Question 1

The return on assets ratio

Accepted Answer

A) considers the investment made by all creditors and stockholders. 
B) is a measure of the liquidity of a company. 
C) is based on average stockholders' equity as compared to net income for the period. 
D) reflects investments made only by the creditors of a company. 
A) considers the investment made by all creditors and stockholders. 
B) is a measure of the liquidity of a company. 
C) is based on average stockholders' equity as compared to net income for the period. 
D) reflects investments made only by the creditors of a company.

Question 2

If two companies in the same industry use different methods to value inventory,this makes comparisons more difficult but not impossible.

Accepted Answer

A) True 
 B)False

Question 3

Turnover ratios differ from the current and quick ratios in that they

Accepted Answer

A) are based on working capital instead of cash. 
B) are based on a point of time instead of a period of time. 
C) are activity ratios 
D) measure the profitability of a company instead of its liquidity. 
A) are based on working capital instead of cash. 
B) are based on a point of time instead of a period of time. 
C) are activity ratios 
D) measure the profitability of a company instead of its liquidity.

Question 4

In a vertical analysis,the base,or benchmark,on which all other items in the income statement are compared is: ___________________.

Accepted Answer

The answer of In a vertical analysis,the base,or benchmark,on which...

Question 5

Trend analysis is another name for ____________________ analysis.

Accepted Answer

The answer of Trend analysis is another name for ____________________...

Question 6

A banker is analyzing a company which operates in the petroleum industry.Which of the following might be a major consideration in determining whether the company should receive a loan?

Accepted Answer

A) The petroleum industry suffers from political pressures concerning the selling price of its products. 
B) Inflation has been high for several years in a row. 
C) All companies in the petroleum industry use the same accounting principles. 
D) The company has a large amount of interest payments related to many outstanding loans. 
A) The petroleum industry suffers from political pressures concerning the selling price of its products. 
B) Inflation has been high for several years in a row. 
C) All companies in the petroleum industry use the same accounting principles. 
D) The company has a large amount of interest payments related to many outstanding loans.

Question 7

Squid Lips,Inc.wants to measure the relationship between profitability and the investment made by stockholders.Squid Lips should use the

Accepted Answer

A) return on stockholders' equity ratio. 
B) earnings per share. 
C) profit margin. 
D) statement of retained earnings. 
A) return on stockholders' equity ratio. 
B) earnings per share. 
C) profit margin. 
D) statement of retained earnings.

Question 8

Analysts trying to make investment decisions may very well ignore discontinued operations,and extraordinary items.

Accepted Answer

A) True 
 B)False

Question 9

Solvency is the company's ability to pay its current debts when they become due.

Accepted Answer

A) True 
 B)False

Question 10

In a vertical analysis of the income statement,the 100% amount is

Accepted Answer

A) Net income 
B) Gross profit 
C) Operating income 
D) Net sales 
A) Net income 
B) Gross profit 
C) Operating income 
D) Net sales

Question 11

Which of the following solvency ratios is the best measure of a company's ability to pay interest and maturing principal amounts on its long-term debt?

Accepted Answer

A) Debt-to-equity ratio 
B) Times interest earned ratio 
C) Debt service coverage ratio 
D) Earnings per share 
A) Debt-to-equity ratio 
B) Times interest earned ratio 
C) Debt service coverage ratio 
D) Earnings per share

Question 12

Which of the following items need not be reported separately at the bottom of the income statement?

Accepted Answer

A) Profitability ratios 
B) Discontinued operations 
C) Extraordinary gains and losses 
D) Cumulative effect of a change in accounting principle 
A) Profitability ratios 
B) Discontinued operations 
C) Extraordinary gains and losses 
D) Cumulative effect of a change in accounting principle

Question 13

A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I.Unusual in Nature
II.Discontinued Segment
III.Infrequent in Occurrence
IV.Nonoperating in Nature
V.Never Occurred

Accepted Answer

A) I and V 
B) III and IV 
C) I and III 
D) I,II,and III 
A) I and V 
B) III and IV 
C) I and III 
D) I,II,and III

Question 14

St.Petersburg Corporation
Use the information obtained from the comparative financial statements included in the St.Petersburg Corporation's 2012 annual report that is presented below to answer the questions that follow.All amounts are in thousands of dollars.
   Refer to the financial information for St.Petersburg Corporation.
REQUIRED:
During 2012,has St.Petersburg successfully employed favorable leverage based on the average cost of capital? What action should the company take?

Accepted Answer

The return on assets ratio is a good ind

Question 15

Discuss the common reporting characteristics of discontinued operations and extraordinary items in the financial statements.

Accepted Answer

Some companies report either or both dis

Question 16

Which of the following is least useful in evaluating a company's financial statements?

Accepted Answer

A) Comparison with government economic data for the economy as a whole 
B) Comparison with other companies in the same industry 
C) Comparison of the company's current period data with accounting data from 5 years ago 
D) Comparison of the company's current period data with that of the last year 
A) Comparison with government economic data for the economy as a whole 
B) Comparison with other companies in the same industry 
C) Comparison of the company's current period data with accounting data from 5 years ago 
D) Comparison of the company's current period data with that of the last year

Question 17

Some ratios are more useful for management,whereas others are better suited to the needs of outsiders,such as stockholders and bankers.What is an example of a ratio that is primarily suited to management use and why? What ratio is more suited to use by outsiders and why?

