Question 1

On a common size balance sheet what is the percentage that would be shown next to the dollar amount of current assets?

Accepted Answer

A)  100% 
B)  44% 
C)  30% 
D)  33%

Question 2

A company that has a current ratio less than one cannot cover:

Accepted Answer

A)  current liabilities with its current cash flow. 
B)  current expenses with its current sales revenue. 
C)  expenses with its current revenues. 
D)  current liabilities with its current assets.

Question 3

Which balance sheet line item has the highest percentage increase from the prior year to the current year?

Accepted Answer

A)  Inventory 
B)  Cash 
C)  Accounts receivable 
D)  Prepaid insurance

Question 4

Judging only from the ratios below, which of the following clothing wholesalers is least likely to be having cash flow problems?

Accepted Answer

A)  Company A: Receivable turnover of 5; inventory turnover of 2 
B)  Company B: Receivable turnover of 2; inventory turnover of 5 
C)  Company C: Receivable turnover of 10; inventory turnover of 10 
D)  Company D: Receivable turnover of 1; inventory turnover of 1

Question 5

Choose the appropriate letter to match the term and the definition. Not all definitions will be used.
Term
_____ Time-Series Analysis
_____ Common-Size Financial Statements
_____ Management Discussion and Analysis
_____ Price/Earnings Ratio
_____ Earnings Per Share
_____ Comprehensive Income
_____ Discontinued Operations
_____ Net Income
Definition
A) The practice of reporting accounting data in the national monetary unit.
B) A nonrecurring item associated with abandoning or selling an operation.
C) The earnings of a company after taxes.
D) An increase in an asset or a decrease in a liability that results from peripheral activities.
E) After-tax earnings adjusted for gains and losses that may disappear before they are realized.
F) A section of the annual report that can be used in interpreting the results of financial statement analysis.
G) The ratio calculated by dividing the net income by the number of common shares outstanding.
H) The ratio calculated by dividing the price of a share of stock by the earnings per share.
I) Also known as ratio analysis.
J) A nonrecurring item on the income statement that reflects gains and losses associated with extraordinary events.
K) Another name for a trend analysis.
L) The practice of reporting information in percentages rather than monetary amounts.

Accepted Answer

The answer of Choose the appropriate letter to match the...

Exam 13: Financial Statement Analysis

On a common size balance sheet what is the percentage that would be shown next to the dollar amount of current assets?

A company that has a current ratio less than one cannot cover:

Which balance sheet line item has the highest percentage increase from the prior year to the current year?

Judging only from the ratios below, which of the following clothing wholesalers is least likely to be having cash flow problems?