Question 1

Horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year.

Accepted Answer

A) True 
 B)False  False

Question 2

Vertical analysis is a technique that expresses each item in a financial statement

Accepted Answer

A) in dollars and cents. 
B) as a percentage of the item in the previous year. 
C) as a percentage of a base amount. 
D) starting with the highest value down to the lowest value. 
A) in dollars and cents. 
B) as a percentage of the item in the previous year. 
C) as a percentage of a base amount. 
D) starting with the highest value down to the lowest value. C

Question 3

Vertical analysis is useful in making comparisons of companies of different sizes.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following ratios are known as market measures of profitability?

Accepted Answer

A) Payout and dividend yield 
B) Return on assets and debt to total assets 
C) Earnings per share and price-earnings 
D) Price-earnings and dividend yield 
A) Payout and dividend yield 
B) Return on assets and debt to total assets 
C) Earnings per share and price-earnings 
D) Price-earnings and dividend yield

Question 5

If the average collection period is 45 days, what is the receivables turnover?

Accepted Answer

A) 8.1 times 
B) 12.0 times 
C) 18.0 times 
D) 20.0 times 
A) 8.1 times 
B) 12.0 times 
C) 18.0 times 
D) 20.0 times

Question 6

Use the following information to answer 
Green Thumb Garden Supplies reported the following information for 2012 and 2013.  
-What is the receivables turnover ratio for 2013?

Accepted Answer

A) 2.7 times 
B) 2.0 times 
C) 3.2 times 
D) 3.8 times 
A) 2.7 times 
B) 2.0 times 
C) 3.2 times 
D) 3.8 times

Question 7

A general rule to use in assessing the average collection period is that it

Accepted Answer

A) should not exceed 30 days. 
B) can be any length as long as the customer eventually pays his account. 
C) should not greatly exceed the discount period. 
D) should not greatly exceed the credit period. 
A) should not exceed 30 days. 
B) can be any length as long as the customer eventually pays his account. 
C) should not greatly exceed the discount period. 
D) should not greatly exceed the credit period.

Question 8

A company has average inventory on hand of $40,000 and its average days in inventory is 26.4 days. What is the cost of goods sold?

Accepted Answer

A) $1,056,000 
B) $ 553,030 
C) $ 486,667 
D) $ 480,000 
A) $1,056,000 
B) $ 553,030 
C) $ 486,667 
D) $ 480,000

Question 9

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2012 and 2013.  
-What is the price-earnings ratio?

Accepted Answer

A) 44.4 times 
B) 16.0 times 
C) 8.0 times 
D) 2.5 times 
A) 44.4 times 
B) 16.0 times 
C) 8.0 times 
D) 2.5 times

Question 10

The receivables turnover and inventory turnover ratios are used to analyze

Accepted Answer

A) solvency. 
B) profitability. 
C) liquidity. 
D) leverage. 
A) solvency. 
B) profitability. 
C) liquidity. 
D) leverage.

Question 11

Shareholders are most interested in evaluating

Accepted Answer

A) liquidity. 
B) solvency. 
C) profitability. 
D) marketability. 
A) liquidity. 
B) solvency. 
C) profitability. 
D) marketability.

Question 12

Using vertical analysis on the income statement, a company's profit as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of net sales must be 85%.

Accepted Answer

A) True 
 B)False

Question 13

Use the following information for questions 
Winnipeg Washing Machines reported net credit sales of $12,000,000 and cost of goods sold of $9,000,000 for the year. The average inventory for the year was $2,000,000.
-The inventory turnover ratio for the year was

Accepted Answer

A) 4.5 times. 
B) 5.3 times. 
C) 6.0 times. 
D) 22.0 times. 
A) 4.5 times. 
B) 5.3 times. 
C) 6.0 times. 
D) 22.0 times.

Question 14

The cash current debt coverage ratio may be a better indicator of liquidity than the current ratio.

Accepted Answer

A) True 
 B)False

Question 15

Profit margin is calculated by dividing

Accepted Answer

A) sales by cost of goods sold. 
B) gross profit by net sales. 
C) profit by shareholders' equity. 
D) profit by net sales. 
A) sales by cost of goods sold. 
B) gross profit by net sales. 
C) profit by shareholders' equity. 
D) profit by net sales.

Question 16

A company that is highly leveraged is one that

Accepted Answer

A) has a high earnings per share. 
B) contains debt financing. 
C) contains equity financing. 
D) has a high current ratio. 
A) has a high earnings per share. 
B) contains debt financing. 
C) contains equity financing. 
D) has a high current ratio.

