Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Crowne Cottages, Inc. has current assets of $44,000, long-term assets of $250,900, current liabilities of $42,600, and long-term debt of $156,700. Crowne's debt ratio is: (Round your final answer to two decimal places, X.XX%.)

Accepted Answer

A) 62.46%. 
B) 67.58%. 
C) 53.14%. 
D) 79.43%.

Question 3

When a company sells off part of the business, this would be reported on the Income Statement:

Accepted Answer

A) as a retrospective application. 
B) in the discontinued operations section. 
C) in the continuing operations section. 
D) in the other income (expense)section.

Question 4

What is the return on equity if sales are $130,000, net income is $25,700, beginning Stockholders' Equity is $93,000, and ending common Stockholders' Equity is $87,000? (Round your final answer to two decimal places, X.XX%)

Accepted Answer

A) 72.22% 
B) 27.63% 
C) 29.54% 
D) 28.56%

Question 5

Earnings per share and dividends per share are indicators of a company's ability to reward stockholders for the use of their money.

Accepted Answer

A) True 
 B)False

Question 6

If Crane Legal Supply's net sales increased from $42,000 to $84,000 and its operating expenses increased from $28,000 to $49,000, the vertical analysis based on net sales would show the following for operating expenses for the two periods: (Round your final answer to the nearest percentage.)

Accepted Answer

A) 67% and 58%. 
B) 58% and 67%. 
C) 150% and 171%. 
D) 171% and 150%.

Question 7

If total assets are $5000, what is the common-size figure of Cash, assuming that Cash has a balance of $2400? (Round your final answer to the nearest percentage.)

Accepted Answer

A) 208% 
B) 100% 
C) 48% 
D) 52%

Question 8

The base amounts for a vertical analysis are net income and total equity.

Accepted Answer

A) True 
 B)False

Question 9

For vertical analysis purposes, the base item on the Income Statement is:

Accepted Answer

A) net income. 
B) net sales. 
C) total expenses. 
D) gross profit.

Question 10

The ratio of dividends to the average number of common shares outstanding is:

Accepted Answer

A) earnings per share. 
B) dividend payout ratio. 
C) dividends per share. 
D) dividend yield.

Question 11

Caesar Coffee Company reported the following for 2016: 
What is the dividend yield for Caesar Coffee Company? (Round your final answer to two decimal places, X.XX%.)

Accepted Answer

A) 26.69% 
B) 11.04% 
C) 37.73% 
D) 41.38%

Question 12

The competitive environment of a business describes how a business competes for critical resources.

Accepted Answer

A) True 
 B)False

Question 13

The formula for determining the percentage change in an account from one year to the next year is [(amount in later period - amount in earlier period)/ amount in earlier period] times 100.

Accepted Answer

A) True 
 B)False

Question 14

Spirit's Signs reported Net Sales of $261,000, Cost of Goods Sold of $109,500, Operating Expenses of $62,400, and Income Tax Expense of 21,500. Spirit's net income percentage was: (Round your final answer to two decimal places, X.XX%.)

Accepted Answer

A) 34.14%. 
B) 41.95%. 
C) 58.05%. 
D) 25.9%.

Question 15

A company with an Accounts Receivable turnover of four means that the company collects its receivables approximately every ________ days.

Accepted Answer

A)  30 
B)  60 
C)  90 
D) 120

Question 16

Gains and losses on plant, property, and equipment are reported on the Income Statement:

Accepted Answer

A) as a retrospective application. 
B) in the discontinued operations section. 
C) in the continuing operations section. 
D) in the financing section.

Question 17

After income from continuing operations, the next section on an Income Statement is:

Accepted Answer

A) earnings per share data. 
B) discontinued operations. 
C) continuing operations. 
D) other income (expense).

Question 18

Sugar's Candy Company reported the following for 2016: 
What is the price earnings ratio for Sugar's Candy Company? (Round your final answer to two decimal places.)

Accepted Answer

A) 9.51 
B) 0.16 
C) 2.48 
D) 3.84

Question 19

Financial analysis is used to predict the future of a business.

Accepted Answer

A) True 
 B)False

Question 20

Inventory turnover would most likely be highest for which of the following?

Accepted Answer

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

Exam 12: Financial Statement Analysis

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

Crowne Cottages, Inc. has current assets of $44,000, long-term assets of $250,900, current liabilities of $42,600, and long-term debt of $156,700. Crowne's debt ratio is: (Round your final answer to two decimal places, X.XX%.)

When a company sells off part of the business, this would be reported on the Income Statement:

What is the return on equity if sales are $130,000, net income is $25,700, beginning Stockholders' Equity is $93,000, and ending common Stockholders' Equity is $87,000? (Round your final answer to two decimal places, X.XX%)

Earnings per share and dividends per share are indicators of a company's ability to reward stockholders for the use of their money.

If Crane Legal Supply's net sales increased from $42,000 to $84,000 and its operating expenses increased from $28,000 to $49,000, the vertical analysis based on net sales would show the following for operating expenses for the two periods: (Round your final answer to the nearest percentage.)

If total assets are $5000, what is the common-size figure of Cash, assuming that Cash has a balance of $2400? (Round your final answer to the nearest percentage.)

The base amounts for a vertical analysis are net income and total equity.

For vertical analysis purposes, the base item on the Income Statement is:

The ratio of dividends to the average number of common shares outstanding is:

Caesar Coffee Company reported the following for 2016: What is the dividend yield for Caesar Coffee Company? (Round your final answer to two decimal places, X.XX%.)

The competitive environment of a business describes how a business competes for critical resources.

The formula for determining the percentage change in an account from one year to the next year is [(amount in later period - amount in earlier period)/ amount in earlier period] times 100.

Spirit's Signs reported Net Sales of $261,000, Cost of Goods Sold of $109,500, Operating Expenses of $62,400, and Income Tax Expense of 21,500. Spirit's net income percentage was: (Round your final answer to two decimal places, X.XX%.)

A company with an Accounts Receivable turnover of four means that the company collects its receivables approximately every ________ days.

Gains and losses on plant, property, and equipment are reported on the Income Statement:

After income from continuing operations, the next section on an Income Statement is:

Sugar's Candy Company reported the following for 2016: What is the price earnings ratio for Sugar's Candy Company? (Round your final answer to two decimal places.)

Financial analysis is used to predict the future of a business.

Inventory turnover would most likely be highest for which of the following?