Question 1

How is horizontal analysis of financial statements accomplished?

Accepted Answer

A)  By placing statement items on an after-tax basis. 
B)  By common-size statements. 
C)  By calculating both earnings per share and the price-earnings ratio. 
D)  By trend percentages. 
A)  By placing statement items on an after-tax basis. 
B)  By common-size statements. 
C)  By calculating both earnings per share and the price-earnings ratio. 
D)  By trend percentages.

Question 2

Common-size statements are particularly useful when comparing data from different companies.

Accepted Answer

A) True 
 B)False

Question 3

What was the dividend payout ratio for the prior year?

Accepted Answer

A)  55.6%. 
B)  85.7%. 
C)  114.3%. 
D)  140.0%. 
A)  55.6%. 
B)  85.7%. 
C)  114.3%. 
D)  140.0%.

Question 4

Arquandt Company's net income last year was $550,000.The company had 150,000 common shares and 50,000 preferred shares outstanding.There was no change in the number of common or preferred shares outstanding during the year.The company declared and paid dividends last year of $1.20 per common share and $1.70 per preferred share.The earnings per common share was closest to which of the following?

Accepted Answer

A)  $2.47. 
B)  $3.10. 
C)  $3.67. 
D)  $4.23. 
A)  $2.47. 
B)  $3.10. 
C)  $3.67. 
D)  $4.23.

Question 5

To put the working capital figure into perspective it must be supplemented with other short-term ratios.

Accepted Answer

A) True 
 B)False

Question 6

During the year just ended,James Company purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,what was the inventory turnover for the year?

Accepted Answer

A)  2.57 times. 
B)  2.62 times. 
C)  2.77 times. 
D)  3.00 times.Turnover = 450,000/[(175,000 + 150,000)/2] = 2.77 times. 
A)  2.57 times. 
B)  2.62 times. 
C)  2.77 times. 
D)  3.00 times.Turnover = 450,000/[(175,000 + 150,000)/2] = 2.77 times.

Question 7

Marcial Company's average collection period (age of receivables)for Year 2 was closest to which of the following? Do not round intermediate calculations.

Accepted Answer

A)  24.6 days. 
B)  30.2 days. 
C)  35.2 days. 
D)  43.2 days. 
A)  24.6 days. 
B)  30.2 days. 
C)  35.2 days. 
D)  43.2 days.

Question 8

Lisa Inc.'s acid-test (quick)ratio at December 31,Year 2,was closest to which of the following?

Accepted Answer

A)  0.6 to 1. 
B)  1.1 to 1. 
C)  1.8 to 1. 
D)  2.0 to 1. 
A)  0.6 to 1. 
B)  1.1 to 1. 
C)  1.8 to 1. 
D)  2.0 to 1.

Question 9

At the end of the year just completed,Orem Company's total current liabilities were $75,000,and its total long-term liabilities were $225,000.Working capital at year-end was $100,000.If the company's debt-to-equity ratio is 0.30 to 1,total long-term assets must equal which of the following?

Accepted Answer

A)  $1,000,000. 
B)  $1,125,000. 
C)  $1,225,000. 
D)  $1,300,000.LTA = 1,300,000 - (100,000 + 75,000)= $1,125,000. 
A)  $1,000,000. 
B)  $1,125,000. 
C)  $1,225,000. 
D)  $1,300,000.LTA = 1,300,000 - (100,000 + 75,000)= $1,125,000.

Question 10

Harker Company,a retailer,had cost of goods sold of $160,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $20,000.The company's inventory turnover was closest to which of the following?

Accepted Answer

A)  3.48 times. 
B)  6.15 times. 
C)  6.96 times. 
D)  8.00 times. 
A)  3.48 times. 
B)  6.15 times. 
C)  6.96 times. 
D)  8.00 times.

Question 11

Larned Company's dividend payout ratio for Year 2 was closest to which of the following?

Accepted Answer

A)  28.5%. 
B)  47.4%. 
C)  75.8%. 
D)  76.7%. 
A)  28.5%. 
B)  47.4%. 
C)  75.8%. 
D)  76.7%.

Question 12

Marcell Company's average sale period (turnover in days)for Year 2 was closest to which of the following?

Accepted Answer

A)  15.7 days. 
B)  22.6 days. 
C)  25.8 days. 
D)  36.9 days. 
A)  15.7 days. 
B)  22.6 days. 
C)  25.8 days. 
D)  36.9 days.

Question 13

March Company's current ratio at the end of Year 2 was closest to which of the following?

Accepted Answer

A)  0.47 to 1. 
B)  0.49 to 1. 
C)  1.27 to 1. 
D)  1.45 to 1. 
A)  0.47 to 1. 
B)  0.49 to 1. 
C)  1.27 to 1. 
D)  1.45 to 1.

Question 14

Mariah Company had a times interest earned ratio of 3.0 for the year just ended.The company's tax rate was 40%,and the interest expense for the year was $25,000.What was Mariah Company's after-tax net income?

Accepted Answer

A)  $25,000. 
B)  $30,000. 
C)  $50,000. 
D)  $75,000. 
A)  $25,000. 
B)  $30,000. 
C)  $50,000. 
D)  $75,000.

Question 15

PFM Company has sales of $210,000,interest expense of $8,000,a tax rate of 30%,and a net profit after tax of $35,000.What is PFM Company's times interest earned ratio?

Accepted Answer

A)  4.375 times. 
B)  5.375 times. 
C)  7.250 times. 
D)  15.500 times. 
A)  4.375 times. 
B)  5.375 times. 
C)  7.250 times. 
D)  15.500 times.

