Question 1

What is the purpose of a good financial statement analysis report? What are the key components?

Accepted Answer

A good financial statement analysis repo

Question 2

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.

Accepted Answer

A) True 
 B)False

Question 3

The comparison of a company's financial condition and performance to a base amount is known as:

Accepted Answer

A) Vertical analysis. 
B) Investment analysis. 
C) Risk analysis. 
D) Financial reporting. 
E) Horizontal ratios. 
A) Vertical analysis. 
B) Investment analysis. 
C) Risk analysis. 
D) Financial reporting. 
E) Horizontal ratios.

Question 4

Liquidity refers to the availability of resources to meet short-term cash requirements.

Accepted Answer

A) True 
 B)False

Question 5

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

Accepted Answer

A) 18.50%. 
B) 5.41%. 
C) 2.14%. 
D) 1.93%. 
E) 4.67%. 
A) 18.50%. 
B) 5.41%. 
C) 2.14%. 
D) 1.93%. 
E) 4.67%.

Question 6

Selected current year company information follows: $$\begin{array} { l | r } 
\text { Net income } & \$ 15,953 \
\hline \text { Net sales } & 712,855 \
\hline \text { Total liabilities, beginning-year } & 83,932 \
\hline \text { Total liabilities, end-of-year } & 103,201 \
\hline \text { Total stockholders' equity, beginning-year.... } & 198,935 \
\hline \text { Total stockholders' equity, end-of-year } & 121,851
\end{array}$$ The total asset turnover is:

Accepted Answer

A) 2.81 times 
B) 6.28 times 
C) 3.64 times 
D) 2.24 times 
E) 4.67 times 
A) 2.81 times 
B) 6.28 times 
C) 3.64 times 
D) 2.24 times 
E) 4.67 times

Question 7

A company had a market price of $27.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals:

Accepted Answer

A) 32.0. 
B) 3.1. 
C) 93.8. 
D) 3.3. 
E) 22.0. 
A) 32.0. 
B) 3.1. 
C) 93.8. 
D) 3.3. 
E) 22.0.

Question 8

When an item has a value in the base period and zero in the analysis period, the decrease is 0 percent.

Accepted Answer

A) True 
 B)False

Question 9

Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:

Accepted Answer

A) Accounts receivable turnover ratio. 
B) Profit margin. 
C) Days' sales uncollected. 
D) Average accounts receivable ratio. 
E) Current ratio. 
A) Accounts receivable turnover ratio. 
B) Profit margin. 
C) Days' sales uncollected. 
D) Average accounts receivable ratio. 
E) Current ratio.

Question 10

Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The average Inventory amount is:

Accepted Answer

A) $83,500. 
B) $9,100. 
C) $41,750. 
D) $37,200. 
E) $46,300. 
A) $83,500. 
B) $9,100. 
C) $41,750. 
D) $37,200. 
E) $46,300.

Question 11

Rajan Company's most recent balance sheet reported total assets of $1.9 million, total liabilities of $0.8 million, and total equity of $1.1 million. Its Debt to equity ratio is:

Accepted Answer

A) 0.58 
B) 1.38 
C) 1.00 
D) 0.73 
E) 0.42 
A) 0.58 
B) 1.38 
C) 1.00 
D) 0.73 
E) 0.42

Question 12

The greater the times interest earned ratio, the greater the risk a company is exposed to.

Accepted Answer

A) True 
 B)False

Question 13

A corporation reports the following year-end balance sheet data. The company's debt-to-equity ratio equals: $$\begin{array} { l | r | l | r } 
\hline\text { Cash } & \$ 40,000 & \text { Curtent liabilities } & \$ 75,000 \
\hline \text { Accounts receivable } & 55,000 & \text { Iong-term liabilities } & \mathbf { 3 5 , 0 0 0 } \
\hline \text { Inventory } & 60,000 & \text { Common stock } & 100,000 \
\hline \text { Equipment } & \underline { 145,000 } & \text { Retaned eamings } & 90,000 \
\hline \text { Total assets } & \underline { \$3 00,000 } & \text { Total liabilities and equity } & \$ 300,000 \
\hline
\end{array}$$

Accepted Answer

A) 0.58 
B) 1.27 
C) 0.37 
D) 0.63 
E) 2.07 
A) 0.58 
B) 1.27 
C) 0.37 
D) 0.63 
E) 2.07

Question 14

When an item has a value in the base period and zero in the analysis period, the decrease is 100 percent.

