Question 1

Three of the most common tools of financial analysis include horizontal analysis, vertical analysis, and ratio analysis.

Accepted Answer

A) True 
 B)False

Question 2

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 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) debt ratio
(b) equity ratio
(c) debt-to-equity ratio
(d) times interest earned
(e) total asset turnover

Accepted Answer

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

Question 3

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 4

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

Accepted Answer

A) True 
 B)False

Question 5

Comparative calendar year financial data for a company are shown below. Calculate the following ratios for 2012:
(a) return on total assets.
(b) return on ordinary shareholders' equity.

Accepted Answer

The answer of Comparative calendar year financial data for a...

Question 6

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 7

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.

Question 8

A good financial report does not link interpretations and conclusions of analysis with the underlying information.

Accepted Answer

A) True 
 B)False

Question 9

_______________ are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

Accepted Answer

Comparativ

Question 10

The debt ratio, the equity ratio, pledged assets to secured liabilities, and times interest earned are all ___________________ ratios.

Accepted Answer

The answer of The debt ratio, the equity ratio, pledged...

Question 11

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 12

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 13

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Accepted Answer

A) True 
 B)False

Question 14

Describe the purpose of vertical financial statement analysis and how it is applied.

Accepted Answer

Vertical financial statement analysis is

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Net sales divided by average accounts receivable, net is the:

Accepted Answer

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

Question 17

The return on total assets can be calculated as profit margin times total asset turnover.

Accepted Answer

A) True 
 B)False

Question 18

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 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 ordinary shareholders'equity.
(e) basic earnings per share.
(f) price earnings ratio.
(g) dividend yield.

Accepted Answer

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

Question 19

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 20

Calculate the percent increases for each of the following selected balance sheet items.

Accepted Answer

The answer of Calculate the percent increases for each of...

Exam 17: Analysis of Financial Statements

Three of the most common tools of financial analysis include horizontal analysis, vertical analysis, and ratio analysis.

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

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

Comparative calendar year financial data for a company are shown below. Calculate the following ratios for 2012: (a) return on total assets. (b) return on ordinary shareholders' equity.

Financial reporting refers to:

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

A good financial report does not link interpretations and conclusions of analysis with the underlying information.

_______________ are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

The debt ratio, the equity ratio, pledged assets to secured liabilities, and times interest earned are all ___________________ ratios.

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

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

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Describe the purpose of vertical financial statement analysis and how it is applied.

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

Net sales divided by average accounts receivable, net is the:

The return on total assets can be calculated as profit margin times total asset turnover.

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.

Calculate the percent increases for each of the following selected balance sheet items.

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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

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

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