Question 16

Larned Company's book value per share at the end of Year 2 was closest to which of the following?

Accepted Answer

A)  $10.00. 
B)  $16.11. 
C)  $63.89. 
D)  $70.56. 
A)  $10.00. 
B)  $16.11. 
C)  $63.89. 
D)  $70.56.

Question 17

Financial leverage is negative in which of the following situations?

Accepted Answer

A)  When the return on total assets is less than the rate of return on common shareholders' equity. 
B)  When total liabilities are less than shareholders' equity. 
C)  When total liabilities are less than total assets. 
D)  When the return on total assets is less than the rate of return demanded by creditors. 
A)  When the return on total assets is less than the rate of return on common shareholders' equity. 
B)  When total liabilities are less than shareholders' equity. 
C)  When total liabilities are less than total assets. 
D)  When the return on total assets is less than the rate of return demanded by creditors.

Question 18

Marcial Company's working capital (in thousands of dollars)at the end of Year 2 was closest to which of the following?

Accepted Answer

A)  $200. 
B)  $440. 
C)  $570. 
D)  $1,360. 
A)  $200. 
B)  $440. 
C)  $570. 
D)  $1,360.

Question 19

Orantes Company's accounts receivable turnover for Year 2 was closest to which of the following?

Accepted Answer

A)  10.3 times. 
B)  13.5 times. 
C)  14.8 times. 
D)  19.3 times. 
A)  10.3 times. 
B)  13.5 times. 
C)  14.8 times. 
D)  19.3 times.

Question 20

Ben Company has the following data for the year just ended:  
What were Ben Company's current liabilities?

Accepted Answer

A)  $35,000. 
B)  $43,750. 
C)  $50,400. 
D)  $63,000. 
A)  $35,000. 
B)  $43,750. 
C)  $50,400. 
D)  $63,000.

How is horizontal analysis of financial statements accomplished?

Common-size statements are particularly useful when comparing data from different companies.

What was the dividend payout ratio for the prior year?

To put the working capital figure into perspective it must be supplemented with other short-term ratios.

During the year just ended,James Company purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,what was the inventory turnover for the year?

Marcial Company's average collection period (age of receivables)for Year 2 was closest to which of the following? Do not round intermediate calculations.

Lisa Inc.'s acid-test (quick)ratio at December 31,Year 2,was closest to which of the following?

At the end of the year just completed,Orem Company's total current liabilities were $75,000,and its total long-term liabilities were $225,000.Working capital at year-end was $100,000.If the company's debt-to-equity ratio is 0.30 to 1,total long-term assets must equal which of the following?

Harker Company,a retailer,had cost of goods sold of $160,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $20,000.The company's inventory turnover was closest to which of the following?

Larned Company's dividend payout ratio for Year 2 was closest to which of the following?

Marcell Company's average sale period (turnover in days)for Year 2 was closest to which of the following?

March Company's current ratio at the end of Year 2 was closest to which of the following?

Mariah Company had a times interest earned ratio of 3.0 for the year just ended.The company's tax rate was 40%,and the interest expense for the year was $25,000.What was Mariah Company's after-tax net income?

PFM Company has sales of $210,000,interest expense of $8,000,a tax rate of 30%,and a net profit after tax of $35,000.What is PFM Company's times interest earned ratio?

Larned Company's book value per share at the end of Year 2 was closest to which of the following?

Financial leverage is negative in which of the following situations?

Marcial Company's working capital (in thousands of dollars)at the end of Year 2 was closest to which of the following?

Orantes Company's accounts receivable turnover for Year 2 was closest to which of the following?

Ben Company has the following data for the year just ended: What were Ben Company's current liabilities?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Filters

Exam 14: Financial Statement Analysis Online

How is horizontal analysis of financial statements accomplished?

Common-size statements are particularly useful when comparing data from different companies.

What was the dividend payout ratio for the prior year?

To put the working capital figure into perspective it must be supplemented with other short-term ratios.

During the year just ended,James Company purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,what was the inventory turnover for the year?

Marcial Company's average collection period (age of receivables)for Year 2 was closest to which of the following? Do not round intermediate calculations.

Lisa Inc.'s acid-test (quick)ratio at December 31,Year 2,was closest to which of the following?

At the end of the year just completed,Orem Company's total current liabilities were $75,000,and its total long-term liabilities were $225,000.Working capital at year-end was $100,000.If the company's debt-to-equity ratio is 0.30 to 1,total long-term assets must equal which of the following?

Harker Company,a retailer,had cost of goods sold of $160,000 last year.The beginning inventory balance was $26,000,and the ending inventory balance was $20,000.The company's inventory turnover was closest to which of the following?

Larned Company's dividend payout ratio for Year 2 was closest to which of the following?

Marcell Company's average sale period (turnover in days)for Year 2 was closest to which of the following?

March Company's current ratio at the end of Year 2 was closest to which of the following?

Mariah Company had a times interest earned ratio of 3.0 for the year just ended.The company's tax rate was 40%,and the interest expense for the year was $25,000.What was Mariah Company's after-tax net income?

PFM Company has sales of $210,000,interest expense of $8,000,a tax rate of 30%,and a net profit after tax of $35,000.What is PFM Company's times interest earned ratio?

Larned Company's book value per share at the end of Year 2 was closest to which of the following?

Financial leverage is negative in which of the following situations?

Marcial Company's working capital (in thousands of dollars)at the end of Year 2 was closest to which of the following?

Orantes Company's accounts receivable turnover for Year 2 was closest to which of the following?

Ben Company has the following data for the year just ended: What were Ben Company's current liabilities?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Filters