Question 1

A financial statement analysis report:

Accepted Answer

A)  Enables readers to see the process and rationale of analysis. 
B)  Forces preparers to organize their reasoning and to verify the logic of analysis. 
C)  Serves as a method of communication to users. 
D)  Helps users and preparers to refine conclusions based on evidence from key building blocks. 
E)  All of these. 
A)  Enables readers to see the process and rationale of analysis. 
B)  Forces preparers to organize their reasoning and to verify the logic of analysis. 
C)  Serves as a method of communication to users. 
D)  Helps users and preparers to refine conclusions based on evidence from key building blocks. 
E)  All of these.

Question 2

Refer to the following selected financial information from Fennie's, LLC. Compute the company's acid-test ratio for Year 2.

Accepted Answer

A)  2.26. 
B)  1.98. 
C)  2.95. 
D)  3.05. 
E)  1.88. 
A)  2.26. 
B)  1.98. 
C)  2.95. 
D)  3.05. 
E)  1.88.

Question 3

The gross margin ratio, return on total assets, and basic earnings per share are all _____________ ratios.

Accepted Answer

The answer of The gross margin ratio, return on total...

Question 4

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

Accepted Answer

A)  $232,700. 
B)  $220,600. 
C)  $147,200. 
D)  $111,700. 
E)  $142,700. 
A)  $232,700. 
B)  $220,600. 
C)  $147,200. 
D)  $111,700. 
E)  $142,700.

Question 5

The average number of times a company's inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance, is the:

Accepted Answer

A)  Accounts receivable turnover. 
B)  Inventory turnover. 
C)  Days' sales uncollected. 
D)  Current ratio. 
E)  Price earnings ratio. 
A)  Accounts receivable turnover. 
B)  Inventory turnover. 
C)  Days' sales uncollected. 
D)  Current ratio. 
E)  Price earnings ratio.

Question 6

Three of the most common tools of financial analysis are:

Accepted Answer

A)  Financial reporting, ratio analysis, vertical analysis. 
B)  Ratio analysis, horizontal analysis, financial reporting. 
C)  Horizontal analysis, vertical analysis, ratio analysis. 
D)  Trend analysis, financial reporting, ratio analysis. 
E)  Vertical analysis, political analysis, horizontal analysis. 
A)  Financial reporting, ratio analysis, vertical analysis. 
B)  Ratio analysis, horizontal analysis, financial reporting. 
C)  Horizontal analysis, vertical analysis, ratio analysis. 
D)  Trend analysis, financial reporting, ratio analysis. 
E)  Vertical analysis, political analysis, horizontal analysis.

Question 7

A company's calendar-year financial data are shown below. The company had total assets of $339,000 and total equity of $144,400 for the prior year. No additional shares of common stock were issued during the year. The December 31 market price per share is $49.50. Cash dividends of $19,500 were paid during the year. Calculate the following ratios for the company:
(a) profit margin ratio.
(b) gross margin ratio.
(c) return on total assets.
(d) return on common stockholders' equity.
(e) book value per common share.
(f) basic earnings per share.
(g) price earnings ratio.
(h) dividend yield.

Accepted Answer

The answer of A company's calendar-year financial data are shown...

Question 8

Net sales divided by average total assets is the:

Accepted Answer

A)  Profit margin. 
B)  Total asset turnover. 
C)  Current ratio. 
D)  Sales return ratio. 
E)  Return on total assets. 
A)  Profit margin. 
B)  Total asset turnover. 
C)  Current ratio. 
D)  Sales return ratio. 
E)  Return on total assets.

Question 9

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

Accepted Answer

The answer of The following information is available for the...

Question 10

Current assets divided by current liabilities is the:

Accepted Answer

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

Question 11

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Accepted Answer

A) True 
 B)False

Question 12

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Accepted Answer

A)  Asset comparative statements. 
B)  Percentage comparative statements. 
C)  Common-size comparative statements. 
D)  Sales comparative statements. 
E)  General-purpose financial statements. 
A)  Asset comparative statements. 
B)  Percentage comparative statements. 
C)  Common-size comparative statements. 
D)  Sales comparative statements. 
E)  General-purpose financial statements.

