Question 1

Indicate the type of each ratio listed below.
-Debt-to-equity ratio

Accepted Answer

A) liquidity ratio 
B) solvency ratio 
C) profitability ratio 
A) liquidity ratio 
B) solvency ratio 
C) profitability ratio

Question 2

The return on assets ratio

Accepted Answer

A)  considers the investment made by all creditors and stockholders. 
B)  is a measure of the liquidity of a company. 
C)  is based on average stockholders' equity as compared to net income for the period. 
D)  reflects investments made only by the creditors of a company. 
A)  considers the investment made by all creditors and stockholders. 
B)  is a measure of the liquidity of a company. 
C)  is based on average stockholders' equity as compared to net income for the period. 
D)  reflects investments made only by the creditors of a company.

Question 3

Given below are several ratios.Select the accounts or amounts that would be used in order to calculate the ratio.You will have more than one response to each ratio.Some accounts or amounts may not be used at all.
-Dividend yield ratio

Accepted Answer

A)  Market price per share 
B)  Net sales 
C)  Gross profit 
D)  Average total assets 
E)  Interest expense, net of tax
F) Netincome
G) Total liabilities
H) Total assets 
A)  Market price per share 
B)  Net sales 
C)  Gross profit 
D)  Average total assets 
E)  Interest expense, net of tax
F) Netincome
G) Total liabilities
H) Total assets

Question 4

In the numerator of the debt service coverage ratio, ________________ is a good substitute for cash flow from operations before interest and tax payments, especially where changes in these accounts are insignificant.

Accepted Answer

EBITDA or earnings b

Question 5

Which of the following statements is true regarding vertical analysis?

Accepted Answer

A)  Common-size financial statements can be used to compare businesses of different sizes. 
B)  Vertical analysis can only be used with balance sheet accounts. 
C)  Vertical analysis can only be used with income statement accounts. 
D)  Vertical analysis can only be used with retained earnings accounts. 
A)  Common-size financial statements can be used to compare businesses of different sizes. 
B)  Vertical analysis can only be used with balance sheet accounts. 
C)  Vertical analysis can only be used with income statement accounts. 
D)  Vertical analysis can only be used with retained earnings accounts.

Question 6

Which combination of ratios will best analyze Stetson's income statement performance?

Accepted Answer

A)  Earnings per share, gross profit, and profit margin ratio 
B)  Gross profit ratio, return on common stockholders' equity ratio, debt-to-equity ratio 
C)  Debt-to-equity ratio, gross profit ratio, and profit margin ratio 
D)  Current ratio, gross profit ratio, and return on common stockholders' equity ratio 
A)  Earnings per share, gross profit, and profit margin ratio 
B)  Gross profit ratio, return on common stockholders' equity ratio, debt-to-equity ratio 
C)  Debt-to-equity ratio, gross profit ratio, and profit margin ratio 
D)  Current ratio, gross profit ratio, and return on common stockholders' equity ratio

Question 7

Trend analysis is another name for ____________________ analysis.

Accepted Answer

The answer of Trend analysis is another name for ____________________...

Question 8

For each of the following sentences, select the phrase or group of words that best completes the statement.
-The relationship between dividends and the market price of a company's stock.

Accepted Answer

A) Earnings per share 
B) Dividend yield ratio 
C) Dividend payout ratio 
D) Leverage 
E) Return on assets ratio
F)Return on common stockholders' equity ratio
G)Debt-to-equity ratio
H)Price/earnings ratio 
A) Earnings per share 
B) Dividend yield ratio 
C) Dividend payout ratio 
D) Leverage 
E) Return on assets ratio
F)Return on common stockholders' equity ratio
G)Debt-to-equity ratio
H)Price/earnings ratio

Question 9

Which of the following statements is true regarding horizontal analysis?

