Question 1

A company reports the following:
   Determine the number of times interest charges are earned. Round your answer to one decimal place.

Accepted Answer

Number of times interest charges are ear

Question 2

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.  
 What is the rate earned on common stockholders' equity for this company? Round your answer to one decimal point.

Accepted Answer

A)  6.8% 
B)  13.3% 
C)  16.7% 
D)  23.3% 
A)  6.8% 
B)  13.3% 
C)  16.7% 
D)  23.3%

Question 3

Short-term creditors are typically most interested in assessing

Accepted Answer

A)  marketability. 
B)  profitability. 
C)  operating results. 
D)  solvency. 
A)  marketability. 
B)  profitability. 
C)  operating results. 
D)  solvency.

Question 4

In computing the ratio of net sales to assets, long-term investments are excluded from average total assets.

Accepted Answer

A) True 
 B)False

Question 5

Comparable financial statements are designed to compare the financial statements of two or more corporations.

Accepted Answer

A) True 
 B)False

Question 6

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.

Accepted Answer

A) True 
 B)False

Question 7

A clean audit opinion is the same as a qualified audit opinion.

Accepted Answer

A) True 
 B)False

Question 8

The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as

Accepted Answer

A)  solvency and leverage 
B)  solvency and profitability 
C)  solvency and liquidity 
D)  solvency and equity 
A)  solvency and leverage 
B)  solvency and profitability 
C)  solvency and liquidity 
D)  solvency and equity

Question 9

The following data are taken from the balance sheet at the end of the current year. Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Present figures used in your computations. Round ratios to the nearest tenth.

Accepted Answer

The answer of The following data are taken from the...

Question 10

The number of times interest expense is earned is computed as

Accepted Answer

A)  net income plus interest expense, divided by interest expense 
B)  income before income tax plus interest expense, divided by interest expense 
C)  net income divided by interest expense 
D)  income before income tax divided by interest expense 
A)  net income plus interest expense, divided by interest expense 
B)  income before income tax plus interest expense, divided by interest expense 
C)  net income divided by interest expense 
D)  income before income tax divided by interest expense

Question 11

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

Accepted Answer

A) True 
 B)False

Question 12

Income statement information for Lucy Company is provided below:   Using vertical analysis of the income statement for Lucy Company, determine the gross profit margin.

Accepted Answer

A)  100% 
B)  70% 
C)  40% 
D)  60% 
A)  100% 
B)  70% 
C)  40% 
D)  60%

Question 13

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales, a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

Accepted Answer

A) True 
 B)False

Question 14

Based on the following data for the current year, what is the number of days' sales in inventory?

Accepted Answer

A)  51.2 
B)  44.4 
C)  6.5 
D)  7.5 
A)  51.2 
B)  44.4 
C)  6.5 
D)  7.5

Question 15

Revenue and expense data for Martinez Company are as follows:
     Round percentage to one decimal place.

Accepted Answer

The answer of Revenue and expense data for Martinez Company...

Question 16

In the vertical analysis of an income statement, each item is generally stated as a percentage of total assets.

Accepted Answer

A) True 
 B)False

Question 17

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Accepted Answer

A)  vertical analysis 
B)  horizontal analysis 
C)  liquidity analysis 
D)  solvency analysis 
A)  vertical analysis 
B)  horizontal analysis 
C)  liquidity analysis 
D)  solvency analysis

Question 18

The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.  What is the price earnings ratio for this company?

Accepted Answer

A)  6.0 times 
B)  4.2 times 
C)  8.0 times 
D)  9.6 times 
A)  6.0 times 
B)  4.2 times 
C)  8.0 times 
D)  9.6 times

Question 19

In a common size balance sheet, the 100% figure is:

Accepted Answer

A)  total property, plant and equipment. 
B)  total current assets. 
C)  total liabilities. 
D)  total assets. 
A)  total property, plant and equipment. 
B)  total current assets. 
C)  total liabilities. 
D)  total assets.

Question 20

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.  
 What is the rate earned on total assets for this company? Round your answer to one decimal point.

Accepted Answer

A)  8.5% 
B)  6.8% 
C)  10.3% 
D)  13.3% 
A)  8.5% 
B)  6.8% 
C)  10.3% 
D)  13.3%

Exam 15: Financial Statement Analysis

A company reports the following: Determine the number of times interest charges are earned. Round your answer to one decimal place.

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the rate earned on common stockholders' equity for this company? Round your answer to one decimal point.

Short-term creditors are typically most interested in assessing

In computing the ratio of net sales to assets, long-term investments are excluded from average total assets.

Comparable financial statements are designed to compare the financial statements of two or more corporations.

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.

A clean audit opinion is the same as a qualified audit opinion.

The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as

The following data are taken from the balance sheet at the end of the current year. Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Present figures used in your computations. Round ratios to the nearest tenth.

The number of times interest expense is earned is computed as

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

Income statement information for Lucy Company is provided below: Using vertical analysis of the income statement for Lucy Company, determine the gross profit margin.

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales, a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

Based on the following data for the current year, what is the number of days' sales in inventory?

Revenue and expense data for Martinez Company are as follows: Round percentage to one decimal place.

In the vertical analysis of an income statement, each item is generally stated as a percentage of total assets.

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the price earnings ratio for this company?

In a common size balance sheet, the 100% figure is:

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the rate earned on total assets for this company? Round your answer to one decimal point.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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