Question 1

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 2

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. Assets
  Liabilities and Stockholders' Equity
  Income Statement
    What is the rate earned on total assets for this company?

Accepted Answer

A)  8.1% 
B)  6.8% 
C)  10.5% 
D)  16.1% 
A)  8.1% 
B)  6.8% 
C)  10.5% 
D)  16.1%

Question 3

A company reports the following:
   Determine the (a) inventory turnover, and (b) number of days' sales in inventory. Round your answer to one decimal place.

Accepted Answer

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

Question 4

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 5

$\begin{array}{ll}
\$ 30,000 & \text { Accounts payable } \
65,000&\text { Accounts receivable } \
7,000 & \text { Acculud liabilities } \
20,000 & \text { Cash } \
40,000 & \text { Intangible assets } \
72,000 & \text { Inventory } \
100,000 & \text { Long-term investments } \
75,000 & \text { Long-term liabilities } \
36,000 & \text { Marketable securities } \
20,000 & \text { Notes payable (short-term) } \
625,000 & \text { Property, plant, and equipment } \
2,000 & \text { Prepaid expenses }
\end{array}$ Based on the above data, what is the quick ratio, rounded to one decimal point?

Accepted Answer

A)  2.4 
B)  3.4 
C)  2.1 
D)  1.5 
A)  2.4 
B)  3.4 
C)  2.1 
D)  1.5

Question 6

$\begin{array}{ll}
530,000 & \text { Accounts payable } \
65,000 & \text { Accounts receivable } \
7,000 & \text { Accrued liabilities } \
25,000 & \text { Cash } \
40,000 & \text { Intangible assets } \
72,000 & \text { Inventory } \
100,000 & \text { Long-term investments } \
75,000 & \text { Long-term liabilities } \
36,000 & \text { Marketable securities } \
20,000 & \text { Notes payable (short-term) } \
625,000 & \text { Property, plant, and equipment } \
2,000 & \text { Prepaid expenses }
\end{array}$ Based on the above data, what is the amount of working capital?

Accepted Answer

A)  $243,000 
B)  $143,000 
C)  $183,000 
D)  $69,000 
A)  $243,000 
B)  $143,000 
C)  $183,000 
D)  $69,000

Question 7

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

Accepted Answer

A) True 
 B)False

Question 8

When a company changes from one acceptable accounting method to another, the change is reported

Accepted Answer

A)  in the statement of retained earnings, as a correction to the beginning balance. 
B)  in the income statement, below income from continuing operations. 
C)  in the income statement, above income from continuing operations 
D)  through a retroactive restatement of prior period earnings. 
A)  in the statement of retained earnings, as a correction to the beginning balance. 
B)  in the income statement, below income from continuing operations. 
C)  in the income statement, above income from continuing operations 
D)  through a retroactive restatement of prior period earnings.

Question 9

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. Assets
  Liabilities and Stockholders' Equity
  Income Statement
    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 10

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 11

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

Accepted Answer

A)  a substitute for sound judgment. 
B)  useful analytical measures. 
C)  enough information for analysis, industry information is not needed. 
D)  unnecessary for analysis, but reaction is better. 
A)  a substitute for sound judgment. 
B)  useful analytical measures. 
C)  enough information for analysis, industry information is not needed. 
D)  unnecessary for analysis, but reaction is better.

Question 12

If two companies have the same current ratio, their ability to pay short-term debt is the same.

Accepted Answer

A) True 
 B)False

Question 13

The relationship of each asset item as a percent of total assets is an example of vertical analysis.

Accepted Answer

A) True 
 B)False

Question 14

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

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

Question 15

Income statement information for Lucy Company is provided below:
   Prepare a vertical analysis of the income statement for Lucy Company.

Accepted Answer

The answer of Income statement information for Lucy Company is...

Question 16

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 17

The numerator of the rate earned on total assets ratio is equal to

Accepted Answer

A)  net income 
B)  net income plus tax expense 
C)  net income plus interest expense 
D)  net income minus preferred dividends 
A)  net income 
B)  net income plus tax expense 
C)  net income plus interest expense 
D)  net income minus preferred dividends

Question 18

Under which of the following cases may a percentage change be computed?

Accepted Answer

A)  There is no amount in the base year. 
B)  There is a negative amount in the base year and a negative amount in the subsequent year. 
C)  The trend of the amounts is decreasing but all amounts are positive. 
D)  There is a negative amount in the base year and a positive amount in the subsequent year. 
A)  There is no amount in the base year. 
B)  There is a negative amount in the base year and a negative amount in the subsequent year. 
C)  The trend of the amounts is decreasing but all amounts are positive. 
D)  There is a negative amount in the base year and a positive amount in the subsequent year.

Question 19

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 dividend yield for this company? Round your answer to one decimal point.

Accepted Answer

A)  4.5% 
B)  9.0% 
C)  16.6% 
D)  22.2% 
A)  4.5% 
B)  9.0% 
C)  16.6% 
D)  22.2%

Question 20

A loss due to a discontinued operation should be reported in the income statement

Accepted Answer

A)  above income from continuing operations. 
B)  without related tax affect. 
C)  below income from continuing operations. 
D)  as an operating expense. 
A)  above income from continuing operations. 
B)  without related tax affect. 
C)  below income from continuing operations. 
D)  as an operating expense.

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

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. Assets Liabilities and Stockholders' Equity Income Statement What is the rate earned on total assets for this company?

A company reports the following: Determine the (a) inventory turnover, and (b) number of days' sales in inventory. 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.

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

When a company changes from one acceptable accounting method to another, the change is reported

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. Assets Liabilities and Stockholders' Equity Income Statement What is the price earnings ratio for this company?

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

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

If two companies have the same current ratio, their ability to pay short-term debt is the same.

The relationship of each asset item as a percent of total assets is an example of vertical analysis.

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.

Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.

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.

The numerator of the rate earned on total assets ratio is equal to

Under which of the following cases may a percentage change be computed?

A loss due to a discontinued operation should be reported in the income statement

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

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Exam 15: Financial Statement Analysis

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

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. Assets Liabilities and Stockholders' Equity Income Statement What is the rate earned on total assets for this company?

A company reports the following: Determine the (a) inventory turnover, and (b) number of days' sales in inventory. 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.

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

When a company changes from one acceptable accounting method to another, the change is reported

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. Assets Liabilities and Stockholders' Equity Income Statement What is the price earnings ratio for this company?

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

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

If two companies have the same current ratio, their ability to pay short-term debt is the same.

The relationship of each asset item as a percent of total assets is an example of vertical analysis.

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.

Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.

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.

The numerator of the rate earned on total assets ratio is equal to

Under which of the following cases may a percentage change be computed?

A loss due to a discontinued operation should be reported in the income statement

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

Filters