Question 1

The following information is available for the Marr Corporation:   Calculate the company's inventory turnover and its days' sales in inventory.

Accepted Answer

Inventory turnover = $550,000/(($81,200 + $78,800)/2) = 6.9 times
Days' sales in inventory = ($78,800/$550,000) * 365 = 52.3 days

Question 2

An advantage of common-size statements is that they reflect the dollar magnitude (size) of the different companies under analysis.

Accepted Answer

A) True 
 B)False  False

Question 3

The building blocks of financial statement analysis include (1) liquidity, (2) salability, (3) solvency, and (4) profitability.

Accepted Answer

A) True 
 B)False  False

Question 4

Current assets divided by current liabilities is the:

Accepted Answer

A) Current ratio. 
B) Quick ratio. 
C) Debt ratio. 
D) Working capital. 
E) Solvency ratio. 
A) Current ratio. 
B) Quick ratio. 
C) Debt ratio. 
D) Working capital. 
E) Solvency ratio.

Question 5

Vertical analysis is used to reveal patterns in data covering two or more successive periods.

Accepted Answer

A) True 
 B)False

Question 6

The building blocks of financial statement analysis do not include:

Accepted Answer

A) External analyst services. 
B) Solvency. 
C) Profitability. 
D) Market prospects. 
E) Liquidity and efficiency. 
A) External analyst services. 
B) Solvency. 
C) Profitability. 
D) Market prospects. 
E) Liquidity and efficiency.

Question 7

Financial reporting includes not only general purpose financial statements, but also information from SEC filings, press releases, shareholders' meetings, forecasts, management letters, auditor's reports, and Webcasts.

Accepted Answer

A) True 
 B)False

Question 8

Flaherty Corporation used data for 3 years to perform a trend analysis of its operating expenses, which were $54,305 in Year 1; $63,421 in Year 2 and $70,340 in Year 3. Using Year 1 as the base year, the operating expense trend percent (rounded to the nearest whole percent) for Year 3 is:

Accepted Answer

A) 100%. 
B) 111%. 
C) 117%. 
D) 130%. 
E) 86%. 
A) 100%. 
B) 111%. 
C) 117%. 
D) 130%. 
E) 86%.

Question 9

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

Accepted Answer

A) True 
 B)False

Question 10

A high level of expected risk suggests a low price-earnings (PE) ratio.

Accepted Answer

A) True 
 B)False

Question 11

Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

Accepted Answer

A) True 
 B)False

Question 12

To compute trend percentages the analyst should:

Accepted Answer

A) Select a base period, assign each item in the base period statement a weight of 100%, and then express financial numbers from other periods as a percent of their base period number. 
B) Subtract the analysis period number from the base period number. 
C) Subtract the base period amount from the analysis period amount, divide the result by the analysis period amount, then multiply that amount by 100. 
D) Compare amounts across industries using Dun and Bradstreet. 
E) Compare amounts to a competitor. 
A) Select a base period, assign each item in the base period statement a weight of 100%, and then express financial numbers from other periods as a percent of their base period number. 
B) Subtract the analysis period number from the base period number. 
C) Subtract the base period amount from the analysis period amount, divide the result by the analysis period amount, then multiply that amount by 100. 
D) Compare amounts across industries using Dun and Bradstreet. 
E) Compare amounts to a competitor.

Question 13

Midsomer Corp. reported current assets of $390,900 and current liabilities of $337,000 on its most recent balance sheet. The current assets consisted of $52,000 Cash; $63,000 Accounts Receivable; $87,000 Short-term Investments; $9,900 Prepaid Expenses and $179,000 of Inventory. The company's quick assets equal:

Accepted Answer

A) $115,000. 
B) $124,900. 
C) $139,000. 
D) $202,000. 
E) $211,900. 
A) $115,000. 
B) $124,900. 
C) $139,000. 
D) $202,000. 
E) $211,900.

Question 14

The four building blocks of financial analysis are (1) _____________, (2) ____________, (3) ____________ and (4) _________________.

