Question 1

Which of the following describes the return on assets ratio?

Accepted Answer

A) Average total assets divided by sales 
B) Net sales divided by net income 
C) Net income divided by average total assets 
D) Average total assets divided by net income 
A) Average total assets divided by sales 
B) Net sales divided by net income 
C) Net income divided by average total assets 
D) Average total assets divided by net income

Question 2

Profitability is the ability to pay bills when due and to meet unexpected needs for cash.

Accepted Answer

A) True 
 B)False

Question 3

The use of rule-of-thumb measures is superior to comparison of financial measures or ratios of the same company over a period of time.

Accepted Answer

A) True 
 B)False

Question 4

Companies file their quarterly reports with the SEC on Form 8-Q.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

Vertical analysis will show what percent

Question 7

A low receivable turnover indicates that

Accepted Answer

A) few customers are defaulting on their debts. 
B) a large proportion of the company's sales are on credit. 
C) the company's inventory is moving very quickly. 
D) customers are making payments slowly. 
A) few customers are defaulting on their debts. 
B) a large proportion of the company's sales are on credit. 
C) the company's inventory is moving very quickly. 
D) customers are making payments slowly.

Question 8

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.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A "big bath"

Accepted Answer

A) often occurs in years when there is a change in management. 
B) occurs in the current year so management can show improved results in future years. 
C) is often an indication of poor management decisions in the past. 
D) All of these choices. 
A) often occurs in years when there is a change in management. 
B) occurs in the current year so management can show improved results in future years. 
C) is often an indication of poor management decisions in the past. 
D) All of these choices.

Question 11

Companies in the same industry are not required to use the same methods to value inventory and to depreciate similar assets.

Accepted Answer

A) True 
 B)False

Question 12

In a common-size balance sheet,total liabilities are represented by 100 percent.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following companys would be required to files its Form 10-K electronically?

Accepted Answer

A) A privately-held corporation with 1,500 shareholders. 
B) A municipality with $20 million in assets. 
C) A public company with 520 shareholders. 
D) All of these choices. 
A) A privately-held corporation with 1,500 shareholders. 
B) A municipality with $20 million in assets. 
C) A public company with 520 shareholders. 
D) All of these choices.

Question 14

Prepare a trend analysis of the following data using 20x4 as the base year.Place your answers in the chart provided.Comment on the trend.

Accepted Answer

The answer of Prepare a trend analysis of the following...

Question 15

Dividend yield is a liquidity ratio.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Interim financial statements report data for a period of less than one year.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 16: Financial Statement Analysis

Which of the following describes the return on assets ratio?

Profitability is the ability to pay bills when due and to meet unexpected needs for cash.

The use of rule-of-thumb measures is superior to comparison of financial measures or ratios of the same company over a period of time.

Companies file their quarterly reports with the SEC on Form 8-Q.

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

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

A low receivable turnover indicates that

Consistency requires

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

A "big bath"

Companies in the same industry are not required to use the same methods to value inventory and to depreciate similar assets.

In a common-size balance sheet,total liabilities are represented by 100 percent.

Which of the following companys would be required to files its Form 10-K electronically?

Prepare a trend analysis of the following data using 20x4 as the base year.Place your answers in the chart provided.Comment on the trend.

Dividend yield is a liquidity ratio.

A common measure of profitability is the

Interim financial statements report data for a period of less than one year.

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

Which of the following is a market strength ratio?

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

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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