Accepted Answer

A) True 
 B)False

Question 15

The ability to generate future revenues and meet long-term obligations is referred to as:

Accepted Answer

A) Liquidity and efficiency. 
B) Profitability. 
C) Solvency. 
D) Market prospects. 
E) Creditworthiness. 
A) Liquidity and efficiency. 
B) Profitability. 
C) Solvency. 
D) Market prospects. 
E) Creditworthiness.

Question 16

Current assets minus current liabilities is:

Accepted Answer

A) Quick assets. 
B) Financial leverage. 
C) Profit margin. 
D) Working capital. 
E) Current ratio. 
A) Quick assets. 
B) Financial leverage. 
C) Profit margin. 
D) Working capital. 
E) Current ratio.

Question 17

Suppliers use financial statement information in establishing credit terms.

Accepted Answer

A) True 
 B)False

Question 18

A corporation reports the following year-end balance sheet data. The company's current ratio equals: $\begin{array}{lrlr}
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \
\text { Accounts receivable } & 55,000 & \text { Long-term liabilities } & 35,000 \
\text { Inventory } & 60,000 & \text { Common stock } & 100,000\
\text { Equipment }&145,000&\text { Retained earnings }&90,000\
\text { Total assets }&\$300,000&\text { Total liabilities and equity }&\$300,000\
\end{array}$
A) 0.37
B) 0.58
C) 0.63
D) 1.27
E) 2.07

Accepted Answer

The answer of A corporation reports the following year-end balance...

Question 19

Match each of the following terms with the appropriate formulas.
-$\frac{\text {Ending inventory }}{\text { Cost of goods sold}}$*365

Accepted Answer

A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio 
A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio

Question 20

The ability to meet short-term obligations and to efficiently generate revenues is called:

Accepted Answer

A) Creditworthiness. 
B) Solvency. 
C) Profitability. 
D) Liquidity and efficiency. 
E) Market prospects. 
A) Creditworthiness. 
B) Solvency. 
C) Profitability. 
D) Liquidity and efficiency. 
E) Market prospects.

What is the purpose of a good financial statement analysis report? What are the key components?

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.

The comparison of a company's financial condition and performance to a base amount is known as:

Liquidity refers to the availability of resources to meet short-term cash requirements.

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

Selected current year company information follows: Net income \ 15,953 Net sales 712,855 Total liabilities, beginning-year 83,932 Total liabilities, end-of-year 103,201 Total stockholders' equity, beginning-year.... 198,935 Total stockholders' equity, end-of-year 121,851 The total asset turnover is:

A company had a market price of $27.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals:

When an item has a value in the base period and zero in the analysis period, the decrease is 0 percent.

Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:

Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The average Inventory amount is:

Rajan Company's most recent balance sheet reported total assets of $1.9 million, total liabilities of $0.8 million, and total equity of $1.1 million. Its Debt to equity ratio is:

The greater the times interest earned ratio, the greater the risk a company is exposed to.

When an item has a value in the base period and zero in the analysis period, the decrease is 100 percent.

The ability to generate future revenues and meet long-term obligations is referred to as:

Current assets minus current liabilities is:

Suppliers use financial statement information in establishing credit terms.

Match each of the following terms with the appropriate formulas. - $\frac{\text {Ending inventory }}{\text { Cost of goods sold}}$ *365

The ability to meet short-term obligations and to efficiently generate revenues is called:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Filters

Exam 17: Analysis of Financial Statements

What is the purpose of a good financial statement analysis report? What are the key components?

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.

The comparison of a company's financial condition and performance to a base amount is known as:

Liquidity refers to the availability of resources to meet short-term cash requirements.

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

A company had a market price of $27.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals:

When an item has a value in the base period and zero in the analysis period, the decrease is 0 percent.

Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:

Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The average Inventory amount is:

Rajan Company's most recent balance sheet reported total assets of $1.9 million, total liabilities of $0.8 million, and total equity of $1.1 million. Its Debt to equity ratio is:

The greater the times interest earned ratio, the greater the risk a company is exposed to.

When an item has a value in the base period and zero in the analysis period, the decrease is 100 percent.

The ability to generate future revenues and meet long-term obligations is referred to as:

Current assets minus current liabilities is:

Suppliers use financial statement information in establishing credit terms.

Match each of the following terms with the appropriate formulas. - Ending inventory Cost of goods sold\frac{\text {Ending inventory }}{\text { Cost of goods sold}} Cost of goods soldEnding inventory ​ *365

The ability to meet short-term obligations and to efficiently generate revenues is called:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Filters

Match each of the following terms with the appropriate formulas. - $\frac{\text {Ending inventory }}{\text { Cost of goods sold}}$ *365