Accepted Answer

A)  Horizontal analysis can only be used with balance sheet accounts. 
B)  Horizontal analysis can only be used with income statement accounts. 
C)  Horizontal analysis can only be used with retained earnings accounts. 
D)  Time series analysis is an advanced statistical technique for horizontal analysis. 
A)  Horizontal analysis can only be used with balance sheet accounts. 
B)  Horizontal analysis can only be used with income statement accounts. 
C)  Horizontal analysis can only be used with retained earnings accounts. 
D)  Time series analysis is an advanced statistical technique for horizontal analysis.

Question 10

What numerators are used in the computation of the following ratios? $\begin{array}{ll}
&\text { Inventory turnover ratio}&\text { Accounts receivable turnover ratio }\
a.&\text { Cost of Goods Sold } & \text { Cost of Goods Sold } \
b.&\text { Net Credit Sales } & \text { Net Credit Sales } \
c.&\text { Net Credit Sales } & \text { Cost of Goods Sold } \
d.&\text { Cost of Goods Sold } & \text { Net Credit Sales }
\end{array}$ ​

Accepted Answer

The answer of What numerators are used in the computation...

Question 11

Following are selected data from Westmoreland Company's financial statements. $$\begin{array} { l r r } 
& \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \
\text { Current liabilities } & \$ 230,000 & \$ 160,000 \
\text { Long-term debt } & 120,000 & 320,000 \
\text { Stockholders' equity } & 420,000 & 540,000 \
\text { Cash payments for additions to plant and equipment } & 45,000 & 32,000 \
\text { Net cash flow from operating activities } & 80,000 & 51,000 \
\text { Interest and principal payments } & 12,000 & 8,000 \
\text { Net operating cash flows before interest and taxes } & 68,000 & 43,000 \
\text { Net income } & 90,000 & 72,000 \
\text { Interest expense } & 8,500 & 11,500 \
\text { Income taxes } & 16,000 & 14,500 \
\text { Dividends paid } & 15,000 & 30,000\
\end{array}$$ ​
-Refer to the Westmoreland Company data. ?
The cash flow from operations to capital expenditures ratio for 2017 is an indicator that Westmoreland Company

Accepted Answer

A)  has been effectively able to use operations to finance its acquisitions of productive assets. 
B)  has increased profits by $13,000. 
C)  has decreased cash, but is offset by the increase in net income. 
D)  has net income that is more than it would have been had dividends of $30,000 been paid. 
A)  has been effectively able to use operations to finance its acquisitions of productive assets. 
B)  has increased profits by $13,000. 
C)  has decreased cash, but is offset by the increase in net income. 
D)  has net income that is more than it would have been had dividends of $30,000 been paid.

Question 12

Select the ratio that each statement below most properly satisfies.
-A measure of a company's success in earning a return for the common stockholders

Accepted Answer

A) Dividend yield ratio 
B) Cash flow from operations to capital expenditures ratio 
C) Debt service coverage ratio 
D) Return on common stockholders' equity ratio 
E) Times interest earned ratio
F)Asset turnover ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price/earnings ratio 
A) Dividend yield ratio 
B) Cash flow from operations to capital expenditures ratio 
C) Debt service coverage ratio 
D) Return on common stockholders' equity ratio 
E) Times interest earned ratio
F)Asset turnover ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price/earnings ratio

Question 13

Which of the following ratios is used to analyze a company's liquidity?

Accepted Answer

A)  Return on assets ratio 
B)  Inventory turnover ratio 
C)  Earnings per share 
D)  Asset turnover ratio 
A)  Return on assets ratio 
B)  Inventory turnover ratio 
C)  Earnings per share 
D)  Asset turnover ratio

Question 14

Indicate the type of each ratio listed below.
-Current ratio

Accepted Answer

A) liquidity ratio 
B) solvency ratio 
C) profitability ratio 
A) liquidity ratio 
B) solvency ratio 
C) profitability ratio

Question 15

Below are selected data from the financial statements of Moriarty Company. $\begin{array}{lcr}
 & \underline{2017} & \underline{2016} \
 \text { Total liabilities }& \$ 1,205,000 & \$ 952,000 \
\text { Common stock }(\$ 30 \text { par) }& 250,000 & 225,000 \
\text { Paid-in capital in excess of par-common stock } & 150,000 & 135,000 \
\text { Retained earnings } & 155,000 & 145,000
\end{array}$ The debt-to-equity ratio for 2017 is

