Question 1

Annual cash dividends per share divided by market price per share is the:

Accepted Answer

A)  Price-earnings ratio.
B)  Price-dividends ratio.
C)  Profit margin.
D)  Dividend yield ratio.
E)  Earnings per share.F) C) and D)
G) D) and E)

Question 2

The ability to provide financial rewards sufficient to attract and retain financing is called:

Accepted Answer

A)  Liquidity and efficiency.
B)  Solvency.
C)  Profitability.
D)  Market prospects.
E)  Creditworthiness.F) B) and C)
G) B) and E)

Question 3

A financial statement analysis report does not include:

Accepted Answer

A)  An auditor statement.
B)  An analysis overview.
C)  An executive summary.
D)  Qualitative and quantitative key factors.
E)  Inferences such as forecasts.F) C) and D)
G) A) and B)

Question 4

Comparative calendar-year financial data for a company are shown below.Calculate the following ratios for the company for Year 2:
(a)accounts receivable turnover
(b)day's sales uncollected
(c)inventory turnover
(d)days' sales in inventory

Accepted Answer

The answer of Comparative calendar-year financial data for a company...

Question 5

General-purpose financial statements include the (1)________,(2)________,(3)________,(4)________ and (5)________.

Accepted Answer

income statement; balance shee...

Question 6

The dollar change for a comparative financial statement item is calculated by:

Accepted Answer

A)  Subtracting the analysis period amount from the fair value amount.
B)  Subtracting the base period amount from the analysis period amount.
C)  Subtracting the analysis period amount from the base period amount,dividing the result by the base period amount,then multiplying that amount by 100.
D)  Subtracting the base period amount from the analysis period amount,dividing the result by the base period amount,then multiplying that amount by 100.
E)  Subtracting the base period amount from the analysis amount,then dividing the result by the base amountF) A) and B)
G) C) and E)

Question 7

Horizontal analysis:

Accepted Answer

A)  Is a method used to evaluate changes in financial data across time.
B)  Is also called vertical analysis.
C)  Is the presentation of financial ratios.
D)  Is a tool used to evaluate financial statement items relative to industry statistics.
E)  Evaluates financial data across industries.F) A) and D)
G) C) and E)

Question 8

External users of financial information:

Accepted Answer

A)  Are those individuals involved in managing and operating the company.
B)  Include internal auditors and managers.
C)  Are not directly involved in operating the company.
D)  Make strategic decisions for a company.
E)  Make operating decisions for a company.F) A) and B)
G) All of the above

Question 9

Zhang Company reported Cost of goods sold of $835,000,average Inventory of $41,750,and Net sales of $2,338,000.The Inventory turnover ratio is:

Accepted Answer

A)  0.5 times.
B)  418 times.
C)  20 times.
D)  56 times.
E)  19 times.F) None of the above
G) A) and B)

Question 10

Intra-company analysis compares a company's current performance to its own prior performance.

Accepted Answer

A) True 
 B)False

Question 11

Ratios may be expressed as (1)________,(2)________,or (3)________.

Accepted Answer

percentages; rates; ...

Question 12

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Accepted Answer

A) True 
 B)False

Question 13

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick) ratio is:

Accepted Answer

A)  1.4 : 1.
B)  0.77 : 1.
C)  0.54 : 1.
D)  1 : 1.
E)  0.64 : 1.F) B) and D)
G) A) and E)

Question 14

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Accepted Answer

A) True 
 B)False

Question 15

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Accepted Answer

A) True 
 B)False

Question 16

Selected current year end financial information for a company is presented below.Calculate the following company ratios:
(a)Profit margin.
(b)Total asset turnover.
(c)Return on total assets.
(d)Return on common stockholders' equity (assume the company has no preferred stock).

Accepted Answer

(a)Profit margin = ($325,000/$4,700,000)...

Question 17

Explain the purpose of financial statement analysis for both external and internal users.

Accepted Answer

The purpose of financial statement analy...

Question 18

A ratio expresses a relation between two amounts and can be expressed as a percent,rate,or proportion.

Accepted Answer

A) True 
 B)False

Question 19

The purposes of financial statement analysis include all of the following except:

Accepted Answer

A)  Providing information to improve efficiency and effectiveness.
B)  Providing information for managing and operating the company.
C)  Helping external users assess performance.
D)  Helping the board of directors monitor management's performance.
E)  Assuring that the company will not be the subject of an IRS audit.F) A) and E)
G) B) and D)

Question 20

The building blocks of financial statement analysis do not include:

Accepted Answer

A)  Industry analysis.
B)  Solvency.
C)  Profitability.
D)  Market prospects.
E)  Liquidity and efficiency.F) A) and C)
G) A) and E)

Exam 13: Analysis of Financial Statements

Selected current year end financial information for a company is presented below.Calculate the following company ratios: (a)Profit margin. (b)Total asset turnover. (c)Return on total assets. (d)Return on common stockholders' equity (assume the company has no preferred stock).

Correct Answerverified(a)Profit margin = ($325,000/$4,700,000)...View AnswerShow Answer

The ability to provide financial rewards sufficient to attract and retain financing is called:

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The dollar change for a comparative financial statement item is calculated by:

Correct AnswerverifiedShow Answer

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Correct AnswerverifiedShow Answer

Ratios may be expressed as (1)________,(2)________,or (3)________.

Correct Answerverifiedpercentages; rates; ...View AnswerShow Answer

Horizontal analysis:

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Annual cash dividends per share divided by market price per share is the:

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Intra-company analysis compares a company's current performance to its own prior performance.

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Comparative calendar-year financial data for a company are shown below.Calculate the following ratios for the company for Year 2: (a)accounts receivable turnover (b)day's sales uncollected (c)inventory turnover (d)days' sales in inventory

Correct AnswerverifiedShow Answer

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick) ratio is:

Correct AnswerverifiedShow Answer

The building blocks of financial statement analysis do not include:

Correct AnswerverifiedShow Answer

Explain the purpose of financial statement analysis for both external and internal users.

Correct AnswerverifiedThe purpose of financial statement analy...View AnswerShow Answer

A ratio expresses a relation between two amounts and can be expressed as a percent,rate,or proportion.

Correct AnswerverifiedShow Answer

A financial statement analysis report does not include:

Correct AnswerverifiedShow Answer

Zhang Company reported Cost of goods sold of $835,000,average Inventory of $41,750,and Net sales of $2,338,000.The Inventory turnover ratio is:

Correct AnswerverifiedShow Answer

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Correct AnswerverifiedShow Answer

External users of financial information:

Correct AnswerverifiedShow Answer

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Correct AnswerverifiedShow Answer

The purposes of financial statement analysis include all of the following except:

Correct AnswerverifiedShow Answer

General-purpose financial statements include the (1)________,(2)________,(3)________,(4)________ and (5)________.

Correct Answerverifiedincome statement; balance shee...View AnswerShow Answer

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(a)Profit margin = ($325,000/$4,700,000)...
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Ratios may be expressed as (1),(2),or (3).

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percentages; rates; ...
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The purpose of financial statement analy...
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General-purpose financial statements include the (1),(2),(3),(4) and (5).

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income statement; balance shee...
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