Question 1

Evaluation of company performance can include comparison and/or assessment of:

Accepted Answer

A)  Past performance. 
B)  Current performance. 
C)  Current financial position. 
D)  Future performance and risk. 
E)  All of these. 
A)  Past performance. 
B)  Current performance. 
C)  Current financial position. 
D)  Future performance and risk. 
E)  All of these.

Question 2

Refer to the following selected financial information from Hansen's, LLC. Compute the company's profit margin for Year 2.

Accepted Answer

A)  14.1%. 
B)  11.7%. 
C)  9.6%. 
D)  16.7%. 
E)  33.9%. 
A)  14.1%. 
B)  11.7%. 
C)  9.6%. 
D)  16.7%. 
E)  33.9%.

Question 3

______________________________ applies analytical tools to general-purpose financial statements and related data for making business decisions.

Accepted Answer

Financial

Question 4

Financial statement analysis:

Accepted Answer

A)  Is the application of analytical tools to general-purpose financial statements and related data for making business decisions. 
B)  Involves transforming accounting data into useful information for decision-making. 
C)  Helps users to make better decisions. 
D)  Helps to reduce uncertainty in decision-making. 
E)  All of these. 
A)  Is the application of analytical tools to general-purpose financial statements and related data for making business decisions. 
B)  Involves transforming accounting data into useful information for decision-making. 
C)  Helps users to make better decisions. 
D)  Helps to reduce uncertainty in decision-making. 
E)  All of these.

Question 5

Industry standards for financial statement analysis:

Accepted Answer

A)  Are based on a company's prior performance. 
B)  Are set by the government. 
C)  Are set by the financial performance and condition of the company's industry. 
D)  Are based on rules of thumb. 
E)  Compare a company's income with the prior year's income. 
A)  Are based on a company's prior performance. 
B)  Are set by the government. 
C)  Are set by the financial performance and condition of the company's industry. 
D)  Are based on rules of thumb. 
E)  Compare a company's income with the prior year's income.

Question 6

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000. What is the company's return on common stockholders' equity?

Accepted Answer

The answer of A company paid cash dividends on its...

Question 7

Vertical analysis is the comparison of a company's financial condition and performance across time.

Accepted Answer

A) True 
 B)False

Question 8

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

Accepted Answer

A) True 
 B)False

Question 9

The ability to meet short-term obligations and to efficiently generate revenues 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 10

Current assets minus current liabilities is:

Accepted Answer

A)  Profit margin. 
B)  Financial leverage. 
C)  Current ratio. 
D)  Working capital. 
E)  Quick assets. 
A)  Profit margin. 
B)  Financial leverage. 
C)  Current ratio. 
D)  Working capital. 
E)  Quick assets.

Question 11

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Accepted Answer

A) True 
 B)False

Question 12

Financial information for Omega Corporation is presented below. Calculate the following ratios for 2012:
(a) Inventory turnover.
(b) Accounts receivable turnover.
(c) Return on total assets.
(d) Times interest earned.
(e) Total asset turnover.

Accepted Answer

The answer of Financial information for Omega Corporation is presented...

Question 13

Selected current year end financial information for a company is presented below. Calculate the following company ratios:
(a) Profit margin.
(b) Total asset turnover.
(c) Return on total assets.
(d) Return on common stockholders' equity (assume the company has no preferred stock).

Accepted Answer

The answer of Selected current year end financial information for...

Question 14

______________________ ratios include the price-earnings ratio and dividend yield.

Accepted Answer

The answer of ______________________ ratios include the price-earnings ratio and...

Question 15

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Accepted Answer

A) True 
 B)False

Question 16

The standards for comparisons in financial statement analysis include (1) _____________, (2) ______________, (3) _______________, and (4) _____________.

Accepted Answer

Intracompany, compet

Question 17

Profitability is the ability to generate future revenues and meet long-term obligations.

Accepted Answer

A) True 
 B)False

Question 18

Use the following selected information from Farris, LLC to determine the Year 2 and Year 1 common size percents for operating expenses using Year 1 net sales as the base.

Accepted Answer

A)  36.4% for Year 2 and 41.1% for Year 1. 
B)  55.0% for Year 2 and 56.0% for Year 1. 
C)  119.4% for Year 2 and 100.0% for Year 1. 
D)  103.8% for Year 2 and 100.0% for Year 1. 
E)  20.0% for Year 2 and 23.0% for Year 1. 
A)  36.4% for Year 2 and 41.1% for Year 1. 
B)  55.0% for Year 2 and 56.0% for Year 1. 
C)  119.4% for Year 2 and 100.0% for Year 1. 
D)  103.8% for Year 2 and 100.0% for Year 1. 
E)  20.0% for Year 2 and 23.0% for Year 1.

Question 19

A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals 7.85%.
($14,000/$178,300) x 100 = 7.85%

Accepted Answer

A) True 
 B)False

Question 20

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the sales trend percent for Year 2 is:

Accepted Answer

A)  87%. 
B)  100%. 
C)  115%. 
D)  15%. 
E)  13%. 
A)  87%. 
B)  100%. 
C)  115%. 
D)  15%. 
E)  13%.

Exam 17: Analysis of Financial Statements

Evaluation of company performance can include comparison and/or assessment of:

Refer to the following selected financial information from Hansen's, LLC. Compute the company's profit margin for Year 2.

______________________________ applies analytical tools to general-purpose financial statements and related data for making business decisions.

Financial statement analysis:

Industry standards for financial statement analysis:

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000. What is the company's return on common stockholders' equity?

Vertical analysis is the comparison of a company's financial condition and performance across time.

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

The ability to meet short-term obligations and to efficiently generate revenues is called:

Current assets minus current liabilities is:

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Financial information for Omega Corporation is presented below. Calculate the following ratios for 2012: (a) Inventory turnover. (b) Accounts receivable turnover. (c) Return on total assets. (d) Times interest earned. (e) Total asset turnover.

Selected current year end financial information for a company is presented below. Calculate the following company ratios: (a) Profit margin. (b) Total asset turnover. (c) Return on total assets. (d) Return on common stockholders' equity (assume the company has no preferred stock).

______________________ ratios include the price-earnings ratio and dividend yield.

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

The standards for comparisons in financial statement analysis include (1) _____________, (2) ______________, (3) _______________, and (4) _____________.

Profitability is the ability to generate future revenues and meet long-term obligations.

Use the following selected information from Farris, LLC to determine the Year 2 and Year 1 common size percents for operating expenses using Year 1 net sales as the base.

A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals 7.85%. ($14,000/$178,300) x 100 = 7.85%

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the sales trend percent for Year 2 is:

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

The standards for comparisons in financial statement analysis include (1) _____, (2) , (3) _, and (4) _____.