Question 1

The following information is available for Taylor Company:   
Which of the following statements is correct?

Accepted Answer

A)  The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2012. 
B)  The price-earnings ratio is 5.0% and a share of common stock was selling for 5.0% more than the amount of earnings per share at the end of 2012. 
C)  The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of 2012. 
D)  The market price per share and the earnings per share are not statistically related to each other. 
A)  The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2012. 
B)  The price-earnings ratio is 5.0% and a share of common stock was selling for 5.0% more than the amount of earnings per share at the end of 2012. 
C)  The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of 2012. 
D)  The market price per share and the earnings per share are not statistically related to each other.

Question 2

The Cash and Accounts Receivable for a company are provided below:
   Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

Accepted Answer

The answer of The Cash and Accounts Receivable for a...

Question 3

Which of the following items should be classified as an extraordinary item on a corporate income statement?

Accepted Answer

A)  gain on the retirement of a bond payable 
B)  loss from land condemned for public use 
C)  loss due to an discontinued operation 
D)  selling treasury stock for more than the company paid for it 
A)  gain on the retirement of a bond payable 
B)  loss from land condemned for public use 
C)  loss due to an discontinued operation 
D)  selling treasury stock for more than the company paid for it

Question 4

A company reports the following:
   Determine the company's price-earnings ratio. Round your answer to one decimal place.

Accepted Answer

Price-earnings ratio = Market price per

Question 5

When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio, the management of the company has effectively used leverage.

Accepted Answer

A) True 
 B)False

Question 6

The dividend yield rate is equal to the dividends per share divided by the par value per share of common stock.

Accepted Answer

A) True 
 B)False

Question 7

When computing the rate earned on total common stockholders' equity, preferred stock dividends are subtracted from net income.

Accepted Answer

A) True 
 B)False

Question 8

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

Accepted Answer

A) True 
 B)False

Question 9

A loss on disposal of a segment would be reported in the income statement as a(n)

Accepted Answer

A)  administrative expense 
B)  other expense 
C)  deduction from income from continuing operations 
D)  selling expense 
A)  administrative expense 
B)  other expense 
C)  deduction from income from continuing operations 
D)  selling expense

Question 10

The following items are reported on a company's balance sheet:
   Determine the (a) current ratio, and (b) quick ratio. Round your answer to one decimal place.

Accepted Answer

The answer of The following items are reported on a...

Question 11

Based on the above data, what is the amount of working capital?

Accepted Answer

A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000 
A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000

Question 12

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

Accepted Answer

A) True 
 B)False

Question 13

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Accepted Answer

A) True 
 B)False

Question 14

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

Accepted Answer

When percentages are utilized rather tha

Question 15

A company reports the following:
   Determine the company's earnings per share on common stock.

Accepted Answer

The answer of A company reports the following:
  ...

Question 16

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

Accepted Answer

A) True 
 B)False

Question 17

The balance sheets at the end of each of the first two years of operations indicate the following:   If net income is $115,000 and interest expense is $30,000 for 2012, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (Round intermediate calculation to two decimal place and final answers to one decimal place)?

Accepted Answer

A)  16.9 
B)  12.1 
C)  14.4 
D)  13.3 
A)  16.9 
B)  12.1 
C)  14.4 
D)  13.3

Question 18

In horizontal analysis, the current year is the base year.

Accepted Answer

A) True 
 B)False

Question 19

The following information is available for Dorman Company:   
Which of the following statements is correct?

Accepted Answer

A)  The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks. 
B)  The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments. 
C)  The dividend yield is 16.7%, which is of interest to bondholders. 
D)  The dividend yield is 16.7% which is an important measure of solvency. 
A)  The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks. 
B)  The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments. 
C)  The dividend yield is 16.7%, which is of interest to bondholders. 
D)  The dividend yield is 16.7% which is an important measure of solvency.

Question 20

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

Accepted Answer

A) True 
 B)False

Exam 15: Financial Statement Analysis

The following information is available for Taylor Company: Which of the following statements is correct?

The Cash and Accounts Receivable for a company are provided below: Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

Which of the following items should be classified as an extraordinary item on a corporate income statement?

A company reports the following: Determine the company's price-earnings ratio. Round your answer to one decimal place.

When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio, the management of the company has effectively used leverage.

The dividend yield rate is equal to the dividends per share divided by the par value per share of common stock.

When computing the rate earned on total common stockholders' equity, preferred stock dividends are subtracted from net income.

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

A loss on disposal of a segment would be reported in the income statement as a(n)

The following items are reported on a company's balance sheet: Determine the (a) current ratio, and (b) quick ratio. Round your answer to one decimal place.

Based on the above data, what is the amount of working capital?

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

A company reports the following: Determine the company's earnings per share on common stock.

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

In horizontal analysis, the current year is the base year.

The following information is available for Dorman Company: Which of the following statements is correct?

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

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

Filters