one-time items. 
A) executive compensation. 
B) accounting methods. 
C) accounting estimates. 
D) one-time items.

Question 10

Use the following information to calculate the ratios requested below.Round answers to two decimal places.Show your work.

Accepted Answer

The answer of Use the following information to calculate the...

Question 11

Declining profitability and liquidity ratios are indications that a company may not survive.

Accepted Answer

A) True 
 B)False

Question 12

A 20 percent change in net sales will result in a 20 percent change in net income.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The price/earnings (P/E)ratio is an indication of investor confidence in a company.

Accepted Answer

A) True 
 B)False

Question 15

Using the following information reported in an annual report,prepare a horizontal analysis of the consolidated balance sheets.(Round percentage answers to one decimal place. )

Accepted Answer

The answer of Using the following information reported in an...

Question 16

The following selected amounts were extracted from the financial statements of Alfonso Corporation.
 
a.Prepare a trend analysis for net sales,gross margin,and net income using Year 1 as the base year.
b.For net sales,gross margin,and net income:
1.Calculate the percentage change from Year 1 to Year 2.
2.Calculate the percentage change from Year 2 to Year 3.
c.For each of the four years,compute the percentage relationship of gross margin to net sales and the relationship of net income to net sales.
d.Identify which requirement(s)above involve(s):
1.Horizontal analysis
2.Vertical analysis
Round all answers to the nearest tenth of 1 percent.

Accepted Answer

a.
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b.
@#IMG-DLM& @#IMG-DLM& 
c.
@#IMG-DLM& 
d.
1.

Question 17

Contrast the circumstances where horizontal analysis would be an effective analysis tool with those where common-sized analysis would be more useful.

Accepted Answer

Horizontal analysis reveals meaningful i

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

Cash flow yield is a

Accepted Answer

A) liquidity ratio. 
B) profitability ratio. 
C) long-term solvency ratio. 
D) market strength ratio. 
A) liquidity ratio. 
B) profitability ratio. 
C) long-term solvency ratio. 
D) market strength ratio.

Exam 16: Financial Statement Analysis

In horizontal analysis,the base year is the most current year being examined.

Liquidity ratios are an indication of a company's

The most complete financial newspaper in the United States is The Wall Street Journal.

Which of the following describes the profit margin ratio?

The following selected amounts were extracted from the financial statements of Alma Corporation. Prepare a trend analysis for net sales,cost of goods sold,and gross margin.(Round answers to the nearest tenth of 1 percent. )Use Year 1 as the base year.

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

It is possible for horizontal analysis to indicate an increase in revenues from one year to another and a decrease in net income.

Quality of earnings is affected by all of the following except

Use the following information to calculate the ratios requested below.Round answers to two decimal places.Show your work.

Declining profitability and liquidity ratios are indications that a company may not survive.

A 20 percent change in net sales will result in a 20 percent change in net income.

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

The price/earnings (P/E)ratio is an indication of investor confidence in a company.

Using the following information reported in an annual report,prepare a horizontal analysis of the consolidated balance sheets.(Round percentage answers to one decimal place. )

Contrast the circumstances where horizontal analysis would be an effective analysis tool with those where common-sized analysis would be more useful.

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

Cash flow yield is a

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

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

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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