Question 1

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Accepted Answer

A) True 
 B)False

Question 2

Financial statement analysis may be used for personal financial investment decisions.

Accepted Answer

A) True 
 B)False

Question 3

Standards for comparisons in financial statement analysis do not include:

Accepted Answer

A)  Intra-company standards.
B)  Competitors' standards.
C)  Industry standards.
D)  Management standards.
E)  Guidelines (rules of thumb) .F) B) and E)
G) All of the above

Question 4

Three of the most common tools of financial analysis are:

Accepted Answer

A)  Financial reporting,ratio analysis,vertical analysis.
B)  Ratio analysis,horizontal analysis,financial reporting.
C)  Horizontal analysis,vertical analysis,ratio analysis.
D)  Trend analysis,financial reporting,ratio analysis.
E)  Vertical analysis,political analysis,horizontal analysis.F) A) and C)
G) C) and D)

Question 5

_________________ applies analytical tools to general-purpose financial statements and related data for making business decisions.

Accepted Answer

Financial ...

Question 6

One of several ratios that reflects solvency includes the:

Accepted Answer

A)  Acid-test ratio.
B)  Current ratio.
C)  Times interest earned ratio.
D)  Total asset turnover.
E)  Days' sales in inventory.F) A) and C)
G) A) and B)

Question 7

Intra-company standards for financial statement analysis:

Accepted Answer

A)  Are based on a company's prior performance and relations between its financial items.
B)  Are often set by competitors.
C)  Are set by the company's industry through published statistics.
D)  Are based on rules of thumb.
E)  Are published in Dun and Bradstreet.F) A) and C)
G) None of the above

Question 8

Refer to the following selected financial information from McCormik,LLC.Compute the company's working capital for Year 2.

Accepted Answer

A)  $232,700.
B)  $220,600.
C)  $147,200.
D)  $111,700.
E)  $142,700.F) A) and E)
G) A) and B)

Question 9

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

Accepted Answer

percentages ;rates ;...

Question 10

The standards for comparisons when interpreting measures from financial statement analysis include (1)___________, (2)____________, (3)_____________,and (4)_______________.

Accepted Answer

intra-company ;compe...

Question 11

Financial reporting includes not only general purpose financial statements,but also information from SEC filings,press releases,shareholders' meetings,forecasts,management letters,auditor's reports,and Webcasts.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the following selected financial information from Graceworks Corp.Compute the company's inventory turnover for Year 2.

Accepted Answer

A)  1.79.
B)  1.71.
C)  1.85.
D)  0.93.
E)  1.75.F) A) and D)
G) C) and D)

Question 13

The background on a company,its industry,and its economic setting is usually included in which of the following sections of a financial statement analysis report?

Accepted Answer

A)  Executive summary.
B)  Analysis overview.
C)  Evidential conclusions.
D)  Factor analysis.
E)  Inferences.F) A) and C)
G) B) and E)

Question 14

A good financial statement analysis report usually includes the following six sections: (1)________________________, (2)______________________, (3)_________________, (4)__________________, (5)____________________,and (6)______________________.

Accepted Answer

executive summary ;analysis ov...

Question 15

Ratios must refer to economically important relationships,such as a sale price compared to its cost.

Accepted Answer

A) True 
 B)False

Question 16

Trend percentage is calculated by dividing _________________________ by ___________________________ and multiplying the result by 100.

Accepted Answer

analysis period amou...

Question 17

Desjardin Landscaping's income statement reports net income of $75,300,which includes deductions for interest expense of $11,500 and income taxes of $34,900.Its times interest earned is:

Accepted Answer

A)  10.6 times
B)  7.5 times
C)  4.0 times
D)  6.5 times
E)  0.15 timesF) A) and B)
G) A) and D)

Question 18

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

Accepted Answer

A) True 
 B)False

Question 19

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1)__________________, (2)______________,and (3)___________________.

Accepted Answer

past and current performance ;...

Question 20

Refer to the following selected financial information from Graceworks,Corp.Compute the company's days' sales in inventory for Year 2.

Accepted Answer

A)  203.4.
B)  228.4.
C)  179.5.
D)  215.1.
E)  113.3.F) A) and D)
G) A) and E)

Exam 17: Analysis of Financial Statements

The background on a company,its industry,and its economic setting is usually included in which of the following sections of a financial statement analysis report?

Correct AnswerverifiedShow Answer

_________________ applies analytical tools to general-purpose financial statements and related data for making business decisions.

Correct AnswerverifiedFinancial ...View AnswerShow Answer

Financial statement analysis may be used for personal financial investment decisions.

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from McCormik,LLC.Compute the company's working capital for Year 2.

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedpercentages ;rates ;...View AnswerShow Answer

Trend percentage is calculated by dividing _________________________ by ___________________________ and multiplying the result by 100.

Correct Answerverifiedanalysis period amou...View AnswerShow Answer

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Correct AnswerverifiedShow Answer

The standards for comparisons when interpreting measures from financial statement analysis include (1)___________, (2)____________, (3)_____________,and (4)_______________.

Correct Answerverifiedintra-company ;compe...View AnswerShow Answer

Intra-company standards for financial statement analysis:

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Graceworks Corp.Compute the company's inventory turnover for Year 2.

Correct AnswerverifiedShow Answer

Three of the most common tools of financial analysis are:

Correct AnswerverifiedShow Answer

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1)__________________, (2)______________,and (3)___________________.

Correct Answerverifiedpast and current performance ;...View AnswerShow Answer

One of several ratios that reflects solvency includes the:

Correct AnswerverifiedShow Answer

Ratios must refer to economically important relationships,such as a sale price compared to its cost.

Correct AnswerverifiedShow Answer

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

Correct AnswerverifiedShow Answer

A good financial statement analysis report usually includes the following six sections: (1)________________________, (2)______________________, (3)_________________, (4)__________________, (5)____________________,and (6)______________________.

Correct Answerverifiedexecutive summary ;analysis ov...View AnswerShow Answer

Financial reporting includes not only general purpose financial statements,but also information from SEC filings,press releases,shareholders' meetings,forecasts,management letters,auditor's reports,and Webcasts.

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Graceworks,Corp.Compute the company's days' sales in inventory for Year 2.

Correct AnswerverifiedShow Answer

Desjardin Landscaping's income statement reports net income of $75,300,which includes deductions for interest expense of $11,500 and income taxes of $34,900.Its times interest earned is:

Correct AnswerverifiedShow Answer

Standards for comparisons in financial statement analysis do not include:

Correct AnswerverifiedShow Answer

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

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percentages ;rates ;...
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Trend percentage is calculated by dividing _ by ___ and multiplying the result by 100.

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analysis period amou...
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The standards for comparisons when interpreting measures from financial statement analysis include (1)_____, (2), (3)_,and (4)_________.

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intra-company ;compe...
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A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1), (2),and (3)___.

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past and current performance ;...
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A good financial statement analysis report usually includes the following six sections: (1)__________, (2), (3)_, (4), (5),and (6)____________.

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executive summary ;analysis ov...
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Correct Answer
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