Question 1

Match each of the following terms with the appropriate formulas.
-$\frac{\text {Net income }}{\text {Net sales }}$

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 2

The evaluation of company performance and financial condition focuses solely on past performance.

Accepted Answer

A) True 
 B)False

Question 3

A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%.

Accepted Answer

A) True 
 B)False

Question 4

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 5

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

A) True 
 B)False

Question 6

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

Accepted Answer

A) $0.36 million. 
B) $2.3 million. 
C) $0.25 million. 
D) $2.7 million. 
E) $1.1 million. 
A) $0.36 million. 
B) $2.3 million. 
C) $0.25 million. 
D) $2.7 million. 
E) $1.1 million.

Question 7

External users of accounting information make the strategic and operating decisions of a company.

Accepted Answer

A) True 
 B)False

Question 8

Earnings per share are calculated only on income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 9

Industry standards for financial statement analysis:

Accepted Answer

A) Are based on a single competitor's financial performance. 
B) Are set by the government. 
C) Are based on rules of thumb. 
D) Are available for the financial performance and condition of the company's industry. 
E) Compare a company's income with its prior year's income. 
A) Are based on a single competitor's financial performance. 
B) Are set by the government. 
C) Are based on rules of thumb. 
D) Are available for the financial performance and condition of the company's industry. 
E) Compare a company's income with its prior year's income.

Question 10

The measurement of key relations among financial statement items is known as:

Accepted Answer

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

Question 11

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

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 12

Match each of the following terms with the appropriate formulas.
-$\frac{\text { Net sales }}{\text { Average total assets }}$

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 13

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet. Its common-size percent for cash equals:

Accepted Answer

A) 5.86%. 
B) 1707%. 
C) 100%. 
D) 58.6%. 
E) 17.1%. 
A) 5.86%. 
B) 1707%. 
C) 100%. 
D) 58.6%. 
E) 17.1%.

Question 14

Describe the purpose of vertical financial statement analysis and how it is applied.

Accepted Answer

Vertical analysis is used to evaluate in

Question 15

A good financial statement analysis report often includes the following sections: executive summary, analysis overview, evidential matter, assumptions, key factors, and inferences.

Accepted Answer

A) True 
 B)False

Question 16

Three of the most common tools of financial analysis are:

Accepted Answer

A) Financial reporting, ratio analysis, vertical analysis. 
B) Horizontal analysis, vertical analysis, ratio analysis. 
C) Trend analysis, financial reporting, ratio analysis. 
D) Ratio analysis, horizontal analysis, financial reporting. 
E) Vertical analysis, political analysis, horizontal analysis. 
A) Financial reporting, ratio analysis, vertical analysis. 
B) Horizontal analysis, vertical analysis, ratio analysis. 
C) Trend analysis, financial reporting, ratio analysis. 
D) Ratio analysis, horizontal analysis, financial reporting. 
E) Vertical analysis, political analysis, horizontal analysis.

Question 17

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Accepted Answer

A) True 
 B)False

Question 18

Gains and losses that are neither unusual nor infrequent are reported as:

Accepted Answer

A) A prior period adjustment on the statement of retained earnings. 
B) A gain or loss from disposing of the discontinued segment's net assets. 
C) Part of continuing operations in before tax dollars. 
D) A gain or loss from operation of a discontinued segment. 
E) Part of continuing operations in after-tax dollars. 
A) A prior period adjustment on the statement of retained earnings. 
B) A gain or loss from disposing of the discontinued segment's net assets. 
C) Part of continuing operations in before tax dollars. 
D) A gain or loss from operation of a discontinued segment. 
E) Part of continuing operations in after-tax dollars.

Question 19

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

Accepted Answer

A) True 
 B)False

Question 20

General-purpose financial statements include the (1)income statement, (2)balance sheet, (3)statement of stockholders' equity (or statement of retained earnings), (4)statement of cash flows, and (5)notes to these statements.

Accepted Answer

A) True 
 B)False

Match each of the following terms with the appropriate formulas. - $\frac{\text {Net income }}{\text {Net sales }}$

The evaluation of company performance and financial condition focuses solely on past performance.

A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%.

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

External users of accounting information make the strategic and operating decisions of a company.

Earnings per share are calculated only on income from continuing operations.

Industry standards for financial statement analysis:

The measurement of key relations among financial statement items is known as:

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

Match each of the following terms with the appropriate formulas. - $\frac{\text { Net sales }}{\text { Average total assets }}$

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet. Its common-size percent for cash equals:

Describe the purpose of vertical financial statement analysis and how it is applied.

A good financial statement analysis report often includes the following sections: executive summary, analysis overview, evidential matter, assumptions, key factors, and inferences.

Three of the most common tools of financial analysis are:

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Gains and losses that are neither unusual nor infrequent are reported as:

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

General-purpose financial statements include the (1)income statement, (2)balance sheet, (3)statement of stockholders' equity (or statement of retained earnings), (4)statement of cash flows, and (5)notes to these statements.

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

Match each of the following terms with the appropriate formulas. - Net income Net sales \frac{\text {Net income }}{\text {Net sales }}Net sales Net income ​

The evaluation of company performance and financial condition focuses solely on past performance.

A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%.

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

External users of accounting information make the strategic and operating decisions of a company.

Earnings per share are calculated only on income from continuing operations.

Industry standards for financial statement analysis:

The measurement of key relations among financial statement items is known as:

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

Match each of the following terms with the appropriate formulas. - Net sales Average total assets \frac{\text { Net sales }}{\text { Average total assets }} Average total assets Net sales ​

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet. Its common-size percent for cash equals:

Describe the purpose of vertical financial statement analysis and how it is applied.

A good financial statement analysis report often includes the following sections: executive summary, analysis overview, evidential matter, assumptions, key factors, and inferences.

Three of the most common tools of financial analysis are:

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Gains and losses that are neither unusual nor infrequent are reported as:

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

General-purpose financial statements include the (1)income statement, (2)balance sheet, (3)statement of stockholders' equity (or statement of retained earnings), (4)statement of cash flows, and (5)notes to these statements.

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. - $\frac{\text {Net income }}{\text {Net sales }}$

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

Match each of the following terms with the appropriate formulas. - $\frac{\text { Net sales }}{\text { Average total assets }}$