Question 1

A company issued additional shares of stock. Which of the following is true with regard to the effect of the stock issuance transaction on the company's ratio computations?

Accepted Answer

A) Earnings per share decreased. 
B) The debt-to-equity ratio increased. 
C) The asset turnover ratio decreased. 
D) Return on equity remained unchanged.

Question 2

Match these terms to their correct definition.
a.Accounts receivable turnover ratio
e.Net profit margin percentage
b.Cash ratio
f.Operating margin percentage
c.Gross profit percentage
g.Quick ratio
d.Inventory turnover ratio
h.Total payout ratio
-Length of time required to collect the receivable from a credit sale.

Accepted Answer

The answer of Match these terms to their correct definition.
a.Accounts...

Question 3

____________________ analysis compares a single corporation across time.

Accepted Answer

The answer of ____________________ analysis compares a single corporation across...

Question 4

When trying to predict future profits, analysts often take a top-down approach which starts with gathering economic and industry data to supplement what they are able to find out about the specific corporations they follow.

Accepted Answer

A) True 
 B)False

Question 5

The three aspects of return on equity (ROE)recognized by DuPont analysis are the net profit margin percentage, the ____________________ ratio, and leverage.

Accepted Answer

The answer of The three aspects of return on equity...

Question 6

____________________ statements highlight differences by expressing each financial statement item in percentage terms.

Accepted Answer

The answer of ____________________ statements highlight differences by expressing each...

Question 7

Select the ratio that each definition most properly satisfies.
a.Dividend yield ratio
b.Operating cash flow ratio
c.Debt-to-total assets ratio
d.Return on common equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
-The relationship between dividends and the market price of a company's stock.

Accepted Answer

The answer of Select the ratio that each definition most...

Question 8

Select the ratio that would include each amount or account in its calculation. (Choices may be used more than once.)
a.Times interest earned ratio
b.Operating cash flow ratio
c.Debt-to-equity ratio
d.Return on equity
-Total stockholders' equity

Accepted Answer

The answer of Select the ratio that would include each...

Question 9

Select the ratio that each definition most properly satisfies.
a.Dividend yield ratio
b.Operating cash flow ratio
c.Debt-to-total assets ratio
d.Return on common equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
-A measure of the ability of a company to finance current obligations from cash from operations.

Accepted Answer

The answer of Select the ratio that each definition most...

Question 10

What importance is placed on a company's stock price in the ratio analysis of a company? Explain.

Accepted Answer

The answer of What importance is placed on a company's...

Question 11

Liquidity analysis is required to

Accepted Answer

A) evaluate a company's profitability. 
B) assess a company's ability to pay its current liabilities. 
C) be reported in the financial statements for all publicly-traded companies. 
D) provide information about a company's capital structure.

Question 12

In evaluating a company's financial statements, the least useful information would be derived from a comparison of the current period data with

Accepted Answer

A) economic and industry data. 
B) another company in the same industry for the same period. 
C) the same company's data from five years ago. 
D) the same company's data from the prior year.

Question 13

What are some weaknesses of performing time series analysis alone?

Accepted Answer

The answer of What are some weaknesses of performing time...

Question 14

Information from the financial statements are provided below:
 
-Refer to Rio Imports. The operating margin percentage for 2015 is an indicator that the company has

Accepted Answer

A) experienced setbacks concerning the effectiveness of its purchasing, production, pricing, and marketing activities. 
B) increased profits by $33,000. 
C) improved profitability in relation to sales. 
D) net income that is more than it would have been if dividends of $30,000 had been paid.

Question 15

What is meant by the concept of efficiency as it relates to turnover ratios? Explain.

Accepted Answer

The answer of What is meant by the concept of...

Question 16

Refer to Ready Mix USA. Complete a common size horizontal analysis of the company's income statements. Your answers should be expressed as percentages and rounded to one decimal place. Provide a short explanation of this analysis.

Accepted Answer

The answer of Refer to Ready Mix USA. Complete a...

Question 17

Which of the following profitability ratios would be determined through a common size vertical analysis of the income statement?

Accepted Answer

A) gross profit percentage 
B) return on assets 
C) return on equity 
D) earnings per share

Question 18

For what purpose is horizontal analysis used by financial analysts?

Accepted Answer

The answer of For what purpose is horizontal analysis used...

Question 19

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Net profit margin percentage

Accepted Answer

The answer of Indicate the type of each ratio listed....

Question 20

Trend analysis is another name for ____________________ analysis.

Accepted Answer

The answer of Trend analysis is another name for ____________________...

Exam 12: Financial Statement Analysis