Question 1

A company has return on assets of -8%. Return on sales are -6%. The leverage ratio is 2.0. Following DuPont analysis, what is return on equity?

Accepted Answer

A) -6% 
B) -8% 
C) -16% 
D) -28% 
A) -6% 
B) -8% 
C) -16% 
D) -28%

Question 2

Given the following data:   In vertical analysis, net income would be expressed as: (Round your final answer to the nearest whole percent, X%.)

Accepted Answer

A) 61%. 
B) 78%. 
C) 22%. 
D) 17%. 
A) 61%. 
B) 78%. 
C) 22%. 
D) 17%.

Question 3

You are using a leading competitor, Company B, for benchmarking your company, Company A. When benchmarking, the gross margin of Company A is expressed as a percentage of:

Accepted Answer

A) the net sales of Companies A and B. 
B) Company B's net sales. 
C) Company A's net income. 
D) Company A's net sales. 
A) the net sales of Companies A and B. 
B) Company B's net sales. 
C) Company A's net income. 
D) Company A's net sales.

Question 4

Zemanowski Company reports the following sales figures(in millions):   What is the trend percentage in 2015 if 2013 is the base year? (Round your final answer to the nearest whole percentage, X%)

Accepted Answer

A) 110% 
B) 103% 
C) 105% 
D) 107% 
A) 110% 
B) 103% 
C) 105% 
D) 107%

Question 5

If the sale of plant assets is a company's major source of cash, it may be a sign of financial difficulty.

Accepted Answer

A) True 
 B)False

Question 6

Horizontal analysis is most closely related to:

Accepted Answer

A) trend analysis. 
B) economic value added analysis. 
C) vertical analysis. 
D) benchmarking. 
A) trend analysis. 
B) economic value added analysis. 
C) vertical analysis. 
D) benchmarking.

Question 7

Cash flow signs of a healthy company do NOT include:

Accepted Answer

A) net cash provided by operating activities exceeds net income 
B) operating activities represent the major source of cash 
C) investing activities include more purchases than sales of long-term assets 
D) borrowing $100 million and repaying $15 million 
A) net cash provided by operating activities exceeds net income 
B) operating activities represent the major source of cash 
C) investing activities include more purchases than sales of long-term assets 
D) borrowing $100 million and repaying $15 million

Question 8

Walton Company's return on sales for the most recent year was 5%. The industry leader reports a return on sales of 7%. The comparison of Walton Company's return on sales to the industry leader is an example of:

Accepted Answer

A) benchmarking. 
B) gross margin analysis. 
C) detail analysis. 
D) intercompany analysis. 
A) benchmarking. 
B) gross margin analysis. 
C) detail analysis. 
D) intercompany analysis.

Question 9

The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

Accepted Answer

A) leverage. 
B) rate of return on total assets. 
C) debt ratio. 
D) times-interest-earned ratio. 
A) leverage. 
B) rate of return on total assets. 
C) debt ratio. 
D) times-interest-earned ratio.

Question 10

In vertical analysis:

Accepted Answer

A) a base amount is optional. 
B) a base amount is required. 
C) line items from balance sheets are examined only. 
D) line items from income statements are examined only. 
A) a base amount is optional. 
B) a base amount is required. 
C) line items from balance sheets are examined only. 
D) line items from income statements are examined only.

Question 11

Goelzer Company reports the following trend percentages for net income:   Given the above data, which statement is FALSE?

Accepted Answer

A) When compared to 2015, net income is falling in 2016. 
B) Net income is increasing in 2014 and 2015. 
C) Net income is lower in 2017 than in 2013. 
D) Net income is higher in 2017 than in 2013. 
A) When compared to 2015, net income is falling in 2016. 
B) Net income is increasing in 2014 and 2015. 
C) Net income is lower in 2017 than in 2013. 
D) Net income is higher in 2017 than in 2013.

Question 12

In general, the larger the working capital, the better the ability to pay debts.

Accepted Answer

A) True 
 B)False

Question 13

The quick ratio reflects the company's percentage of total assets financed with debt.

Accepted Answer

A) True 
 B)False

Question 14

The percentage change in a financial statement line item over two years is computed by dividing the dollar amount of the line item in the most recent year by the prior year dollar amount of the line item.

Accepted Answer

A) True 
 B)False

Question 15

Nekich Company reports the following sales figures(in millions):   What is the trend percentage in 2018 if 2013 is the base year? (Round your final answer to the nearest whole percentage, X%)

Accepted Answer

A) 92% 
B) 88% 
C) 85% 
D) 95% 
A) 92% 
B) 88% 
C) 85% 
D) 95%

Question 16

The leverage ratio is a component of:

Accepted Answer

A) return on assets under DuPont analysis. 
B) return on equity under DuPont analysis. 
C) return on sales under DuPont analysis. 
D) total asset turnover under DuPont analysis. 
A) return on assets under DuPont analysis. 
B) return on equity under DuPont analysis. 
C) return on sales under DuPont analysis. 
D) total asset turnover under DuPont analysis.

