Question 1

Which of the following statements regarding trend analysis is true?

Accepted Answer

A) Time-series analysis is an example of trend analysis. 
B) Trend data are always in dollars. 
C) Trend analysis is also known as vertical analysis. 
D) Common-size analysis is an example of trend analysis. 
A) Time-series analysis is an example of trend analysis. 
B) Trend data are always in dollars. 
C) Trend analysis is also known as vertical analysis. 
D) Common-size analysis is an example of trend analysis.

Question 2

Which of the following statements regarding liquidity and solvency ratios is true?

Accepted Answer

A) Unlike solvency ratios,liquidity ratios relate to the company's long-run survival. 
B) Both liquidity ratios and solvency ratios measure a company's ability to meet its financial obligations. 
C) Liquidity ratios include the return on equity ratio and the times interest earned ratio. 
D) Solvency ratios include the current ratio and the net profit margin ratio. 
A) Unlike solvency ratios,liquidity ratios relate to the company's long-run survival. 
B) Both liquidity ratios and solvency ratios measure a company's ability to meet its financial obligations. 
C) Liquidity ratios include the return on equity ratio and the times interest earned ratio. 
D) Solvency ratios include the current ratio and the net profit margin ratio.

Question 3

An increase in the gross profit percentage indicates that:

Accepted Answer

A) cost of goods sold as a percentage of sales has decreased. 
B) cost of goods sold as a percentage of sales has increased. 
C) operating expenses as a percentage of sales have increased. 
D) operating expenses as a percentage of sales have decreased. 
A) cost of goods sold as a percentage of sales has decreased. 
B) cost of goods sold as a percentage of sales has increased. 
C) operating expenses as a percentage of sales have increased. 
D) operating expenses as a percentage of sales have decreased.

Question 4

A company that has a current ratio less than one cannot cover:

Accepted Answer

A) current liabilities with its current cash flow. 
B) current expenses with its current sales revenue. 
C) expenses with its current revenues. 
D) current liabilities with its current assets. 
A) current liabilities with its current cash flow. 
B) current expenses with its current sales revenue. 
C) expenses with its current revenues. 
D) current liabilities with its current assets.

Question 5

The ratio that measures the percentage of financing from creditors is the:

Accepted Answer

A) Current ratio. 
B) Times interest earned ratio. 
C) Debt to assets ratio. 
D) Price/earnings ratio. 
A) Current ratio. 
B) Times interest earned ratio. 
C) Debt to assets ratio. 
D) Price/earnings ratio.

Question 6

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to

Accepted Answer

A) 2.39 
B) 2.61 
C) 2.5 
D) 2.81 
A) 2.39 
B) 2.61 
C) 2.5 
D) 2.81

Question 7

A company has a debt to assets ratio of 0.45.If the company then borrows cash from the bank to finance a building acquisition,which of the following is a true statement?

Accepted Answer

A) The debt to assets ratio will be unchanged. 
B) The debt to assets ratio will increase. 
C) The debt to assets ratio will decrease. 
D) The debt to assets ratio will increase as a result of the cash received and then decrease as a result of the building acquisition. 
A) The debt to assets ratio will be unchanged. 
B) The debt to assets ratio will increase. 
C) The debt to assets ratio will decrease. 
D) The debt to assets ratio will increase as a result of the cash received and then decrease as a result of the building acquisition.

Question 8

Trend analysis is a form of horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 9

Use the information above to answer the following question.Which of the following is closest to the company's asset turnover ratio for the current year?

Accepted Answer

A) 0.50 
B) 1.51 
C) 1.80 
D) 2.00 
A) 0.50 
B) 1.51 
C) 1.80 
D) 2.00

Question 10

For each of the accounting treatments below,indicate whether it is followed in GAAP,or IFRS,or both,by placing an "X" in the appropriate column(s).

Accepted Answer

The answer of For each of the accounting treatments below,indicate...

Question 11

Which of the following is a liquidity ratio?

Accepted Answer

A) Inventory turnover. 
B) Price earnings (P/
E) . 
C) Net profit margin. 
D) Times interest earned. 
A) Inventory turnover. 
B) Price earnings (P/
E) . 
C) Net profit margin. 
D) Times interest earned.

Question 12

Gains or losses from discontinued operations are reported on a separate line on the income statement net of income tax effects.

Accepted Answer

A) True 
 B)False

Question 13

Use the information above to answer the following question.The price/earnings ratio at December 31,2015 is closest to:

Accepted Answer

A) 0.35. 
B) 1.40. 
C) 0.28. 
D) 3.50. 
A) 0.35. 
B) 1.40. 
C) 0.28. 
D) 3.50.

Question 14

Choose the appropriate letter to match the term and the definition.Not all definitions will be used.
Term
_______ Full disclosure principle
_______ Ratio analysis
_______ Liquidity
_______ Going-concern assumption
_______ Profitability
_______ Solvency
_______ Trend analysis
_______ Vertical analysis
Definition
A)The ability of a company to meet its short-run financial obligations.
B)A type of analysis that focuses on relationships within a single financial statement.
C)Also known as time-series analysis.
D)The standard that companies should present all relevant information needed to interpret a company's financial position and performance.
E)The standard that expenses should be recognized when incurred.
F)A measure of current earnings performance.
G)A result from comparing a company's results to other companies in the industry.
H)A measure of long-run survivability.
I)The standard that revenue should be recorded when earned,provided payment is reasonably expected.
J)Measures that relate financial variables reported in one or more of the financial statements from the same year.
K)The characteristic that financial information needs to be valuable to decision makers.
L)The standard that takes for granted a company's near term financial survival.

