Question 1

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 2

Horizontal analysis is also called

Accepted Answer

A) percentage analysis. 
B) trend analysis. 
C) vertical analysis. 
D) economic analysis. 
A) percentage analysis. 
B) trend analysis. 
C) vertical analysis. 
D) economic analysis.

Question 3

A common measure of liquidity is

Accepted Answer

A) return on assets. 
B) receivables turnover. 
C) profit margin. 
D) debt to total assets. 
A) return on assets. 
B) receivables turnover. 
C) profit margin. 
D) debt to total assets.

Question 4

Vertical analysis

Accepted Answer

A) is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease)that has taken place. 
B) expresses each item in a financial statement as a percent of a base amount. 
C) makes it more difficult to compare different companies. 
D) is also called trend analysis. 
A) is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease)that has taken place. 
B) expresses each item in a financial statement as a percent of a base amount. 
C) makes it more difficult to compare different companies. 
D) is also called trend analysis.

Question 5

On a statement of income analyzed vertically, each item is expressed as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 6

Use the following information for questions 
Nelly Inc.reported credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year.The average inventory for the year was $6,000,000.
-The days in inventory during the year was

Accepted Answer

A) 15 days. 
B) 11 days. 
C) 91 days. 
D) 122 days. 
A) 15 days. 
B) 11 days. 
C) 91 days. 
D) 122 days.

Question 7

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 8

A component of an entity, for the purpose of discontinued operations, represents all of the following except

Accepted Answer

A) a major line of business. 
B) major geographical area of operations. 
C) a clearly distinguishable component from the rest of the company. 
D) a major line of business held for future use. 
A) a major line of business. 
B) major geographical area of operations. 
C) a clearly distinguishable component from the rest of the company. 
D) a major line of business held for future use.

Question 9

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

Accepted Answer

A) retained earnings amount. 
B) total assets amount. 
C) net income amount. 
D) base year amount. 
A) retained earnings amount. 
B) total assets amount. 
C) net income amount. 
D) base year amount.

Question 10

The receivables turnover ratio is useful in assessing the profitability of receivables.

Accepted Answer

A) True 
 B)False

Question 11

Horizontal analysis of comparative financial statements includes the

Accepted Answer

A) development of vertically analyzed statements. 
B) calculation of liquidity ratios. 
C) calculation of dollar amount changes and percentage changes from the previous to the current year. 
D) evaluation of financial statement data that expresses each item in the current period's financial statement as a percentage of a base amount. 
A) development of vertically analyzed statements. 
B) calculation of liquidity ratios. 
C) calculation of dollar amount changes and percentage changes from the previous to the current year. 
D) evaluation of financial statement data that expresses each item in the current period's financial statement as a percentage of a base amount.

Question 12

Consider the following information:   The dividend yield is

Accepted Answer

A) 1.5%. 
B) 6.2%. 
C) 8.6%. 
D) 50.0%. 
A) 1.5%. 
B) 6.2%. 
C) 8.6%. 
D) 50.0%.

Question 13

In horizontal analysis, the percentage of a base-period amount is calculated by

Accepted Answer

A) dividing the analysis period amount by the base period amount. 
B) dividing the dollar amount of the change since the base period by the base period amount. 
C) dividing the item under analysis by sales. 
D) dividing the item under analysis by total assets. 
A) dividing the analysis period amount by the base period amount. 
B) dividing the dollar amount of the change since the base period by the base period amount. 
C) dividing the item under analysis by sales. 
D) dividing the item under analysis by total assets.

Question 14

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 15

On a statement of financial position analyzed vertically, total assets are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 16

In performing a vertical analysis, the base for prepaid expenses is

Accepted Answer

A) total current assets. 
B) total assets. 
C) total liabilities. 
D) prepaid expenses in a previous year. 
A) total current assets. 
B) total assets. 
C) total liabilities. 
D) prepaid expenses in a previous year.

Question 17

In the vertical analysis of a statement of financial position, the base for current liabilities is total liabilities.

Accepted Answer

A) True 
 B)False

Question 18

Profit margin is calculated by dividing

Accepted Answer

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

Question 19

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 20

A receivables turnover ratio that is significantly higher than the industry average may indicate

Accepted Answer

A) a collection problem. 
B) that a company's credit-granting policies are too loose. 
C) that a company's collection period is higher than the industry. 
D) that a company's credit-granting policies are too tight. 
A) a collection problem. 
B) that a company's credit-granting policies are too loose. 
C) that a company's collection period is higher than the industry. 
D) that a company's credit-granting policies are too tight.

A supplier to a company would be most interested in the

Horizontal analysis is also called

A common measure of liquidity is

Vertical analysis

On a statement of income analyzed vertically, each item is expressed as a percentage of net income.

Use the following information for questions Nelly Inc.reported credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year.The average inventory for the year was $6,000,000. -The days in inventory during the year was

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

A component of an entity, for the purpose of discontinued operations, represents all of the following except

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

The receivables turnover ratio is useful in assessing the profitability of receivables.

Horizontal analysis of comparative financial statements includes the

Consider the following information: The dividend yield is

In horizontal analysis, the percentage of a base-period amount is calculated by

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?

On a statement of financial position analyzed vertically, total assets are represented by 100%.

In performing a vertical analysis, the base for prepaid expenses is

In the vertical analysis of a statement of financial position, the base for current liabilities is total liabilities.

Profit margin is calculated by dividing

The receivables turnover and inventory turnover ratios are used to analyze

A receivables turnover ratio that is significantly higher than the industry average may indicate

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

A supplier to a company would be most interested in the

Horizontal analysis is also called

A common measure of liquidity is

Vertical analysis

On a statement of income analyzed vertically, each item is expressed as a percentage of net income.

Use the following information for questions Nelly Inc.reported credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year.The average inventory for the year was $6,000,000. -The days in inventory during the year was

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

A component of an entity, for the purpose of discontinued operations, represents all of the following except

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

The receivables turnover ratio is useful in assessing the profitability of receivables.

Horizontal analysis of comparative financial statements includes the

Consider the following information: The dividend yield is

In horizontal analysis, the percentage of a base-period amount is calculated by

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?

On a statement of financial position analyzed vertically, total assets are represented by 100%.

In performing a vertical analysis, the base for prepaid expenses is

In the vertical analysis of a statement of financial position, the base for current liabilities is total liabilities.

Profit margin is calculated by dividing

The receivables turnover and inventory turnover ratios are used to analyze

A receivables turnover ratio that is significantly higher than the industry average may indicate

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