Question 1

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Accepted Answer

A)  Asset comparative statements.
B)  Percentage comparative statements.
C)  Common-size comparative statements.
D)  Sales comparative statements.
E)  General-purpose financial statements.F) B) and E)
G) C) and E)

Question 2

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

Accepted Answer

A)  Subtracting the analysis period amount from the base period 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 amount.F) A) and B)
G) A) and C)

Question 3

Use the financial data shown below to calculate the following ratios for the current year:
(a)Current ratio.
(b)Acid-test ratio.
(c)Accounts receivable turnover.
(d)Days' sales uncollected.
(e)Inventory turnover.
(f)Days' sales in inventory.
  Sales (all on credit)………………………………… $650,000
Cost of goods sold…………………………………. 425,000
Income before taxes……………………………….. 78,000
Net income………………………………………… 54,600

Accepted Answer

(a)Current ratio:
($19,500 + $65,000 + $...

Question 4

Net income divided by average total assets is:

Accepted Answer

A)  Profit margin.
B)  Total asset turnover.
C)  Return on total assets.
D)  Days' income in assets.
E)  Current ratio.F) A) and E)
G) C) and E)

Question 5

Refer to the following selected financial information from Hansen's,LLC.Compute the company's times interest earned for Year 2.

Accepted Answer

A)  6.9.
B)  4.8.
C)  5.8.
D)  14.0.
E)  7.9.F) B) and E)
G) B) and D)

Question 6

Net sales divided by average accounts receivable,net is the:

Accepted Answer

A)  Days' sales uncollected.
B)  Average accounts receivable ratio.
C)  Current ratio.
D)  Profit margin.
E)  Accounts receivable turnover ratio.F) B) and C)
G) A) and B)

Question 7

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Accepted Answer

A) True 
 B)False

Question 8

Earnings per share are calculated only on income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 9

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Accepted Answer

A) True 
 B)False

Question 10

To compute trend percents the analyst should:

Accepted Answer

A)  Select a base period, assign each item in the base period statement a weight of 100%, and then express financial numbers from other periods as a percent of their base period number.
B)  Subtract the analysis period number from the base period number.
C)  Subtract the base period amount from the analysis period amount, divide the result by the analysis period amount, then multiply that amount by 100.
D)  Compare amounts across industries using Dun and Bradstreet.
E)  Compare amounts to a competitor.F) None of the above
G) B) and D)

Question 11

Current assets minus current liabilities is:

Accepted Answer

A)  Profit margin.
B)  Financial leverage.
C)  Current ratio.
D)  Working capital.
E)  Quick assets.F) D) and E)
G) C) and D)

Question 12

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

Accepted Answer

intra-company; compe...

Question 13

Refer to the following selected financial information from Fennie's,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 D)
G) All of the above

Question 14

Use the balance sheets of Sando shown below to calculate the following ratios for 2014 (round to the hundredths):
(a)Current ratio.
(b)Acid-test ratio.
(c)Debt ratio.
(d)Equity ratio.

Accepted Answer

The answer of Use the balance sheets of Sando shown...

Question 15

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) B) and E)
G) A) and B)

Question 16

Identify and describe three common tools of financial statement analysis.

Accepted Answer

Analysis: Three common tools of financia...

Question 17

Intra-company standards for financial statement analysis:

Accepted Answer

A)  Are often based on a company's prior performance.
B)  Are often set by competitors.
C)  Are set by the company's industry.
D)  Are based on rules of thumb.
E)  Are published in Dun and Bradstreet.F) A) and B)
G) All of the above

Question 18

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________________________.

Accepted Answer

The answer of The income level most likely to continue...

Question 19

A financial statement analysis report:

Accepted Answer

A)  Enables readers to see the process and rationale of analysis.
B)  Forces preparers to organize their reasoning and to verify the logic of analysis.
C)  Serves as a method of communication to users.
D)  Helps users and preparers to refine conclusions based on evidence from key building blocks.
E)  A financial statement analysis report entails all of the choices listed.F) B) and D)
G) A) and D)

Question 20

General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of stockholders' equity (or statement of retained earnings),(4)statement of cash flows,and (5)notes to these statements.

Accepted Answer

A) True 
 B)False

Exam 17: Analysis of Financial Statements

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Correct Answer
verified

General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of stockholders' equity (or statement of retained earnings),(4)statement of cash flows,and (5)notes to these statements.

Correct Answer
verified

Net sales divided by average accounts receivable,net is the:

Correct Answer
verified

Earnings per share are calculated only on income from continuing operations.

Correct Answer
verified

Intra-company standards for financial statement analysis:

Correct Answer
verified

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

Correct Answer
verified

Use the balance sheets of Sando shown below to calculate the following ratios for 2014 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.

Correct Answer
verified

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

Correct Answer
verified

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________________________.

Correct Answer
verified

A financial statement analysis report:

Correct Answer
verified

Correct Answer
verified
(a)Current ratio:
($19,500 + $65,000 + $...
View Answer

Identify and describe three common tools of financial statement analysis.

Correct Answer
verified
Analysis: Three common tools of financia...
View Answer

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Correct Answer
verified

Horizontal analysis:

Correct Answer
verified

Net income divided by average total assets is:

Correct Answer
verified

Refer to the following selected financial information from Hansen's,LLC.Compute the company's times interest earned for Year 2.

Correct Answer
verified

Current assets minus current liabilities is:

Correct Answer
verified

To compute trend percents the analyst should:

Correct Answer
verified

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Correct Answer
verified

The standards for comparisons in financial statement analysis include (1)_____,(2),(3)_,and (4)_________.

Correct Answer
verified
intra-company; compe...
View Answer

Exam 17: Analysis of Financial Statements

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

Correct AnswerverifiedShow Answer

General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of stockholders' equity (or statement of retained earnings),(4)statement of cash flows,and (5)notes to these statements.

Correct AnswerverifiedShow Answer

Net sales divided by average accounts receivable,net is the:

Correct AnswerverifiedShow Answer

Earnings per share are calculated only on income from continuing operations.

Correct AnswerverifiedShow Answer

Intra-company standards for financial statement analysis:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use the balance sheets of Sando shown below to calculate the following ratios for 2014 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________________________.

Correct AnswerverifiedShow Answer

A financial statement analysis report:

Correct AnswerverifiedShow Answer

Correct Answerverified(a)Current ratio:($19,500 + $65,000 + $...View AnswerShow Answer

Identify and describe three common tools of financial statement analysis.

Correct AnswerverifiedAnalysis: Three common tools of financia...View AnswerShow Answer

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Correct AnswerverifiedShow Answer

Horizontal analysis:

Correct AnswerverifiedShow Answer

Net income divided by average total assets is:

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Hansen's,LLC.Compute the company's times interest earned for Year 2.

Correct AnswerverifiedShow Answer

Current assets minus current liabilities is:

Correct AnswerverifiedShow Answer

To compute trend percents the analyst should:

Correct AnswerverifiedShow Answer

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Correct AnswerverifiedShow Answer

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

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(a)Current ratio:
($19,500 + $65,000 + $...
View Answer

Correct Answer
verified
Analysis: Three common tools of financia...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The standards for comparisons in financial statement analysis include (1)_____,(2),(3)_,and (4)_________.

Correct Answer
verified
intra-company; compe...
View Answer