Question 1

Match each ratio that follows to its use items a-h.Items may be used more than once.
-rate earned on total assets

Accepted Answer

A)  assess the profitability of the assets
B)  assess the effectiveness in the use of assets
C)  indicate the ability to meet currently maturing obligations
D)  indicate the margin of safety to creditors
E)  indicate instant debt-paying abilityF) assess the profitability of the investment by common stockholdersG) indicate future earnings prospectsH) indicate the extent to which earnings are being distributed to common stockholdersI) C) and D)
J) C) and H)

Question 2

In a vertical analysis, the base for cost of goods sold is

Accepted Answer

A)  total selling expenses
B)  sales
C)  total expenses
D)  gross profitE) None of the above
F) B) and C)

Question 3

Comparative information taken from the Friction Company's financial statements is shown below:
  Using horizontal analysis, show the percentage change and direction increase or decrease from Year 1 to Year 2 with Year 1 as the base year.

Accepted Answer

a Base year is zero.Not possible to comp...

Question 4

Based on the above data, what is the amount of working capital?

Accepted Answer

A)  $213,000
B)  $113,000
C)  $153,000
D)  $39,000E) B) and C)
F) None of the above

Question 5

Match each definition that follows with the term a-h it defines.
-focuses on a company's ability to generate net income

Accepted Answer

A)  discontinued operations
B)  extraordinary items
C)  change from one generally accepted accounting principle to another
D)  horizontal analysis
E)  vertical analysisF) common-sized financial statementsG) current position analysisH) profitability analysisI) D) and F)
J) All of the above

Question 6

The denominator of the rate of return on total assets ratio is the average total assets.

Accepted Answer

A) True 
 B)False

Question 7

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

A)  for one period of time
B)  over a period of time
C)  on a certain date
D)  as it may appear in the futureE) B) and C)
F) B) and D)

Question 8

Short-term creditors are typically most interested in analyzing a company's

Accepted Answer

A)  marketability
B)  profitability
C)  operating results
D)  solvencyE) B) and C)
F) A) and D)

Question 9

The particular analytical measures chosen to analyze a company may be influenced by all of the following except

Accepted Answer

A)  industry type
B)  capital structure
C)  diversity of business operations
D)  product quality or service effectivenessE) B) and D)
F) B) and C)

Question 10

The analysis of increases and decreases in the amount and percentage of comparative financial statement items is referred to as horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 11

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

Accepted Answer

A) True 
 B)False

Question 12

All of the following are typically included in the management's discussion and analysis in annual reports except

Accepted Answer

A)  explanations of any significant changes between the current and prior years' financial statements
B)  management's assessment of liquidity
C)  journal entries
D)  off-balance-sheet arrangementsE) A) and B)
F) B) and D)

Question 13

A company reports the following:
Sales $2,400,000
Average total assets 1,500,000
Determine the ratio of sales to assets.Round your answer to one decimal place.

Accepted Answer

Ratio of sales to assets = Sal...

Question 14

Which of the following items should be classified as an extraordinary item on an income statement?

Accepted Answer

A)  gain on the retirement of a bond payable
B)  loss from hurricane damage in Iowa
C)  loss due to a discontinued operation in Colorado
D)  selling treasury stock for more than the company paid for itE) C) and D)
F) A) and B)

Question 15

Match each ratio that follows to its use items a-h.Items may be used more than once.
-ratio of liabilities to stockholders' equity

Accepted Answer

A)  assess the profitability of the assets
B)  assess the effectiveness in the use of assets
C)  indicate the ability to meet currently maturing obligations
D)  indicate the margin of safety to creditors
E)  indicate instant debt-paying abilityF) assess the profitability of the investment by common stockholdersG) indicate future earnings prospectsH) indicate the extent to which earnings are being distributed to common stockholdersI) B) and D)
J) None of the above

Question 16

Based on the above data, what is the amount of quick assets?

Accepted Answer

A)  $168,000
B)  $96,000
C)  $60,000
D)  $61,000E) A) and D)
F) All of the above

Question 17

Match each ratio that follows to its use items a-h.Items may be used more than once.
-price-earnings P/E ratio

Accepted Answer

A)  assess the profitability of the assets
B)  assess the effectiveness in the use of assets
C)  indicate the ability to meet currently maturing obligations
D)  indicate the margin of safety to creditors
E)  indicate instant debt-paying abilityF) assess the profitability of the investment by common stockholdersG) indicate future earnings prospectsH) indicate the extent to which earnings are being distributed to common stockholdersI) G) and H)
J) C) and D)

Question 18

A company reports the following:

Accepted Answer

A)   
B)   
C)   
D)   E) B) and C)
F) None of the above

Question 19

What is the ratio of sales to total assets for Diane Company?