Accepted Answer

A)  increasing, which should be a major cause of concern for Moriarty Company. 
B)  increasing, which should be a good sign in investors' eyes. 
C)  decreasing, which should be a major cause of concern for Moriarty Company. 
D)  decreasing, which should be a good sign in investors' eyes. 
A)  increasing, which should be a major cause of concern for Moriarty Company. 
B)  increasing, which should be a good sign in investors' eyes. 
C)  decreasing, which should be a major cause of concern for Moriarty Company. 
D)  decreasing, which should be a good sign in investors' eyes.

Question 16

For each of the following sentences, select the phrase or group of words that best completes the statement.
-The percentage of earnings paid out as dividends.

Accepted Answer

A) Earnings per share 
B) Dividend yield ratio 
C) Dividend payout ratio 
D) Leverage 
E) Return on assets ratio
F)Return on common stockholders' equity ratio
G)Debt-to-equity ratio
H)Price/earnings ratio 
A) Earnings per share 
B) Dividend yield ratio 
C) Dividend payout ratio 
D) Leverage 
E) Return on assets ratio
F)Return on common stockholders' equity ratio
G)Debt-to-equity ratio
H)Price/earnings ratio

Question 17

The acid-test ratio differs from the current ratio in that it

Accepted Answer

A)  represents the amount of cash on hand instead of the amount of working capital. 
B)  excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible nonpayment. 
C)  is a stricter test of a company's ability to pay its current debts as they are due. 
D)  signals the need to liquidate marketable securities when it drops below 5 to 1. 
A)  represents the amount of cash on hand instead of the amount of working capital. 
B)  excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible nonpayment. 
C)  is a stricter test of a company's ability to pay its current debts as they are due. 
D)  signals the need to liquidate marketable securities when it drops below 5 to 1.

Question 18

A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I. Unusual in Nature
II. Discontinued Segment
III. Infrequent in Occurrence
IV. Nonoperating in Nature
V. Never Occurred

Accepted Answer

A)  I and V 
B)  III and IV 
C)  I and III 
D)  I, II, and III 
A)  I and V 
B)  III and IV 
C)  I and III 
D)  I, II, and III

Question 19

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

Accepted Answer

The answer of In a vertical analysis, the base, or...

Question 20

Use the selected data from Pinecrest Company's financial statements to answer the following question. $$\begin{array} { l r r } 
& \underline { 2017 } & \underline { 2016 } \
\text { Cash } & \$ 22,000 & \$ 14,000 \
\text { Accounts receivable } & 42,000 & 16,000 \
\text { Merchandise inventory }  & 22,000 & 83,000 \
\text { Prepaid expenses }& \underline { 23,000 } & \underline { 18,000 } \
\text { Total current assets } & \underline { \mathbf { \$ 1 0 9 , 0 0 0 } } & \underline { \mathbf { \$ 1 3 1 , 0 0 0 } } \\
\text { Total current liabilities } & \$ 65,000 & \$ 72,000 \
\text { Net credit sales } & 221,000 & 326,000 \
\text { Cost of goods sold } & 168,000 & 299,000 \
\text { Net cash flow from operating activities } & 16,000 & 29,000
\end{array}$$ ​
​
-Refer to the data for Pinecrest Company. The current ratio for 2017 is

Accepted Answer

A)  0.60 to 1 
B)  0.99 to 1 
C)  1.34 to 1 
D)  1.68 to 1 
A)  0.60 to 1 
B)  0.99 to 1 
C)  1.34 to 1 
D)  1.68 to 1

Indicate the type of each ratio listed below. -Debt-to-equity ratio

The return on assets ratio

Given below are several ratios.Select the accounts or amounts that would be used in order to calculate the ratio.You will have more than one response to each ratio.Some accounts or amounts may not be used at all. -Dividend yield ratio

In the numerator of the debt service coverage ratio, ________________ is a good substitute for cash flow from operations before interest and tax payments, especially where changes in these accounts are insignificant.