Accepted Answer

Most of the liquidity ratios are primari

Question 18

An example of horizontal analysis is the increase in cost of goods sold by 29% from 2011 to 2012.

Accepted Answer

A) True 
 B)False

Question 19

Paint Company Following are selected data from Paint Company's financial statements.
  Refer to the Paint Company data.
Paint's debt-to-equity ratio for 2012 is:

Accepted Answer

A) an indicator that Paint Company's ability to meet current interest payments to creditors is increasing 
B) increasing slightly from 2011 to 2012. 
C) an indicator that for every $1 of capital that stockholders provided,creditors provided $0.83. 
D) an indicator that Paint Company has relied on stockholders for funds more in 2011 than in 2012. 
A) an indicator that Paint Company's ability to meet current interest payments to creditors is increasing 
B) increasing slightly from 2011 to 2012. 
C) an indicator that for every $1 of capital that stockholders provided,creditors provided $0.83. 
D) an indicator that Paint Company has relied on stockholders for funds more in 2011 than in 2012.

Question 20

Which of the following will decrease working capital?

Accepted Answer

A) collection of accounts receivable 
B) purchase of a new computer with cash 
C) payment of salaries payable 
D) purchase of merchandise on credit 
A) collection of accounts receivable 
B) purchase of a new computer with cash 
C) payment of salaries payable 
D) purchase of merchandise on credit

The return on assets ratio

If two companies in the same industry use different methods to value inventory,this makes comparisons more difficult but not impossible.

Turnover ratios differ from the current and quick ratios in that they

In a vertical analysis,the base,or benchmark,on which all other items in the income statement are compared is: ___________________.

Trend analysis is another name for ____________________ analysis.

A banker is analyzing a company which operates in the petroleum industry.Which of the following might be a major consideration in determining whether the company should receive a loan?

Squid Lips,Inc.wants to measure the relationship between profitability and the investment made by stockholders.Squid Lips should use the

Analysts trying to make investment decisions may very well ignore discontinued operations,and extraordinary items.

Solvency is the company's ability to pay its current debts when they become due.

In a vertical analysis of the income statement,the 100% amount is

Which of the following solvency ratios is the best measure of a company's ability to pay interest and maturing principal amounts on its long-term debt?

Which of the following items need not be reported separately at the bottom of the income statement?

A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I.Unusual in Nature II.Discontinued Segment III.Infrequent in Occurrence IV.Nonoperating in Nature V.Never Occurred

Discuss the common reporting characteristics of discontinued operations and extraordinary items in the financial statements.

Which of the following is least useful in evaluating a company's financial statements?

Some ratios are more useful for management,whereas others are better suited to the needs of outsiders,such as stockholders and bankers.What is an example of a ratio that is primarily suited to management use and why? What ratio is more suited to use by outsiders and why?

An example of horizontal analysis is the increase in cost of goods sold by 29% from 2011 to 2012.

Paint Company Following are selected data from Paint Company's financial statements. Refer to the Paint Company data. Paint's debt-to-equity ratio for 2012 is:

Which of the following will decrease working capital?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International Financial Reporting Standards

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Exam 13: Financial Statement Analysis

The return on assets ratio

If two companies in the same industry use different methods to value inventory,this makes comparisons more difficult but not impossible.

Turnover ratios differ from the current and quick ratios in that they

In a vertical analysis,the base,or benchmark,on which all other items in the income statement are compared is: ___________________.

Trend analysis is another name for ____________________ analysis.

A banker is analyzing a company which operates in the petroleum industry.Which of the following might be a major consideration in determining whether the company should receive a loan?

Squid Lips,Inc.wants to measure the relationship between profitability and the investment made by stockholders.Squid Lips should use the

Analysts trying to make investment decisions may very well ignore discontinued operations,and extraordinary items.

Solvency is the company's ability to pay its current debts when they become due.

In a vertical analysis of the income statement,the 100% amount is

Which of the following solvency ratios is the best measure of a company's ability to pay interest and maturing principal amounts on its long-term debt?

Which of the following items need not be reported separately at the bottom of the income statement?

A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I.Unusual in Nature II.Discontinued Segment III.Infrequent in Occurrence IV.Nonoperating in Nature V.Never Occurred

Discuss the common reporting characteristics of discontinued operations and extraordinary items in the financial statements.

Which of the following is least useful in evaluating a company's financial statements?

Some ratios are more useful for management,whereas others are better suited to the needs of outsiders,such as stockholders and bankers.What is an example of a ratio that is primarily suited to management use and why? What ratio is more suited to use by outsiders and why?

An example of horizontal analysis is the increase in cost of goods sold by 29% from 2011 to 2012.

Paint Company Following are selected data from Paint Company's financial statements. Refer to the Paint Company data. Paint's debt-to-equity ratio for 2012 is:

Which of the following will decrease working capital?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International Financial Reporting Standards

Filters