Question 17

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

Accepted Answer

A) that has been arranged from the highest number to the lowest number. 
B) that has been arranged from the lowest number to the highest number. 
C) to determine which items are in error. 
D) to determine the amount and/or percentage increase or decrease that has taken place. 
A) that has been arranged from the highest number to the lowest number. 
B) that has been arranged from the lowest number to the highest number. 
C) to determine which items are in error. 
D) to determine the amount and/or percentage increase or decrease that has taken place.

Question 18

Use the following information for questions 
Winnipeg Washing Machines reported net credit sales of $12,000,000 and cost of goods sold of $9,000,000 for the year. The average inventory for the year was $2,000,000.
-The days in inventory during the year was

Accepted Answer

A) 17 days. 
B) 61 days. 
C) 69 days. 
D) 81 days. 
A) 17 days. 
B) 61 days. 
C) 69 days. 
D) 81 days.

Question 19

An example of a mandatory change in accounting policy is a change in inventory cost formula.

Accepted Answer

A) True 
 B)False

Question 20

Asset turnover ratio is calculated as

Accepted Answer

A) net sales divided by profit. 
B) average total assets divided by profit. 
C) net sales divided by average total assets. 
D) average total assets divided by net sales. 
A) net sales divided by profit. 
B) average total assets divided by profit. 
C) net sales divided by average total assets. 
D) average total assets divided by net sales.

Horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year.

Vertical analysis is a technique that expresses each item in a financial statement

Vertical analysis is useful in making comparisons of companies of different sizes.

Which of the following ratios are known as market measures of profitability?

If the average collection period is 45 days, what is the receivables turnover?

Use the following information to answer Green Thumb Garden Supplies reported the following information for 2012 and 2013. -What is the receivables turnover ratio for 2013?

A general rule to use in assessing the average collection period is that it

A company has average inventory on hand of $40,000 and its average days in inventory is 26.4 days. What is the cost of goods sold?

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2012 and 2013. -What is the price-earnings ratio?

The receivables turnover and inventory turnover ratios are used to analyze

Shareholders are most interested in evaluating

Using vertical analysis on the income statement, a company's profit as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of net sales must be 85%.

Use the following information for questions Winnipeg Washing Machines reported net credit sales of $12,000,000 and cost of goods sold of $9,000,000 for the year. The average inventory for the year was $2,000,000. -The inventory turnover ratio for the year was

The cash current debt coverage ratio may be a better indicator of liquidity than the current ratio.

Profit margin is calculated by dividing

A company that is highly leveraged is one that

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

Use the following information for questions Winnipeg Washing Machines reported net credit sales of $12,000,000 and cost of goods sold of $9,000,000 for the year. The average inventory for the year was $2,000,000. -The days in inventory during the year was

An example of a mandatory change in accounting policy is a change in inventory cost formula.

Asset turnover ratio is calculated as

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

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Exam 14: Performance Measurement

Horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year.

Vertical analysis is a technique that expresses each item in a financial statement

Vertical analysis is useful in making comparisons of companies of different sizes.

Which of the following ratios are known as market measures of profitability?

If the average collection period is 45 days, what is the receivables turnover?

Use the following information to answer Green Thumb Garden Supplies reported the following information for 2012 and 2013. -What is the receivables turnover ratio for 2013?

A general rule to use in assessing the average collection period is that it

A company has average inventory on hand of $40,000 and its average days in inventory is 26.4 days. What is the cost of goods sold?

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2012 and 2013. -What is the price-earnings ratio?

The receivables turnover and inventory turnover ratios are used to analyze

Shareholders are most interested in evaluating

Using vertical analysis on the income statement, a company's profit as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of net sales must be 85%.

Use the following information for questions Winnipeg Washing Machines reported net credit sales of $12,000,000 and cost of goods sold of $9,000,000 for the year. The average inventory for the year was $2,000,000. -The inventory turnover ratio for the year was

The cash current debt coverage ratio may be a better indicator of liquidity than the current ratio.

Profit margin is calculated by dividing

A company that is highly leveraged is one that

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

Use the following information for questions Winnipeg Washing Machines reported net credit sales of $12,000,000 and cost of goods sold of $9,000,000 for the year. The average inventory for the year was $2,000,000. -The days in inventory during the year was

An example of a mandatory change in accounting policy is a change in inventory cost formula.

Asset turnover ratio is calculated as

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Filters