Question 1

Refer to the following selected financial information from Fennie's, LLC. Compute the company's current 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 2

Use the balance sheets of Sando shown below to calculate the following ratios for 2012 (round to the hundredths):
(a) Current ratio.
(b) Acid-test ratio.
(c) Debt ratio.
(d) Equity ratio.

Accepted Answer

The answer of Use the balance sheets of Sando shown...

Question 3

For the following financial statement items, calculate trend percents using 2009 as the base year:

Accepted Answer

The answer of For the following financial statement items, calculate...

Question 4

Working capital is computed as current liabilities minus current assets.

Accepted Answer

A) True 
 B)False

Question 5

Use the following selected information from Farris, LLC to determine the Year 2 and Year 1 common size percents for cost of goods sold 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)  117.2% for Year 2 and 100.0% for Year 1. 
E)  65.1% for Year 2 and 64.6% 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)  117.2% for Year 2 and 100.0% for Year 1. 
E)  65.1% for Year 2 and 64.6% for Year 1.

Question 6

A corporation reports the following year-end balance sheet data. Calculate the following ratios:
(a) working capital
(b) acid-test ratio
(c) current ratio
(d) debt ratio
(e) equity ratio
(f) debt-to-equity ratio

Accepted Answer

The answer of A corporation reports the following year-end balance...

Question 7

Liquidity refers to the availability of resources to meet short-term cash requirements.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the following selected financial information from Hansen's, LLC. Compute the company's times interest earned for Year 2.

Accepted Answer

A)  6.9. 
B)  4.8. 
C)  5.8. 
D)  14.0. 
E)  7.9. 
A)  6.9. 
B)  4.8. 
C)  5.8. 
D)  14.0. 
E)  7.9.

Question 9

Identify and explain the four building blocks of financial statement analysis.

Accepted Answer

The four usual building blocks of financ

Question 10

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

Accepted Answer

A) True 
 B)False

Question 11

Financial reporting refers to:

Accepted Answer

A)  The application of analytical tools to general-purpose financial statements. 
B)  The communication of financial information useful for decision making. 
C)  Financial statements only. 
D)  Ratio analysis. 
E)  Profitability. 
A)  The application of analytical tools to general-purpose financial statements. 
B)  The communication of financial information useful for decision making. 
C)  Financial statements only. 
D)  Ratio analysis. 
E)  Profitability.

Question 12

Financial statement analysis may be used for personal investment decisions.

Accepted Answer

A) True 
 B)False

Question 13

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accepted Answer

A) True 
 B)False

Question 14

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Accepted Answer

A)  Inventory turnover ratio. 
B)  Profit margin. 
C)  Days' sales in inventory. 
D)  Current ratio. 
E)  Total asset turnover. 
A)  Inventory turnover ratio. 
B)  Profit margin. 
C)  Days' sales in inventory. 
D)  Current ratio. 
E)  Total asset turnover.

Question 15

Refer to the following selected financial information from Hansen's, LLC. Compute the company's return on total assets for Year 2.

Accepted Answer

A)  9.6%. 
B)  15.2%. 
C)  2.6%. 
D)  22.2%. 
E)  14.5%. 
A)  9.6%. 
B)  15.2%. 
C)  2.6%. 
D)  22.2%. 
E)  14.5%.

Question 16

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 17

Ratios, like other analysis tools, are only historically oriented.

Accepted Answer

A) True 
 B)False

Question 18

Intracompany analysis is based on comparisons with competitors.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

The standards are intracompany compariso

Question 20

The following current year information is available from a manufacturing company:   Calculate the company's accounts receivable turnover and its days' sales uncollected.

Accepted Answer

The answer of The following current year information is available...

Exam 17: Analysis of Financial Statements

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

Use the balance sheets of Sando shown below to calculate the following ratios for 2012 (round to the hundredths): (a) Current ratio. (b) Acid-test ratio. (c) Debt ratio. (d) Equity ratio.

For the following financial statement items, calculate trend percents using 2009 as the base year:

Working capital is computed as current liabilities minus current assets.

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

A corporation reports the following year-end balance sheet data. Calculate the following ratios: (a) working capital (b) acid-test ratio (c) current ratio (d) debt ratio (e) equity ratio (f) debt-to-equity ratio

Liquidity refers to the availability of resources to meet short-term cash requirements.

Refer to the following selected financial information from Hansen's, LLC. Compute the company's times interest earned for Year 2.

Identify and explain the four building blocks of financial statement analysis.

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

Financial reporting refers to:

Financial statement analysis may be used for personal investment decisions.

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Refer to the following selected financial information from Hansen's, LLC. Compute the company's return on total assets for Year 2.

Net income divided by average total assets is:

Ratios, like other analysis tools, are only historically oriented.

Intracompany analysis is based on comparisons with competitors.

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

The following current year information is available from a manufacturing company: Calculate the company's accounts receivable turnover and its days' sales uncollected.

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

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