Accepted Answer

The answer of Choose the appropriate letter to match the...

Question 15

A current ratio of less than one is not so much of a concern when the company has a:

Accepted Answer

A) low fixed asset turnover ratio. 
B) high days to collect number. 
C) high inventory turnover ratio. 
D) high debt-to-equity ratio. 
A) low fixed asset turnover ratio. 
B) high days to collect number. 
C) high inventory turnover ratio. 
D) high debt-to-equity ratio.

Question 16

A company's sales in 2013 are $200,000 and in 2014 sales are $285,000.The percentage change is:

Accepted Answer

A) 42.5%. 
B) 70%. 
C) 29.8%. 
D) 130%. 
A) 42.5%. 
B) 70%. 
C) 29.8%. 
D) 130%.

Question 17

Which of the following ratios is a solvency ratio?

Accepted Answer

A) Net profit margin ratio. 
B) Current ratio. 
C) Asset turnover ratio. 
D) Debt to assets ratio. 
A) Net profit margin ratio. 
B) Current ratio. 
C) Asset turnover ratio. 
D) Debt to assets ratio.

Question 18

Which of the following ratios does not use total revenue in its calculation?

Accepted Answer

A) Net profit margin. 
B) Asset turnover. 
C) Return on equity. 
D) Fixed asset turnover. 
A) Net profit margin. 
B) Asset turnover. 
C) Return on equity. 
D) Fixed asset turnover.

Question 19

The financial information below presents selected information from the financial statements of Pelican Company.Sales revenue in 2014 was $13,700,300.Cost of goods sold was $8,905,195.   
A.Calculate the following.Round to two decimal places.1)Receivables turnover ratio assuming all Pelican's sales are made on account.2)Current ratios as of December 31,2014,and as of December 31,2013.3)Quick ratio as of December 31,2014,and as of December 31,2013.4)Inventory turnover ratio.
B.Evaluate the company's liquidity position at 12/31/2014.Cite any additional information not given in the problem that would be helpful in evaluating the company's liquidity.

Accepted Answer

@#IMG-DLM& B.Receivables turnover is slow,assuming

Question 20

A company has a current ratio of 2.0 and a quick ratio of 1.4.If the company then collects an accounts receivable,which of the following is a true statement?

Accepted Answer

A) The current ratio will not change and the quick ratio will increase. 
B) The current ratio will increase and the quick ratio will increase. 
C) The current ratio and the quick ratio will not change. 
D) The current ratio will increase and the quick ratio will decrease. 
A) The current ratio will not change and the quick ratio will increase. 
B) The current ratio will increase and the quick ratio will increase. 
C) The current ratio and the quick ratio will not change. 
D) The current ratio will increase and the quick ratio will decrease.

Which of the following statements regarding trend analysis is true?

Which of the following statements regarding liquidity and solvency ratios is true?

An increase in the gross profit percentage indicates that:

A company that has a current ratio less than one cannot cover:

The ratio that measures the percentage of financing from creditors is the:

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to

A company has a debt to assets ratio of 0.45.If the company then borrows cash from the bank to finance a building acquisition,which of the following is a true statement?

Trend analysis is a form of horizontal analysis.

Use the information above to answer the following question.Which of the following is closest to the company's asset turnover ratio for the current year?

For each of the accounting treatments below,indicate whether it is followed in GAAP,or IFRS,or both,by placing an "X" in the appropriate column(s).

Which of the following is a liquidity ratio?

Gains or losses from discontinued operations are reported on a separate line on the income statement net of income tax effects.

Use the information above to answer the following question.The price/earnings ratio at December 31,2015 is closest to:

A current ratio of less than one is not so much of a concern when the company has a:

A company's sales in 2013 are $200,000 and in 2014 sales are $285,000.The percentage change is:

Which of the following ratios is a solvency ratio?

Which of the following ratios does not use total revenue in its calculation?

A company has a current ratio of 2.0 and a quick ratio of 1.4.If the company then collects an accounts receivable,which of the following is a true statement?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Inventories and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Filters

Exam 13: Measuring and Evaluating Financial Performance

Which of the following statements regarding trend analysis is true?

Which of the following statements regarding liquidity and solvency ratios is true?

An increase in the gross profit percentage indicates that:

A company that has a current ratio less than one cannot cover:

The ratio that measures the percentage of financing from creditors is the:

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to

A company has a debt to assets ratio of 0.45.If the company then borrows cash from the bank to finance a building acquisition,which of the following is a true statement?

Trend analysis is a form of horizontal analysis.

Use the information above to answer the following question.Which of the following is closest to the company's asset turnover ratio for the current year?

For each of the accounting treatments below,indicate whether it is followed in GAAP,or IFRS,or both,by placing an "X" in the appropriate column(s).

Which of the following is a liquidity ratio?

Gains or losses from discontinued operations are reported on a separate line on the income statement net of income tax effects.

Use the information above to answer the following question.The price/earnings ratio at December 31,2015 is closest to:

A current ratio of less than one is not so much of a concern when the company has a:

A company's sales in 2013 are $200,000 and in 2014 sales are $285,000.The percentage change is:

Which of the following ratios is a solvency ratio?

Which of the following ratios does not use total revenue in its calculation?

A company has a current ratio of 2.0 and a quick ratio of 1.4.If the company then collects an accounts receivable,which of the following is a true statement?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Inventories and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Filters