Question 1

The most recent period in a horizontal analysis is called the __________ period.

Accepted Answer

The answer of The most recent period in a horizontal...

Question 2

In computing trend percentages, the most recent year amounts become the base and are always set to 100%.

Accepted Answer

A) True 
 B)False

Question 3

If management wishes to determine the delinquency of charge customers, they could use the:

Accepted Answer

A)  rate of return on total assets. 
B)  rate of return on equity. 
C)  accounts receivable turnover. 
D)  quick ratio. 
E)  current ratio.

Question 4

Other income (such as rental income) and other expenses (such as interest expense) are listed immediately after:

Accepted Answer

A)  gross profit. 
B)  operating expenses. 
C)  operating income. 
D)  income tax expense. 
E)  profit.

Question 5

Determining the percentage changes in line items on financial statements for two consecutive years is called __________ analysis.

Accepted Answer

The answer of Determining the percentage changes in line items...

Question 6

A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments; and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The company's quick ratio is __________.

Accepted Answer

The answer of A company has $56,000 in cash; $12,000...

Question 7

What type of application is required per IFRS and ASPE when changing from the application of one principle to another?

Accepted Answer

The answer of What type of application is required per...

Question 8

Comparing your company with a leading company in the same category of business is called __________.

Accepted Answer

The answer of Comparing your company with a leading company...

Question 9

Which analysis deals with the percentage of changes in certain items over a period of years?

Accepted Answer

The answer of Which analysis deals with the percentage of...

Question 10

To determine the ability of a company to service debt, you would calculate the debt ratio.

Accepted Answer

A) True 
 B)False

Question 11

Which ratio measures the earnings of a company on each sales dollar?

Accepted Answer

The answer of Which ratio measures the earnings of a...

Question 12

Statements that are often used to compare similar businesses are called:

Accepted Answer

The answer of Statements that are often used to compare...

Question 13

Inventory turnover would be highest for which of the following?

Accepted Answer

A)  Home builder 
B)  Grocery store 
C)  Car dealership 
D)  Heavy equipment dealer 
E)  Plane manufacturer

Question 14

A distinguishable part of a business that is subject to a different set of risks and returns than other parts of the business is called a __________.

Accepted Answer

The answer of A distinguishable part of a business that...

Question 15

Common-size statements use the same percentages that are computed during a __________ analysis, but no dollar amounts are shown.

Accepted Answer

The answer of Common-size statements use the same percentages that...

Question 16

Rick's has a cash balance of $80,000; short-term investments of $20,000; net receivables of $60,000; and inventory of $450,000. Current liabilities total $200,000. Ricks' acid test (quick ratio) is within __________.

Accepted Answer

The answer of Rick's has a cash balance of $80,000;...

Question 17

Interest expense was $10,000; income tax expense was $20,000; and net income after taxes is $60,000. The number of times interest was earned is __________.

Accepted Answer

The answer of Interest expense was $10,000; income tax expense...

Question 18

According to the Risk Management Association, the debt ratio for most companies ranges from 0.57 - 0.67.

Accepted Answer

A) True 
 B)False

Question 19

Predictions about a company's future earnings can best be inferred from the:

Accepted Answer

A)  cumulative effect of changes in accounting principles section. 
B)  discontinued operations section. 
C)  continuing operations section. 
D)  extraordinary items section. 
E)  earnings per share.

Question 20

A liquidity ratio is defined as the ability to meet short-term obligations with current assets.

Accepted Answer

A) True 
 B)False

Exam 12: Financial Statement Analysis

The most recent period in a horizontal analysis is called the __________ period.

In computing trend percentages, the most recent year amounts become the base and are always set to 100%.

If management wishes to determine the delinquency of charge customers, they could use the:

Other income (such as rental income) and other expenses (such as interest expense) are listed immediately after:

Determining the percentage changes in line items on financial statements for two consecutive years is called __________ analysis.

A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments; and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The company's quick ratio is __________.

What type of application is required per IFRS and ASPE when changing from the application of one principle to another?

Comparing your company with a leading company in the same category of business is called __________.

Which analysis deals with the percentage of changes in certain items over a period of years?

To determine the ability of a company to service debt, you would calculate the debt ratio.

Which ratio measures the earnings of a company on each sales dollar?

Statements that are often used to compare similar businesses are called:

Inventory turnover would be highest for which of the following?

A distinguishable part of a business that is subject to a different set of risks and returns than other parts of the business is called a __________.

Common-size statements use the same percentages that are computed during a __________ analysis, but no dollar amounts are shown.

Rick's has a cash balance of $80,000; short-term investments of $20,000; net receivables of $60,000; and inventory of $450,000. Current liabilities total $200,000. Ricks' acid test (quick ratio) is within __________.

Interest expense was $10,000; income tax expense was $20,000; and net income after taxes is $60,000. The number of times interest was earned is __________.

According to the Risk Management Association, the debt ratio for most companies ranges from 0.57 - 0.67.

Predictions about a company's future earnings can best be inferred from the:

A liquidity ratio is defined as the ability to meet short-term obligations with current assets.