Question 1

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 2

In a common-sized income statement, each item is expressed as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  7.3 
B)  2.5 
C)  14.6 
D)  25 
A)  7.3 
B)  2.5 
C)  14.6 
D)  25

Question 4

Which of the following measures a company's ability to pay its current liabilities?

Accepted Answer

A)  earnings per share 
B)  inventory turnover 
C)  current ratio 
D)  number of times interest charges earned 
A)  earnings per share 
B)  inventory turnover 
C)  current ratio 
D)  number of times interest charges earned

Question 5

One reason that a common-size statement is a useful tool in financial analysis is that it enables the user to

Accepted Answer

A)  judge the relative potential of two companies of similar size in different industries. 
B)  determine which companies in a single industry are of the same value. 
C)  determine which companies in a single industry are of the same size. 
D)  make a better comparison of two companies of different sizes in the same industry. 
A)  judge the relative potential of two companies of similar size in different industries. 
B)  determine which companies in a single industry are of the same value. 
C)  determine which companies in a single industry are of the same size. 
D)  make a better comparison of two companies of different sizes in the same industry.

Question 6

Assume the following sales data for a company:   What is the percentage increase in sales from 2014 to 2015?

Accepted Answer

A)  100% 
B)  65% 
C)  165% 
D)  60.1% 
A)  100% 
B)  65% 
C)  165% 
D)  60.1%

Question 7

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

Accepted Answer

A) True 
 B)False

Question 10

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. Assets
  Liabilities and Stockholders' Equity
  Income Statement
    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 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

Accepted Answer

A)  ratio of fixed assets to long-term liabilities 
B)  ratio of net sales to assets 
C)  number of days' sales in receivables 
D)  rate earned on stockholders' equity 
A)  ratio of fixed assets to long-term liabilities 
B)  ratio of net sales to assets 
C)  number of days' sales in receivables 
D)  rate earned on stockholders' equity

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Comparative information taken from the Koda Company financial statements is shown below:
   Instructions
Using horizontal analysis, show the percentage change from 2011 to 2012 with 2011 as the base year.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 15

A company reports the following:
   Determine the (a) rate earned on stockholders' equity, and (b) rate earned on common stockholders' equity. Round your answer to one decimal place.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 16

If a company has issued only one class of stock, the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 17

The following data are taken from the financial statements:

Accepted Answer

(a)
 @#IMG-DLM&_TB20

Question 18

A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are typically included in the Management's Discussion and Analysis in annual reports except:

Accepted Answer

A)  explanations of any significant changes between the current and prior years' financial statements. 
B)  management's assessment of liquidity. 
C)  journal entries. 
D)  off-balance-sheet arrangements 
A)  explanations of any significant changes between the current and prior years' financial statements. 
B)  management's assessment of liquidity. 
C)  journal entries. 
D)  off-balance-sheet arrangements

Question 20

Current position analysis indicates a company's ability to liquidate current liabilities.

Accepted Answer

A) True 
 B)False

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

In a common-sized income statement, each item is expressed as a percentage of net income.

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

Which of the following measures a company's ability to pay its current liabilities?

One reason that a common-size statement is a useful tool in financial analysis is that it enables the user to

Assume the following sales data for a company: What is the percentage increase in sales from 2014 to 2015?

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

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.

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

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

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

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

Comparative information taken from the Koda Company financial statements is shown below: Instructions Using horizontal analysis, show the percentage change from 2011 to 2012 with 2011 as the base year.

A company reports the following: Determine the (a) rate earned on stockholders' equity, and (b) rate earned on common stockholders' equity. Round your answer to one decimal place.

If a company has issued only one class of stock, the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

The following data are taken from the financial statements:

A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors.

All of the following are typically included in the Management's Discussion and Analysis in annual reports except:

Current position analysis indicates a company's ability to liquidate current liabilities.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Filters

Exam 17: Financial Statement Analysis

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

In a common-sized income statement, each item is expressed as a percentage of net income.

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

Which of the following measures a company's ability to pay its current liabilities?

One reason that a common-size statement is a useful tool in financial analysis is that it enables the user to

Assume the following sales data for a company: What is the percentage increase in sales from 2014 to 2015?

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

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.

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

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

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

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

Comparative information taken from the Koda Company financial statements is shown below: Instructions Using horizontal analysis, show the percentage change from 2011 to 2012 with 2011 as the base year.

A company reports the following: Determine the (a) rate earned on stockholders' equity, and (b) rate earned on common stockholders' equity. Round your answer to one decimal place.

If a company has issued only one class of stock, the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

The following data are taken from the financial statements:

A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors.

All of the following are typically included in the Management's Discussion and Analysis in annual reports except:

Current position analysis indicates a company's ability to liquidate current liabilities.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Filters