Question 1

When preparing a vertical analysis on an income statement, net sales are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) 2.3 times 
B) 2.0 times 
C) 1.8 times 
D) 0.5 times 
A) 2.3 times 
B) 2.0 times 
C) 1.8 times 
D) 0.5 times

Question 3

The cumulative effects of a change in accounting policy are disclosed in the income statement.

Accepted Answer

A) True 
 B)False

Question 4

In horizontal analysis, each item is expressed as a percentage of the

Accepted Answer

A) retained earnings figure. 
B) total assets figure. 
C) profit figure. 
D) base year figure. 
A) retained earnings figure. 
B) total assets figure. 
C) profit figure. 
D) base year figure.

Question 5

A common measure of profitability is the

Accepted Answer

A) current ratio. 
B) cash current debt coverage ratio. 
C) return on common shareholders' equity ratio. 
D) debt to total assets ratio. 
A) current ratio. 
B) cash current debt coverage ratio. 
C) return on common shareholders' equity ratio. 
D) debt to total assets ratio.

Question 6

Factors that may limit the usefulness of financial analysis include alternative accounting policies, professional judgement, other comprehensive income, diversification, inflation, and economic factors.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following items appears on the income statement before profit from continuing operations?

Accepted Answer

A) Change in accounting policy 
B) Profit from discontinued operations 
C) Income tax expense 
D) Gain on sale of discontinued operations 
A) Change in accounting policy 
B) Profit from discontinued operations 
C) Income tax expense 
D) Gain on sale of discontinued operations

Question 8

A supplier to a company would be most interested in the

Accepted Answer

A) asset turnover ratio. 
B) profit margin ratio. 
C) current ratio. 
D) free cash flow. 
A) asset turnover ratio. 
B) profit margin ratio. 
C) current ratio. 
D) free cash flow.

Question 9

Assets that are held for sale as discontinued operations

Accepted Answer

A) continue to be depreciated until sold. 
B) are removed from the statement of financial position and are disclosed in the notes instead. 
C) are not separately identified on the statement of financial position until they are sold. 
D) are segregated and reported on the statement of financial position at the lower of their carrying amount and fair value. 
A) continue to be depreciated until sold. 
B) are removed from the statement of financial position and are disclosed in the notes instead. 
C) are not separately identified on the statement of financial position until they are sold. 
D) are segregated and reported on the statement of financial position at the lower of their carrying amount and fair value.

Question 10

Which of the following is false about the dividend yield ratio?

Accepted Answer

A) High growth companies tend to have lower dividend yield ratios. 
B) It measures the rate of return a shareholder earned from dividends during the year. 
C) A low dividend yield, by itself, is neither bad nor good. 
D) Dividend yield ratio = Market price per share ÷ Dividends per share 
A) High growth companies tend to have lower dividend yield ratios. 
B) It measures the rate of return a shareholder earned from dividends during the year. 
C) A low dividend yield, by itself, is neither bad nor good. 
D) Dividend yield ratio = Market price per share ÷ Dividends per share

Question 11

Use the following information for questions 
During 2013, Pattar Corp reported after-tax profit of $450,000 and paid $75,000 in common dividends. The weighted average number of common shares issued in 2013 was 150,000. There are no preferred shares issued. At year end, Pattar's common shares are selling for $60 per share on the Toronto Stock Exchange.
-Pattar's payout ratio for 2013 is

Accepted Answer

A) $0.50. 
B) 0.8%. 
C) 6.0%. 
D) 16.7%. 
A) $0.50. 
B) 0.8%. 
C) 6.0%. 
D) 16.7%.

Question 12

A high receivables turnover ratio may indicate that

Accepted Answer

A) customers are making payments quickly. 
B) a large portion of the company's sales are on credit. 
C) many customers are not paying their receivables. 
D) the company's sales have increased. 
A) customers are making payments quickly. 
B) a large portion of the company's sales are on credit. 
C) many customers are not paying their receivables. 
D) the company's sales have increased.

Question 13

Assume the following sales data for a company:   If 2010 is the base year, what is the percentage increase in sales from 2010 to 2013?

Accepted Answer

A) 283% 
B) 135% 
C) 35% 
D) 28% 
A) 283% 
B) 135% 
C) 35% 
D) 28%

Question 14

On financial statements that include vertical analysis, which of the following is set at 100%?

Accepted Answer

A) Total liabilities 
B) Profit 
C) Total assets 
D) Cost of goods sold 
A) Total liabilities 
B) Profit 
C) Total assets 
D) Cost of goods sold

Question 15

Comparisons of earnings per share with other companies and the industry averages are usually not very meaningful.

Accepted Answer

A) True 
 B)False

Question 16

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Accepted Answer

A) True 
 B)False

Question 17

Identifying irregular items is important if a potential investor is going to use reported profit to estimate a company's value.

Accepted Answer

A) True 
 B)False

Question 18

Factors than can limit the usefulness of financial analysis do not include

Accepted Answer

A) professional judgement. 
B) alternative accounting policies. 
C) diversification. 
D) accrual accounting. 
A) professional judgement. 
B) alternative accounting policies. 
C) diversification. 
D) accrual accounting.

Question 19

Leveraging and return on common shareholders' equity are closely related.

Accepted Answer

A) True 
 B)False

When preparing a vertical analysis on an income statement, net sales are represented by 100%.

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

The cumulative effects of a change in accounting policy are disclosed in the income statement.

In horizontal analysis, each item is expressed as a percentage of the

A common measure of profitability is the

Factors that may limit the usefulness of financial analysis include alternative accounting policies, professional judgement, other comprehensive income, diversification, inflation, and economic factors.

Which of the following items appears on the income statement before profit from continuing operations?

A supplier to a company would be most interested in the

Assets that are held for sale as discontinued operations

Which of the following is false about the dividend yield ratio?

A high receivables turnover ratio may indicate that

Assume the following sales data for a company: If 2010 is the base year, what is the percentage increase in sales from 2010 to 2013?

On financial statements that include vertical analysis, which of the following is set at 100%?

Comparisons of earnings per share with other companies and the industry averages are usually not very meaningful.

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Identifying irregular items is important if a potential investor is going to use reported profit to estimate a company's value.

Factors than can limit the usefulness of financial analysis do not include

Leveraging and return on common shareholders' equity are closely related.

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

Exam 14: Performance Measurement

When preparing a vertical analysis on an income statement, net sales are represented by 100%.

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

The cumulative effects of a change in accounting policy are disclosed in the income statement.

In horizontal analysis, each item is expressed as a percentage of the

A common measure of profitability is the

Factors that may limit the usefulness of financial analysis include alternative accounting policies, professional judgement, other comprehensive income, diversification, inflation, and economic factors.

Which of the following items appears on the income statement before profit from continuing operations?

A supplier to a company would be most interested in the

Assets that are held for sale as discontinued operations

Which of the following is false about the dividend yield ratio?

A high receivables turnover ratio may indicate that

Assume the following sales data for a company: If 2010 is the base year, what is the percentage increase in sales from 2010 to 2013?

On financial statements that include vertical analysis, which of the following is set at 100%?

Comparisons of earnings per share with other companies and the industry averages are usually not very meaningful.

Both the profit margin ratio and the asset turnover ratio affect a company's return on assets.

Identifying irregular items is important if a potential investor is going to use reported profit to estimate a company's value.

Factors than can limit the usefulness of financial analysis do not include

Leveraging and return on common shareholders' equity are closely related.

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