Which of the following statements is true regarding vertical analysis?

Which combination of ratios will best analyze Stetson's income statement performance?

Trend analysis is another name for ____________________ analysis.

For each of the following sentences, select the phrase or group of words that best completes the statement. -The relationship between dividends and the market price of a company's stock.

Which of the following statements is true regarding horizontal analysis?

What numerators are used in the computation of the following ratios? Inventory turnover ratio Accounts receivable turnover ratio a. Cost of Goods Sold Cost of Goods Sold b. Net Credit Sales Net Credit Sales c. Net Credit Sales Cost of Goods Sold d. Cost of Goods Sold Net Credit Sales

Select the ratio that each statement below most properly satisfies. -A measure of a company's success in earning a return for the common stockholders

Which of the following ratios is used to analyze a company's liquidity?

Indicate the type of each ratio listed below. -Current ratio

Below are selected data from the financial statements of Moriarty Company. Total liabilities \ 1,205,000 \ 952,000 Common stock (\ 30 par) 250,000 225,000 Paid-in capital in excess of par-common stock 150,000 135,000 Retained earnings 155,000 145,000 The debt-to-equity ratio for 2017 is

For each of the following sentences, select the phrase or group of words that best completes the statement. -The percentage of earnings paid out as dividends.

The acid-test ratio differs from the current ratio in that it

A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I. Unusual in Nature II. Discontinued Segment III. Infrequent in Occurrence IV. Nonoperating in Nature V. Never Occurred

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Exploring Accounting Standards and Differences around the World

Filters

Exam 13: Financial Statement Analysis

Indicate the type of each ratio listed below. -Debt-to-equity ratio

The return on assets ratio

Given below are several ratios.Select the accounts or amounts that would be used in order to calculate the ratio.You will have more than one response to each ratio.Some accounts or amounts may not be used at all. -Dividend yield ratio

In the numerator of the debt service coverage ratio, ________________ is a good substitute for cash flow from operations before interest and tax payments, especially where changes in these accounts are insignificant.

Which of the following statements is true regarding vertical analysis?

Which combination of ratios will best analyze Stetson's income statement performance?

Trend analysis is another name for ____________________ analysis.

For each of the following sentences, select the phrase or group of words that best completes the statement. -The relationship between dividends and the market price of a company's stock.

Which of the following statements is true regarding horizontal analysis?

What numerators are used in the computation of the following ratios? Inventory turnover ratio Accounts receivable turnover ratio a. Cost of Goods Sold Cost of Goods Sold b. Net Credit Sales Net Credit Sales c. Net Credit Sales Cost of Goods Sold d. Cost of Goods Sold Net Credit Sales ​

Select the ratio that each statement below most properly satisfies. -A measure of a company's success in earning a return for the common stockholders

Which of the following ratios is used to analyze a company's liquidity?

Indicate the type of each ratio listed below. -Current ratio

Below are selected data from the financial statements of Moriarty Company. Total liabilities \ 1,205,000 \ 952,000 Common stock (\ 30 par) 250,000 225,000 Paid-in capital in excess of par-common stock 150,000 135,000 Retained earnings 155,000 145,000 The debt-to-equity ratio for 2017 is

For each of the following sentences, select the phrase or group of words that best completes the statement. -The percentage of earnings paid out as dividends.

The acid-test ratio differs from the current ratio in that it

A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I. Unusual in Nature II. Discontinued Segment III. Infrequent in Occurrence IV. Nonoperating in Nature V. Never Occurred

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Exploring Accounting Standards and Differences around the World

Filters

What numerators are used in the computation of the following ratios? Inventory turnover ratio Accounts receivable turnover ratio a. Cost of Goods Sold Cost of Goods Sold b. Net Credit Sales Net Credit Sales c. Net Credit Sales Cost of Goods Sold d. Cost of Goods Sold Net Credit Sales