Question 13

The ability to provide financial rewards sufficient to attract and retain financing is called:

Accepted Answer

A)  Liquidity and efficiency. 
B)  Solvency. 
C)  Profitability. 
D)  Market prospects. 
E)  Creditworthiness. 
A)  Liquidity and efficiency. 
B)  Solvency. 
C)  Profitability. 
D)  Market prospects. 
E)  Creditworthiness.

Question 14

Refer to the following selected financial information from Fennie's, LLC. Compute the company's days' sales uncollected for Year 2.

Accepted Answer

A)  43.9. 
B)  42.3. 
C)  46.2. 
D)  80.0. 
E)  113.3. 
A)  43.9. 
B)  42.3. 
C)  46.2. 
D)  80.0. 
E)  113.3.

Question 15

The ability to generate future revenues and meet long-term obligations is referred to as:

Accepted Answer

A)  Liquidity and efficiency. 
B)  Solvency. 
C)  Profitability. 
D)  Market prospects. 
E)  Creditworthiness. 
A)  Liquidity and efficiency. 
B)  Solvency. 
C)  Profitability. 
D)  Market prospects. 
E)  Creditworthiness.

Question 16

Dividing accounts receivable, net by net sales and multiplying the result by 365 is the:

Accepted Answer

A)  Profit margin. 
B)  Days' sales uncollected. 
C)  Accounts receivable turnover ratio. 
D)  Average accounts receivable ratio. 
E)  Current ratio. 
A)  Profit margin. 
B)  Days' sales uncollected. 
C)  Accounts receivable turnover ratio. 
D)  Average accounts receivable ratio. 
E)  Current ratio.

Question 17

The percent change is computed by subtracting the analysis period amount from the base period amount, dividing the result by the base period amount and multiplying that result by 100.

Accepted Answer

A) True 
 B)False

Question 18

General-purpose financial statements include the (1) _________________, (2) _________________, (3) ___________________________ (4) ________________________ and (5) ___________________________.

Accepted Answer

Income statement, balance shee

Question 19

The common-size percent is computed by:

Accepted Answer

A)  Dividing the analysis amount by the base amount. 
B)  Dividing the base amount by the analysis amount. 
C)  Dividing the analysis amount by the base amount and multiplying the result by 100. 
D)  Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E)  Subtracting the base amount from the analysis amount and multiplying the result by 100. 
A)  Dividing the analysis amount by the base amount. 
B)  Dividing the base amount by the analysis amount. 
C)  Dividing the analysis amount by the base amount and multiplying the result by 100. 
D)  Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E)  Subtracting the base amount from the analysis amount and multiplying the result by 100.

Question 20

Financial statement analysis lessens the need for expert judgment.

Accepted Answer

A) True 
 B)False

Exam 17: Analysis of Financial Statements

A financial statement analysis report:

Refer to the following selected financial information from Fennie's, LLC. Compute the company's acid-test ratio for Year 2.

The gross margin ratio, return on total assets, and basic earnings per share are all _____________ ratios.

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

The average number of times a company's inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance, is the:

Three of the most common tools of financial analysis are:

Net sales divided by average total assets is the:

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

Current assets divided by current liabilities is the:

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

The ability to provide financial rewards sufficient to attract and retain financing is called:

Refer to the following selected financial information from Fennie's, LLC. Compute the company's days' sales uncollected for Year 2.

The ability to generate future revenues and meet long-term obligations is referred to as:

Dividing accounts receivable, net by net sales and multiplying the result by 365 is the:

The percent change is computed by subtracting the analysis period amount from the base period amount, dividing the result by the base period amount and multiplying that result by 100.

General-purpose financial statements include the (1) _________________, (2) _________________, (3) ___________________________ (4) ________________________ and (5) ___________________________.

The common-size percent is computed by:

Financial statement analysis lessens the need for expert judgment.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters

General-purpose financial statements include the (1) _________, (2) _, (3) _ (4) and (5) _________.