Question 1

Short-term creditors are usually most interested in assessing

Accepted Answer

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

Question 2

Comparative information taken from Water Works Corporation's financial statements is shown below:   InstructionsUsing horizontal analysis, calculate the percentage change from 2017 to 2018.

Accepted Answer

(a) $(20,000) ÷ $(80,000) = 25

Question 3

A solvency ratio measures the net income or operating success of a company for a given period of time.

Accepted Answer

A) True 
 B)False

Question 4

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

Accepted Answer

A) True 
 B)False

Question 5

All of the following statements about vertical analysis are true except

Accepted Answer

A)  vertical analysis is also called common size analysis. 
B)  amounts on the income statement are expressed as a percentage of net sales. 
C)  vertical analysis shows the relative size of each item in the statement of financial position. 
D)  vertical analysis is also called trend analysis. 
A)  vertical analysis is also called common size analysis. 
B)  amounts on the income statement are expressed as a percentage of net sales. 
C)  vertical analysis shows the relative size of each item in the statement of financial position. 
D)  vertical analysis is also called trend analysis.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Liquidity ratios measure the ability of the company to survive over a long period of time.

Accepted Answer

A) True 
 B)False

Question 8

All of the following statements about vertical analysis are true except

Accepted Answer

A)  vertical analysis makes it easier to for intercompany comparisons. 
B)  vertical analysis is seldom performed on the income statement. 
C)  vertical analysis makes it easier to compare companies of different sizes. 
D)  vertical analysis is seldom performed on the cash flow statement. 
A)  vertical analysis makes it easier to for intercompany comparisons. 
B)  vertical analysis is seldom performed on the income statement. 
C)  vertical analysis makes it easier to compare companies of different sizes. 
D)  vertical analysis is seldom performed on the cash flow statement.

Question 9

Use the following information for questions.
Nelly Inc. reported net 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.
-Some of the ratios that are used to determine a company's short-term debt paying ability are

Accepted Answer

A)  asset turnover, times interest earned, current ratio, and receivables turnover. 
B)  times interest earned, inventory turnover, current ratio, and receivables turnover. 
C)  times interest earned, current ratio, and inventory turnover. 
D)  current ratio, receivables turnover, and inventory turnover. 
A)  asset turnover, times interest earned, current ratio, and receivables turnover. 
B)  times interest earned, inventory turnover, current ratio, and receivables turnover. 
C)  times interest earned, current ratio, and inventory turnover. 
D)  current ratio, receivables turnover, and inventory turnover.

Question 10

A horizontal analysis is being conducted with year one as the base year. If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

Accepted Answer

A)  89%. 
B)  100%. 
C)  106%. 
D)  111%. 
A)  89%. 
B)  100%. 
C)  106%. 
D)  111%.

Question 11

Under which of the following cases would a percentage change not be calculated?

Accepted Answer

A)  The trend of the amounts is decreasing but all amounts are positive. 
B)  There is no amount in the base year. 
C)  The trend of the amounts is decreasing but all amounts are negative. 
D)  The trend of the amounts is increasing but all amounts are negative. 
A)  The trend of the amounts is decreasing but all amounts are positive. 
B)  There is no amount in the base year. 
C)  The trend of the amounts is decreasing but all amounts are negative. 
D)  The trend of the amounts is increasing but all amounts are negative.

Question 12

In vertical analysis of an income statement, the 100% figure is

Accepted Answer

A)  net income. 
B)  cost of goods sold. 
C)  gross profit. 
D)  net sales. 
A)  net income. 
B)  cost of goods sold. 
C)  gross profit. 
D)  net sales.

Question 13

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 14

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.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Selected data from McAllister Corp. are presented below:   InstructionsCalculate all of the profitability ratios that can be determined from the above information.

Accepted Answer

With the information

Question 17

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

Accepted Answer

A)  total liabilities 
B)  net income 
C)  total assets 
D)  cost of goods sold 
A)  total liabilities 
B)  net income 
C)  total assets 
D)  cost of goods sold

Question 18

Explain and apply comparative analysis.

Accepted Answer

Horizontal analysis is a technique for e

Question 19

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 net 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 net sales. 
D)  dividing the item under analysis by total assets.

Question 20

Presented below are liquidity and solvency ratios for Carmelo Industries, along with industry averages:   InstructionsAnalyze the company's liquidity and solvency using the information presented. Present a conclusion on the liquidity and solvency, supported by your analysis.

Accepted Answer

The company's current ratio has decrease

Short-term creditors are usually most interested in assessing

Comparative information taken from Water Works Corporation's financial statements is shown below: InstructionsUsing horizontal analysis, calculate the percentage change from 2017 to 2018.

A solvency ratio measures the net income or operating success of a company for a given period of time.

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

All of the following statements about vertical analysis are true except

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

Liquidity ratios measure the ability of the company to survive over a long period of time.

All of the following statements about vertical analysis are true except

Use the following information for questions. Nelly Inc. reported net 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. -Some of the ratios that are used to determine a company's short-term debt paying ability are

A horizontal analysis is being conducted with year one as the base year. If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

Under which of the following cases would a percentage change not be calculated?

In vertical analysis of an income statement, the 100% figure is

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

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

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

Selected data from McAllister Corp. are presented below: InstructionsCalculate all of the profitability ratios that can be determined from the above information.

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

Explain and apply comparative analysis.

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

Presented below are liquidity and solvency ratios for Carmelo Industries, along with industry averages: InstructionsAnalyze the company's liquidity and solvency using the information presented. Present a conclusion on the liquidity and solvency, supported by your analysis.

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

Short-term creditors are usually most interested in assessing

Comparative information taken from Water Works Corporation's financial statements is shown below: InstructionsUsing horizontal analysis, calculate the percentage change from 2017 to 2018.

A solvency ratio measures the net income or operating success of a company for a given period of time.

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

All of the following statements about vertical analysis are true except

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

Liquidity ratios measure the ability of the company to survive over a long period of time.

All of the following statements about vertical analysis are true except

Use the following information for questions. Nelly Inc. reported net 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. -Some of the ratios that are used to determine a company's short-term debt paying ability are

A horizontal analysis is being conducted with year one as the base year. If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

Under which of the following cases would a percentage change not be calculated?

In vertical analysis of an income statement, the 100% figure is

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

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

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

Selected data from McAllister Corp. are presented below: InstructionsCalculate all of the profitability ratios that can be determined from the above information.

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

Explain and apply comparative analysis.

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

Presented below are liquidity and solvency ratios for Carmelo Industries, along with industry averages: InstructionsAnalyze the company's liquidity and solvency using the information presented. Present a conclusion on the liquidity and solvency, supported by your analysis.

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