Question 1

What is meant by the concept of "activity" as it relates to turnover ratios? Explain.

Accepted Answer

Activity means that a ratio consists of

Question 2

Which of the following ratios is the best measure in analyzing a company's ability to pay interest on long-term debt and to repay the long-term debt over several years

Accepted Answer

A) Debt-to-equity ratio 
B) Times interest earned ratio 
C) Debt service coverage ratio 
D) Acid-test ratio 
A) Debt-to-equity ratio 
B) Times interest earned ratio 
C) Debt service coverage ratio 
D) Acid-test ratio

Question 3

The Stockholders' Equity section of the balance sheet for Brompton Construction Company at the end of 2014 is as follows:

Accepted Answer

The lower portion of the 2014 income sta

Question 4

Computech Industries Below is financial data for Computech Industries' current year.
  Refer to the data for Computech Industries.
Based on this information,what is Computech's number of days' sales in receivables (assuming a 360 day year)?

Accepted Answer

A) 32.4 days 
B) 36.0 days 
C) 28.8 days 
D) 25.2 days 
A) 32.4 days 
B) 36.0 days 
C) 28.8 days 
D) 25.2 days

Question 5

The number of days' sales in inventory is the same as a company's accounting cycle.

Accepted Answer

A) True 
 B)False

Question 6

Ware Company has a return on assets of 15% and a return on common stockholders' equity of 10%.John Ware,the president of the company,has asked you to explain the reason for this difference.What causes the difference? How is the concept of financial leverage involved?

Accepted Answer

A return on stockholders' equity that is

Question 7

Because discontinued segments of a business will not be part of the company's future operations,discontinued operations are disclosed separately on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements.
REQUIRED: Why is this true? Give an example of a financial ratio that is meaningless to a service business.

Accepted Answer

Because service-oriented companies do no

Question 9

Sunshine Farm Supply Following are selected data from the financial statements of Sunshine Farm Supply:
  Refer to the data for Sunshine Farm Supply.
Which of the following would not result from a vertical analysis of its balance sheet?

Accepted Answer

A) Accounts receivable increased $22,000 or 36.7% during 2012. 
B) Accounts receivable is five times larger than Merchandise inventory in 2012. 
C) Accounts receivable is 13.3% of total assets for 2012. 
D) Merchandise inventory is 2.7% of total assets for 2012. 
A) Accounts receivable increased $22,000 or 36.7% during 2012. 
B) Accounts receivable is five times larger than Merchandise inventory in 2012. 
C) Accounts receivable is 13.3% of total assets for 2012. 
D) Merchandise inventory is 2.7% of total assets for 2012.

Question 10

Discontinued operations and extraordinary items are two components of the income statement that are reported after income from operations or are reported separately because of their unique nature.

Accepted Answer

A) True 
 B)False

Question 11

The following items appear on the balance sheet of The Piano Company at the end of 2012 and 2011:   Between 2011 and 2012

Accepted Answer

A) The Piano Company's debt-to-equity ratio and current ratio both increased. 
B) The Piano Company's debt-to-equity ratio and current ratio both decreased. 
C) The Piano Company's debt-to-equity ratio increased and its debt-to-total assets ratio decreased 
D) The Piano Company's debt-to-equity ratio decreased and its debt-to-total assets ratio increased 
A) The Piano Company's debt-to-equity ratio and current ratio both increased. 
B) The Piano Company's debt-to-equity ratio and current ratio both decreased. 
C) The Piano Company's debt-to-equity ratio increased and its debt-to-total assets ratio decreased 
D) The Piano Company's debt-to-equity ratio decreased and its debt-to-total assets ratio increased

Question 12

Because net income is on an after-tax basis,interest in the return on assets ratio must
be placed on a before-tax basis.

Accepted Answer

A) True 
 B)False

Question 13

Use the following information that was obtained from the 2012 and 2011 financial statements of Lake Company,River Corporation,and Ocean Company to answer the questions that follow.
   REQUIRED:
Compare the three companies and answer the following:

Accepted Answer

The answer of Use the following information that was obtained...

Question 14

The following information was obtained from the 2012 and 2011 financial statements
Better Books and Tenacious Texts.Assume all sales are on credit for both companies.
(in millions)

Accepted Answer

Better Boo

Question 15

___________________ statements recast all items on the statement as a percentage of a
selected item on the statement.

Accepted Answer

The answer of ___________________ statements recast all items on the...

Question 16

Trend analysis is analysis

Accepted Answer

A) of dollar changes and percentage changes over several years. 
B) in which all items are presented as a percentage of one selected item on a financial statement. 
C) in which a statistic is calculated for the relationship between two items on a single financial statement or for two items on different financial statements. 
D) of all ratios that increased or decreased over past accounting periods. 
A) of dollar changes and percentage changes over several years. 
B) in which all items are presented as a percentage of one selected item on a financial statement. 
C) in which a statistic is calculated for the relationship between two items on a single financial statement or for two items on different financial statements. 
D) of all ratios that increased or decreased over past accounting periods.

Question 17

Income statements for Maltese Corp.for the past two years are as follows:
(amounts in thousands of dollars)

Accepted Answer

The answer of Income statements for Maltese Corp.for the past...

Question 18

_____________ ratio is capable of telling the user everything there is to know about a particular company.

Accepted Answer

The answer of _____________ ratio is capable of telling the...

Question 19

Which of the following is true regarding the relationship of the current ratio to the quick ratio?

