Question 1

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

Accepted Answer

A ratio is a mathematical relation betwe

Question 2

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 3

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1) ________, (2) ________, and (3) ________.

Accepted Answer

past and current performance;

Question 4

The purposes of financial statement analysis include all of the following except:

Accepted Answer

A)  Providing information to improve efficiency and effectiveness. 
B)  Providing information for managing and operating the company. 
C)  Helping external users assess performance. 
D)  Helping the board of directors monitor management's performance. 
E)  Assuring that the company will not be the subject of an IRS audit. 
A)  Providing information to improve efficiency and effectiveness. 
B)  Providing information for managing and operating the company. 
C)  Helping external users assess performance. 
D)  Helping the board of directors monitor management's performance. 
E)  Assuring that the company will not be the subject of an IRS audit.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Match between columns
                        Premises: A company's ability to generate future revenues and meet long-term obligations.
A company's ability to generate positive market expectations.
A statement where each amount is expressed as a percent of a base amount to reveal the relative importance of each financial statement item.
Examination of financial data across time.
A measure of solvency presented as the ratio of total liabilities to total equity.
The application of analytical tools to general-purpose financial statements and related data for making business decisions.
A company's ability to provide financial rewards sufficient to attract and retain capital.
A statement with amounts for two or more successive accounting periods placed in side-by-side columns, often with changes shown in dollar amounts and percentages.
The availability of resources to meet short-term obligations and to efficiently generate revenues.
The comparison of a company's financial condition and performance to a base amount.

Accepted Answer

The Answer of Liquidity and efficiency and Market prospects and is...

Question 7

The base amount for a common-size balance sheet is usually total assets.

Accepted Answer

A) True 
 B)False

Question 8

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Accepted Answer

A) True 
 B)False

Question 9

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Accepted Answer

A) True 
 B)False

Question 10

Use the following selected information from Whitman Corp. to determine the Year 1 and Year 2 common size percentages for cost of goods sold using Net sales as the base. $\begin{array}{lrr}
& \text { Year } 2 & \text { Year } 1 \
\text { Net sales } & \$ 276,200 & \$ 231,400 \
\text { Cost of goods sold } & 151,900 & 129,590 \
\text { Operating expenses } & 55,240 & 53,240 \
\text { Net earnings } & 27,820 & 19,820
\end{array}$

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 56.0% 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)  117.2% for year 2 and 100.0% for year 1. 
E)  65.1% for year 2 and 56.0% for year 1.

Question 11

The comparison of a company's financial condition and performance across time is known as ________.

Accepted Answer

The answer of The comparison of a company's financial condition...

Question 12

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

Accepted Answer

Horizontal analysis is a tool to evaluat

Question 13

The dollar change for a comparative financial statement item is calculated by:

Accepted Answer

A)  Subtracting the analysis period amount from the fair value amount. 
B)  Subtracting the base period amount from the analysis period amount. 
C)  Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
D)  Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
E)  Subtracting the base period amount from the analysis amount, then dividing the result by the base amount 
A)  Subtracting the analysis period amount from the fair value amount. 
B)  Subtracting the base period amount from the analysis period amount. 
C)  Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
D)  Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100. 
E)  Subtracting the base period amount from the analysis amount, then dividing the result by the base amount

Question 14

Comparative statements for Warmer Corporation are shown below:

Calculate trend percentages for all income statement amounts shown and comment on the results. Use Year 1 as the base year.Comment on the results.

Accepted Answer

@#IMG-DLM& During Year 2, sales declined, cost of

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Refer to the following selected financial information from Gomez Electronics. Compute the company's profit margin for Year 2. $\begin{array}{lrr}& \text { Year 2 } & \text { Year 1 } \
\text { Net sales } & \$ 478,500 & \$ 426,250 \
\text { Cost of goods sold } & 276,300 & 250,120 \
\text { Interest expense } & 9,700 & 10,700 \
\text { Net income before tax } & 67,250 & 52,680 \
\text { Net income after tax } & 46,050 & 39,900 \
\text { Total assets } & 317,100 & 288,000 \
\text { Total liabilities } & 181,400 & 167,300 \
\text { Total equity } & 135,700 & 120,700
\end{array}$

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 17

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

Accepted Answer

Vertical analysis is used to evaluate in

Question 18

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...

Question 19

The current ratio is calculated as total assets divided by current assets.

Accepted Answer

A) True 
 B)False

Question 20

The executive summary of a financial statement analysis report includes the evidential matter, assumptions, and inferences for the report.

Accepted Answer

A) True 
 B)False

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

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

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1) , (2) , and (3) .

The purposes of financial statement analysis include all of the following except:

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

The base amount for a common-size balance sheet is usually total assets.

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

The comparison of a company's financial condition and performance across time is known as ________.

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

The dollar change for a comparative financial statement item is calculated by:

Comparative statements for Warmer Corporation are shown below: Calculate trend percentages for all income statement amounts shown and comment on the results. Use Year 1 as the base year.Comment on the results.

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

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

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

The current ratio is calculated as total assets divided by current assets.

The executive summary of a financial statement analysis report includes the evidential matter, assumptions, and inferences for the report.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

Exam 13: Analysis of Financial Statements

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

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

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1) ________, (2) ________, and (3) ________.

The purposes of financial statement analysis include all of the following except:

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

The base amount for a common-size balance sheet is usually total assets.

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

The comparison of a company's financial condition and performance across time is known as ________.

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

The dollar change for a comparative financial statement item is calculated by:

Comparative statements for Warmer Corporation are shown below: Calculate trend percentages for all income statement amounts shown and comment on the results. Use Year 1 as the base year.Comment on the results.

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

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

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

The current ratio is calculated as total assets divided by current assets.

The executive summary of a financial statement analysis report includes the evidential matter, assumptions, and inferences for the report.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1) , (2) , and (3) .