Accepted Answer

A)  1.00
B)  2.94
C)  0.18
D)  0.34E) A) and B)
F) None of the above

Question 20

From the following data for Norton Company for the year ended December 31, prepare a multiple-step income statement.Show earnings per share for the following: income from continuing operations, loss on discontinued operations less applicable income tax, income before extraordinary item, extraordinary item less applicable income tax, and net income.

Accepted Answer

The answer of From the following data for Norton Company...

Exam 14: Financial Statement Analysis

The particular analytical measures chosen to analyze a company may be influenced by all of the following except

Correct Answer
verified

All of the following are typically included in the management's discussion and analysis in annual reports except

Correct Answer
verified

Comparative information taken from the Friction Company's financial statements is shown below: Using horizontal analysis, show the percentage change and direction increase or decrease from Year 1 to Year 2 with Year 1 as the base year.

Correct Answer
verified
a Base year is zero.Not possible to comp...
View Answer

Short-term creditors are typically most interested in analyzing a company's

Correct Answer
verified

What is the ratio of sales to total assets for Diane Company?

Correct Answer
verified

Match each ratio that follows to its use items a-h.Items may be used more than once. -ratio of liabilities to stockholders' equity

Correct Answer
verified

Match each definition that follows with the term a-h it defines. -focuses on a company's ability to generate net income

Correct Answer
verified

A company reports the following: Sales $2,400,000 Average total assets 1,500,000 Determine the ratio of sales to assets.Round your answer to one decimal place.

Correct Answer
verified
Ratio of sales to assets = Sal...
View Answer

Correct Answer
verified

The denominator of the rate of return on total assets ratio is the average total assets.

Correct Answer
verified

A company reports the following:

Correct Answer
verified

Based on the above data, what is the amount of working capital?

Correct Answer
verified

Which of the following items should be classified as an extraordinary item on an income statement?

Correct Answer
verified

The analysis of increases and decreases in the amount and percentage of comparative financial statement items is referred to as horizontal analysis.

Correct Answer
verified

Based on the above data, what is the amount of quick assets?

Correct Answer
verified

Match each ratio that follows to its use items a-h.Items may be used more than once. -price-earnings P/E ratio

Correct Answer
verified

Match each ratio that follows to its use items a-h.Items may be used more than once. -rate earned on total assets

Correct Answer
verified

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

Correct Answer
verified

Horizontal analysis is a technique for evaluating financial statement data

Correct Answer
verified

In a vertical analysis, the base for cost of goods sold is

Correct Answer
verified

Exam 14: Financial Statement Analysis

The particular analytical measures chosen to analyze a company may be influenced by all of the following except

Correct AnswerverifiedShow Answer

All of the following are typically included in the management's discussion and analysis in annual reports except

Correct AnswerverifiedShow Answer

Comparative information taken from the Friction Company's financial statements is shown below: Using horizontal analysis, show the percentage change and direction increase or decrease from Year 1 to Year 2 with Year 1 as the base year.

Correct Answerverifieda Base year is zero.Not possible to comp...View AnswerShow Answer

Short-term creditors are typically most interested in analyzing a company's

Correct AnswerverifiedShow Answer

What is the ratio of sales to total assets for Diane Company?

Correct AnswerverifiedShow Answer

Match each ratio that follows to its use items a-h.Items may be used more than once. -ratio of liabilities to stockholders' equity

Correct AnswerverifiedShow Answer

Match each definition that follows with the term a-h it defines. -focuses on a company's ability to generate net income

Correct AnswerverifiedShow Answer

A company reports the following: Sales $2,400,000 Average total assets 1,500,000 Determine the ratio of sales to assets.Round your answer to one decimal place.

Correct AnswerverifiedRatio of sales to assets = Sal...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The denominator of the rate of return on total assets ratio is the average total assets.

Correct AnswerverifiedShow Answer

A company reports the following:

Correct AnswerverifiedShow Answer

Based on the above data, what is the amount of working capital?

Correct AnswerverifiedShow Answer

Which of the following items should be classified as an extraordinary item on an income statement?

Correct AnswerverifiedShow Answer

The analysis of increases and decreases in the amount and percentage of comparative financial statement items is referred to as horizontal analysis.

Correct AnswerverifiedShow Answer

Based on the above data, what is the amount of quick assets?

Correct AnswerverifiedShow Answer

Match each ratio that follows to its use items a-h.Items may be used more than once. -price-earnings P/E ratio

Correct AnswerverifiedShow Answer

Match each ratio that follows to its use items a-h.Items may be used more than once. -rate earned on total assets

Correct AnswerverifiedShow Answer

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

Correct AnswerverifiedShow Answer

Horizontal analysis is a technique for evaluating financial statement data

Correct AnswerverifiedShow Answer

In a vertical analysis, the base for cost of goods sold is

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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a Base year is zero.Not possible to comp...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Ratio of sales to assets = Sal...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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