Question 1

A financial statement analysis report does not include:

Accepted Answer

A) An auditor statement. 
B) An analysis overview. 
C) Evidential matter. 
D) Qualitative and quantitative key factors. 
E) Inferences such as forecasts.

Question 2

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

Accepted Answer

A) 0.65 times. 
B) 14.3 times. 
C) 28.6 times. 
D) 15.3 times. 
E) 16.3 times.

Question 3

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.

Accepted Answer

A) True 
 B)False

Question 4

Use the following selected information from Wheeler,LLC to determine the 2015 and 2014 common size percentages for operating expenses using Net sales as the base.

Accepted Answer

A) 36.4% for 2015 and 41.1% for 2014. 
B) 55.0% for 2015 and 56.0% for 2014. 
C) 23.9% for 2015 and 23.0% for 2014. 
D) 103.8% for 2015 and 100.0% for 2014. 
E) 20.0% for 2015 and 23.0% for 2014.

Question 5

A high level of expected risk suggests a low price-earnings (PE)ratio.

Accepted Answer

A) True 
 B)False

Question 6

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

A) True 
 B)False

Question 7

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 8

____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

The answer of ____________ is a method of analysis used...

Question 9

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 10

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 11

Comparative statements for Warmer Corporation are shown below:  Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2014 as the base year.Comment on the results.

Accepted Answer

The answer of Comparative statements for Warmer Corporation are shown...

Question 12

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet.Its common-size percent for cash equals:

Accepted Answer

A) 17.1%. 
B) 58.6%. 
C) 100%. 
D) 5.86%. 
E) 1707%.

Question 13

Dividing Accounts receivable,net by Net sales and multiplying the result by 365 is the:

Accepted Answer

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

Question 14

Refer to the following selected financial information from Marston Company.Compute the company's days' sales uncollected for Year 2.

Accepted Answer

A) 43.9. 
B) 43.7. 
C) 46.2. 
D) 85.4. 
E) 42.7.

Question 15

Refer to the following selected financial information from Frankle Corp.Compute the company's current ratio.

Accepted Answer

A) 6.44. 
B) 2.84. 
C) 6.27. 
D) 3.60. 
E) 1.44.

Question 16

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

Accepted Answer

A) 1.93%. 
B) 2.14%. 
C) 4.67%. 
D) 5.41%. 
E) 18.50%.

Question 17

The common-size percent is computed by:

Accepted Answer

A) Dividing the analysis amount by the base amount. 
B) Dividing the base amount by the analysis amount. 
C) Dividing the analysis amount by the base amount and multiplying the result by 100. 
D) Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E) Subtracting the base amount from the analysis amount and multiplying the result by 100.

Question 18

The building blocks of financial statement analysis do not include:

Accepted Answer

A) External analyst services. 
B) Solvency. 
C) Profitability. 
D) Market prospects. 
E) Liquidity and efficiency.

Question 19

Standards for comparison are not generally necessary when making judgments about a company's performance.

Accepted Answer

A) True 
 B)False

Question 20

One purpose of financial statement analysis for internal users is to provide strategic information to improve company efficiency and effectiveness in providing products and services.

Accepted Answer

A) True 
 B)False

Exam 17: Analysis of Financial Statements

A financial statement analysis report does not include:

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.

Use the following selected information from Wheeler,LLC to determine the 2015 and 2014 common size percentages for operating expenses using Net sales as the base.

A high level of expected risk suggests a low price-earnings (PE)ratio.

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

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

____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

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

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.

Comparative statements for Warmer Corporation are shown below: Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2014 as the base year.Comment on the results.

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet.Its common-size percent for cash equals:

Dividing Accounts receivable,net by Net sales and multiplying the result by 365 is the:

Refer to the following selected financial information from Marston Company.Compute the company's days' sales uncollected for Year 2.

Refer to the following selected financial information from Frankle Corp.Compute the company's current ratio.

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

The common-size percent is computed by:

The building blocks of financial statement analysis do not include:

Standards for comparison are not generally necessary when making judgments about a company's performance.

One purpose of financial statement analysis for internal users is to provide strategic information to improve company efficiency and effectiveness in providing products and services.