Accepted Answer

liquidity and effici

Question 15

Net income divided by average total assets is:

Accepted Answer

A) Profit margin. 
B) Total asset turnover. 
C) Return on total assets. 
D) Days' income in assets. 
E) Current ratio. 
A) Profit margin. 
B) Total asset turnover. 
C) Return on total assets. 
D) Days' income in assets. 
E) Current ratio.

Question 16

What are the four standards for comparisons in financial analysis? Give an example of each.

Accepted Answer

The standards are intra-company comparis

Question 17

Profitability is the ability to generate positive market expectations.

Accepted Answer

A) True 
 B)False

Question 18

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

Accepted Answer

The answer of The current ratio and acid-test ratio are...

Question 19

Powers Company reported Net sales of $1,200,000 and Accounts Receivable, net of $78,500. The day's sales uncollected (rounded to whole days) is:

Accepted Answer

A) 24 days. 
B) 15 days. 
C) 4 days. 
D) 56 days. 
E) 48 days. 
A) 24 days. 
B) 15 days. 
C) 4 days. 
D) 56 days. 
E) 48 days.

Question 20

Annual cash dividends per share divided by market price per share is the:

Accepted Answer

A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share. 
A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share.

The following information is available for the Marr Corporation: Calculate the company's inventory turnover and its days' sales in inventory.

An advantage of common-size statements is that they reflect the dollar magnitude (size) of the different companies under analysis.

The building blocks of financial statement analysis include (1) liquidity, (2) salability, (3) solvency, and (4) profitability.

Current assets divided by current liabilities is the:

Vertical analysis is used to reveal patterns in data covering two or more successive periods.

The building blocks of financial statement analysis do not include:

Financial reporting includes not only general purpose financial statements, but also information from SEC filings, press releases, shareholders' meetings, forecasts, management letters, auditor's reports, and Webcasts.

Flaherty Corporation used data for 3 years to perform a trend analysis of its operating expenses, which were $54,305 in Year 1; $63,421 in Year 2 and $70,340 in Year 3. Using Year 1 as the base year, the operating expense trend percent (rounded to the nearest whole percent) for Year 3 is:

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

A high level of expected risk suggests a low price-earnings (PE) ratio.

Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

To compute trend percentages the analyst should:

The four building blocks of financial analysis are (1) _, (2) , (3) and (4) _____.

Net income divided by average total assets is:

What are the four standards for comparisons in financial analysis? Give an example of each.

Profitability is the ability to generate positive market expectations.

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

Powers Company reported Net sales of $1,200,000 and Accounts Receivable, net of $78,500. The day's sales uncollected (rounded to whole days) is:

Annual cash dividends per share divided by market price per share is the:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 13: Analyzing and Interpreting Financial Statements

The following information is available for the Marr Corporation: Calculate the company's inventory turnover and its days' sales in inventory.

An advantage of common-size statements is that they reflect the dollar magnitude (size) of the different companies under analysis.

The building blocks of financial statement analysis include (1) liquidity, (2) salability, (3) solvency, and (4) profitability.

Current assets divided by current liabilities is the:

Vertical analysis is used to reveal patterns in data covering two or more successive periods.

The building blocks of financial statement analysis do not include:

Financial reporting includes not only general purpose financial statements, but also information from SEC filings, press releases, shareholders' meetings, forecasts, management letters, auditor's reports, and Webcasts.

Flaherty Corporation used data for 3 years to perform a trend analysis of its operating expenses, which were $54,305 in Year 1; $63,421 in Year 2 and $70,340 in Year 3. Using Year 1 as the base year, the operating expense trend percent (rounded to the nearest whole percent) for Year 3 is:

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

A high level of expected risk suggests a low price-earnings (PE) ratio.

Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

To compute trend percentages the analyst should:

The four building blocks of financial analysis are (1) _____________, (2) ____________, (3) ____________ and (4) _________________.

Net income divided by average total assets is:

What are the four standards for comparisons in financial analysis? Give an example of each.

Profitability is the ability to generate positive market expectations.

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

Powers Company reported Net sales of $1,200,000 and Accounts Receivable, net of $78,500. The day's sales uncollected (rounded to whole days) is:

Annual cash dividends per share divided by market price per share is the:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

The four building blocks of financial analysis are (1) _, (2) , (3) and (4) _____.