Accepted Answer

A) The current ratio is based on a more conservative measure of liquidity. 
B) Both focus on the relationship between part or all of the firm's current assets and all of its current liabilities. 
C) Both focus on the relationship between all of the firm's current assets and part or all of its current liabilities. 
D) For a company in the service industry,the current ratio and quick ratio will be significantly different. 
A) The current ratio is based on a more conservative measure of liquidity. 
B) Both focus on the relationship between part or all of the firm's current assets and all of its current liabilities. 
C) Both focus on the relationship between all of the firm's current assets and part or all of its current liabilities. 
D) For a company in the service industry,the current ratio and quick ratio will be significantly different.

Question 20

Aleve Company purchased inventory on credit.The effect of this transaction is that the

Accepted Answer

A) earnings per share decreased 
B) working capital increased 
C) debt-to-equity ratio increased 
D) earnings per share increased 
A) earnings per share decreased 
B) working capital increased 
C) debt-to-equity ratio increased 
D) earnings per share increased

What is meant by the concept of "activity" as it relates to turnover ratios? Explain.

Which of the following ratios is the best measure in analyzing a company's ability to pay interest on long-term debt and to repay the long-term debt over several years

The Stockholders' Equity section of the balance sheet for Brompton Construction Company at the end of 2014 is as follows:

Computech Industries Below is financial data for Computech Industries' current year. Refer to the data for Computech Industries. Based on this information,what is Computech's number of days' sales in receivables (assuming a 360 day year)?

The number of days' sales in inventory is the same as a company's accounting cycle.

Ware Company has a return on assets of 15% and a return on common stockholders' equity of 10%.John Ware,the president of the company,has asked you to explain the reason for this difference.What causes the difference? How is the concept of financial leverage involved?

Because discontinued segments of a business will not be part of the company's future operations,discontinued operations are disclosed separately on the income statement.

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements. REQUIRED: Why is this true? Give an example of a financial ratio that is meaningless to a service business.

Sunshine Farm Supply Following are selected data from the financial statements of Sunshine Farm Supply: Refer to the data for Sunshine Farm Supply. Which of the following would not result from a vertical analysis of its balance sheet?

Discontinued operations and extraordinary items are two components of the income statement that are reported after income from operations or are reported separately because of their unique nature.

The following items appear on the balance sheet of The Piano Company at the end of 2012 and 2011: Between 2011 and 2012

Because net income is on an after-tax basis,interest in the return on assets ratio must be placed on a before-tax basis.

Use the following information that was obtained from the 2012 and 2011 financial statements of Lake Company,River Corporation,and Ocean Company to answer the questions that follow. REQUIRED: Compare the three companies and answer the following:

The following information was obtained from the 2012 and 2011 financial statements Better Books and Tenacious Texts.Assume all sales are on credit for both companies. (in millions)

___________________ statements recast all items on the statement as a percentage of a selected item on the statement.

Trend analysis is analysis

Income statements for Maltese Corp.for the past two years are as follows: (amounts in thousands of dollars)

_____________ ratio is capable of telling the user everything there is to know about a particular company.

Which of the following is true regarding the relationship of the current ratio to the quick ratio?

Aleve Company purchased inventory on credit.The effect of this transaction is that the

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

What is meant by the concept of "activity" as it relates to turnover ratios? Explain.

Which of the following ratios is the best measure in analyzing a company's ability to pay interest on long-term debt and to repay the long-term debt over several years

The Stockholders' Equity section of the balance sheet for Brompton Construction Company at the end of 2014 is as follows:

Computech Industries Below is financial data for Computech Industries' current year. Refer to the data for Computech Industries. Based on this information,what is Computech's number of days' sales in receivables (assuming a 360 day year)?

The number of days' sales in inventory is the same as a company's accounting cycle.

Ware Company has a return on assets of 15% and a return on common stockholders' equity of 10%.John Ware,the president of the company,has asked you to explain the reason for this difference.What causes the difference? How is the concept of financial leverage involved?

Because discontinued segments of a business will not be part of the company's future operations,discontinued operations are disclosed separately on the income statement.

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements. REQUIRED: Why is this true? Give an example of a financial ratio that is meaningless to a service business.

Sunshine Farm Supply Following are selected data from the financial statements of Sunshine Farm Supply: Refer to the data for Sunshine Farm Supply. Which of the following would not result from a vertical analysis of its balance sheet?

Discontinued operations and extraordinary items are two components of the income statement that are reported after income from operations or are reported separately because of their unique nature.

The following items appear on the balance sheet of The Piano Company at the end of 2012 and 2011: Between 2011 and 2012

Because net income is on an after-tax basis,interest in the return on assets ratio must be placed on a before-tax basis.

Use the following information that was obtained from the 2012 and 2011 financial statements of Lake Company,River Corporation,and Ocean Company to answer the questions that follow. REQUIRED: Compare the three companies and answer the following:

The following information was obtained from the 2012 and 2011 financial statements Better Books and Tenacious Texts.Assume all sales are on credit for both companies. (in millions)

___________________ statements recast all items on the statement as a percentage of a selected item on the statement.

Trend analysis is analysis

Income statements for Maltese Corp.for the past two years are as follows: (amounts in thousands of dollars)

_____________ ratio is capable of telling the user everything there is to know about a particular company.

Which of the following is true regarding the relationship of the current ratio to the quick ratio?

Aleve Company purchased inventory on credit.The effect of this transaction is that the

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