Question 17

Trend analysis using income statement data is widely used for predicting the future.

Accepted Answer

A) True 
 B)False

Question 18

Cash, short-term investments and net current receivables are all components of the numerator of the quick ratio.

Accepted Answer

A) True 
 B)False

Question 19

A positive economic value added (EVA®)suggests an increase in stockholders' wealth.

Accepted Answer

A) True 
 B)False

Question 20

On a common-size income statement, income taxes expense is expressed as a percentage of:

Accepted Answer

A) net income. 
B) total stockholders' equity. 
C) total assets. 
D) net sales. 
A) net income. 
B) total stockholders' equity. 
C) total assets. 
D) net sales.

A company has return on assets of -8%. Return on sales are -6%. The leverage ratio is 2.0. Following DuPont analysis, what is return on equity?

Given the following data: In vertical analysis, net income would be expressed as: (Round your final answer to the nearest whole percent, X%.)

You are using a leading competitor, Company B, for benchmarking your company, Company A. When benchmarking, the gross margin of Company A is expressed as a percentage of:

Zemanowski Company reports the following sales figures(in millions): What is the trend percentage in 2015 if 2013 is the base year? (Round your final answer to the nearest whole percentage, X%)

If the sale of plant assets is a company's major source of cash, it may be a sign of financial difficulty.

Horizontal analysis is most closely related to:

Cash flow signs of a healthy company do NOT include:

Walton Company's return on sales for the most recent year was 5%. The industry leader reports a return on sales of 7%. The comparison of Walton Company's return on sales to the industry leader is an example of:

The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

In vertical analysis:

Goelzer Company reports the following trend percentages for net income: Given the above data, which statement is FALSE?

In general, the larger the working capital, the better the ability to pay debts.

The quick ratio reflects the company's percentage of total assets financed with debt.

The percentage change in a financial statement line item over two years is computed by dividing the dollar amount of the line item in the most recent year by the prior year dollar amount of the line item.

Nekich Company reports the following sales figures(in millions): What is the trend percentage in 2018 if 2013 is the base year? (Round your final answer to the nearest whole percentage, X%)

The leverage ratio is a component of:

Trend analysis using income statement data is widely used for predicting the future.

Cash, short-term investments and net current receivables are all components of the numerator of the quick ratio.

A positive economic value added (EVA®)suggests an increase in stockholders' wealth.

On a common-size income statement, income taxes expense is expressed as a percentage of:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, Statement of Comprehensive Income

The Statement of Cash Flows

Filters

Exam 13: Financial Statement Analysis

A company has return on assets of -8%. Return on sales are -6%. The leverage ratio is 2.0. Following DuPont analysis, what is return on equity?

Given the following data: In vertical analysis, net income would be expressed as: (Round your final answer to the nearest whole percent, X%.)

You are using a leading competitor, Company B, for benchmarking your company, Company A. When benchmarking, the gross margin of Company A is expressed as a percentage of:

Zemanowski Company reports the following sales figures(in millions): What is the trend percentage in 2015 if 2013 is the base year? (Round your final answer to the nearest whole percentage, X%)

If the sale of plant assets is a company's major source of cash, it may be a sign of financial difficulty.

Horizontal analysis is most closely related to:

Cash flow signs of a healthy company do NOT include:

Walton Company's return on sales for the most recent year was 5%. The industry leader reports a return on sales of 7%. The comparison of Walton Company's return on sales to the industry leader is an example of:

The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

In vertical analysis:

Goelzer Company reports the following trend percentages for net income: Given the above data, which statement is FALSE?

In general, the larger the working capital, the better the ability to pay debts.

The quick ratio reflects the company's percentage of total assets financed with debt.

The percentage change in a financial statement line item over two years is computed by dividing the dollar amount of the line item in the most recent year by the prior year dollar amount of the line item.

Nekich Company reports the following sales figures(in millions): What is the trend percentage in 2018 if 2013 is the base year? (Round your final answer to the nearest whole percentage, X%)

The leverage ratio is a component of:

Trend analysis using income statement data is widely used for predicting the future.

Cash, short-term investments and net current receivables are all components of the numerator of the quick ratio.

A positive economic value added (EVA®)suggests an increase in stockholders' wealth.

On a common-size income statement, income taxes expense is expressed as a percentage of:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, Statement of Comprehensive Income

The Statement of Cash Flows

Filters