Question 1

The current ratio is an activity ratio.

Accepted Answer

A) True 
 B)False

Question 2

Retrospective analysis reviews past trends in order to help predict the future.

Accepted Answer

A) True 
 B)False

Question 3

Use the following data to answer questions .
From the year-end financial statements of Fraggle Rock Ltd: $$\begin{array} { l r c } 
& \text { Common } & \text { Preferred } \
\text { Average shareholders' equity } & \$ 1,500,000 & \$ 120,000 \
\text { Average number of shares outstanding } & 100,000 & 30,000 \
\text { Dividends paid } & 50,000 & 90,000 \
\text { Net Income } & \$ 340,000 \
\text { Interest expense } & \$ 22,000 \
\text { Average Total assets } & \$ 2,535,000
\end{array}$$
-If Fraggle Rock's tax rate is 32%, the ROA for Fraggle Rock is closest to:

Accepted Answer

A) 12.8% 
B) 13.1% 
C) 13.7% 
D) 14.0% 
A) 12.8% 
B) 13.1% 
C) 13.7% 
D) 14.0%

Question 4

To best interpret the accounts receivable turnover ratio, the days in accounts receivable should be compared to the company's:

Accepted Answer

A) inventory turnover. 
B) sales revenue. 
C) credit terms. 
D) accounts receivable balance. 
A) inventory turnover. 
B) sales revenue. 
C) credit terms. 
D) accounts receivable balance.

Question 5

The point of leverage where a company's ROE is maximized is referred to as its optimal capital structure.

Accepted Answer

A) True 
 B)False

Question 6

The quick ratio will be negatively impacted by:

Accepted Answer

A) tying up cash in inventory 
B) increasing accounts receivable 
C) decreasing the level of prepaid accounts 
D) increasing levels of long term debt 
A) tying up cash in inventory 
B) increasing accounts receivable 
C) decreasing the level of prepaid accounts 
D) increasing levels of long term debt

Question 7

The analysis of financial statements to assist in predicting future results is an example of:

Accepted Answer

A) historical analysis. 
B) retrospective analysis. 
C) retroactive analysis. 
D) prospective analysis. 
A) historical analysis. 
B) retrospective analysis. 
C) retroactive analysis. 
D) prospective analysis.

Question 8

Use the following information for questions:
Dorada Industries' books revealed the following data for 2011: $$\begin{array} { l c c r } 
\text { Total assets } & \$ 575,000 & \text { Shareholders' equity } & \$ 222,900 \
\text { Current liabilities } & 52,100 & \text { Long-term liabilities } & 300,000 \
\text { Operating Cash flow } & 125,500 &
\end{array}$$
-The debt\total assets ratio for 2011 is closest to:

Accepted Answer

A) 23.4% 
B) 57.3% 
C) 61.2% 
D) 67.3% 
A) 23.4% 
B) 57.3% 
C) 61.2% 
D) 67.3%

The current ratio is an activity ratio.

Retrospective analysis reviews past trends in order to help predict the future.

To best interpret the accounts receivable turnover ratio, the days in accounts receivable should be compared to the company's:

The point of leverage where a company's ROE is maximized is referred to as its optimal capital structure.

The quick ratio will be negatively impacted by:

The analysis of financial statements to assist in predicting future results is an example of:

Use the following information for questions: Dorada Industries' books revealed the following data for 2011: Total assets \ 575,000 Shareholders' equity \ 222,900 Current liabilities 52,100 Long-term liabilities 300,000 Operating Cash flow 125,500 -The debt\total assets ratio for 2011 is closest to:

Overview of Corporate Financial Reporting

Business Transaction Analysis and Financial Statement Effects

Processing Data Through the Accounting System

Revenue Recognition

Cash Flow Statement

Cash, Temporary Investments, and Accounts Notes Receivable

Inventory

Capital Assetstangible and Intangible

Short-Term Liabilities

Long-Term Liabilities

Shareholders Equity

Accounting for Investments and Consolidated Financial Statements

Filters

Exam 12: Financial Statement Analysis

The current ratio is an activity ratio.

Retrospective analysis reviews past trends in order to help predict the future.

To best interpret the accounts receivable turnover ratio, the days in accounts receivable should be compared to the company's:

The point of leverage where a company's ROE is maximized is referred to as its optimal capital structure.

The quick ratio will be negatively impacted by:

The analysis of financial statements to assist in predicting future results is an example of:

Use the following information for questions: Dorada Industries' books revealed the following data for 2011: Total assets \ 575,000 Shareholders' equity \ 222,900 Current liabilities 52,100 Long-term liabilities 300,000 Operating Cash flow 125,500 -The debt\total assets ratio for 2011 is closest to:

Overview of Corporate Financial Reporting

Business Transaction Analysis and Financial Statement Effects

Processing Data Through the Accounting System

Revenue Recognition

Cash Flow Statement

Cash, Temporary Investments, and Accounts Notes Receivable

Inventory

Capital Assetstangible and Intangible

Short-Term Liabilities

Long-Term Liabilities

Shareholders Equity

Accounting for Investments and Consolidated Financial Statements

Filters