Question 1

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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

Accepted Answer

($120,000

Question 4

Financial statement analysis lessens the need for expert judgment.

Accepted Answer

A) True 
 B)False

Question 5

The current year-end balance sheet data for a company are shown below. Calculate the company's:
(a) working capital.
(b) current ratio.
(c) acid-test ratio.

Accepted Answer

The answer of The current year-end balance sheet data for...

Question 6

General standards of comparisons include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 7

A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is the:

Accepted Answer

A)  Acid-test ratio. 
B)  Merchandise turnover. 
C)  Price earnings ratio. 
D)  Accounts receivable turnover. 
E)  Profit margin ratio. 
A)  Acid-test ratio. 
B)  Merchandise turnover. 
C)  Price earnings ratio. 
D)  Accounts receivable turnover. 
E)  Profit margin ratio.

Question 8

The comparative balance sheet for Golden Co. is shown below. Express the balance sheet in common-size percents.

Accepted Answer

The answer of The comparative balance sheet for Golden Co....

Question 9

Describe ratio analysis including its purpose, application, and interpretation.

Accepted Answer

A ratio is a mathematical relation betwe

Question 10

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 11

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

Accepted Answer

Days' sales in inven

Question 12

Financial statement analysis may be used for personal investment decisions.

Accepted Answer

A) True 
 B)False

Question 13

The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

Accepted Answer

A) True 
 B)False

Question 14

One purpose of financial statement analysis for internal users is to provide information helpful in improving the company's efficiency and effectiveness in providing products and services.

Accepted Answer

A) True 
 B)False

Question 15

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 16

A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%.
$0.75/$64.75 = 1.16%

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

Income statement, balance shee

Question 18

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 19

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 20

The measurement of key relations among financial statement items is known as:

Accepted Answer

A)  Financial reporting. 
B)  Horizontal analysis. 
C)  Investment analysis. 
D)  Ratio analysis. 
E)  Risk analysis. 
A)  Financial reporting. 
B)  Horizontal analysis. 
C)  Investment analysis. 
D)  Ratio analysis. 
E)  Risk analysis.

Exam 17: Analysis of Financial Statements

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Current assets divided by current liabilities is the:

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

Financial statement analysis lessens the need for expert judgment.

The current year-end balance sheet data for a company are shown below. Calculate the company's: (a) working capital. (b) current ratio. (c) acid-test ratio.

General standards of comparisons include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is the:

The comparative balance sheet for Golden Co. is shown below. Express the balance sheet in common-size percents.

Describe ratio analysis including its purpose, application, and interpretation.

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

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

Financial statement analysis may be used for personal investment decisions.

The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

One purpose of financial statement analysis for internal users is to provide information helpful in improving the company's efficiency and effectiveness in providing products and services.

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.

A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%. $0.75/$64.75 = 1.16%

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

Net income divided by average total assets is:

A financial statement analysis report:

The measurement of key relations among financial statement items is known as:

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

Filters

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