Question 1

In horizontal analysis,each item on an income statement is expressed as a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 2

A high P/E ratio indicates that ________.

Accepted Answer

A) a company is highly profitable 
B) investors believe that a company has the potential for significant growth 
C) the company paid a large dividend compared with its earnings per share 
D) a company has high earnings per share 
A) a company is highly profitable 
B) investors believe that a company has the potential for significant growth 
C) the company paid a large dividend compared with its earnings per share 
D) a company has high earnings per share

Question 3

Only investments in debt securities can be classified as held-to-maturity.

Accepted Answer

A) True 
 B)False

Question 4

Indicate which of the following analytical tools should be used in each situation:
a.current ratio
b.inventory turnover ratio
c.accounts receivable turnover ratio

Accepted Answer

The answer of Indicate which of the following analytical tools...

Question 5

Vertical analysis is a technique used to evaluate a series of financial statement data over a period of time.

Accepted Answer

A) True 
 B)False

Question 6

Comprehensive income is the total ________.

Accepted Answer

A) income earned by a company over an entire fiscal year 
B) of all items that affect shareholders' equity except transactions with the owners 
C) of all items that affect shareholders' equity 
D) income earned by a company including all of its business segments 
A) income earned by a company over an entire fiscal year 
B) of all items that affect shareholders' equity except transactions with the owners 
C) of all items that affect shareholders' equity 
D) income earned by a company including all of its business segments

Question 7

The following information is from Megabux, Inc.'s annual report for the years ended December 31:
 
-Refer to the Megabux annual report above.Calculate the gross profit ratio for 2010.

Accepted Answer

A) 46% 
B) 42% 
C) 54% 
D) 6% 
A) 46% 
B) 42% 
C) 54% 
D) 6%

Question 8

The following information is provided from EZ Electronics' annual report for the years ended December 31:
 
-Refer to the EZ Electronics annual report above.Using horizontal analysis with 2010 as the base year,$\bold{2011}$ gross profit would be represented as ________.

Accepted Answer

A) 109% 
B) 9% 
C) 69% 
D) 169% 
A) 109% 
B) 9% 
C) 69% 
D) 169%

Question 9

Centrex Corporation purchased 500 shares of Pfizer stock.The managers of Centrex Corporation intend to sell the shares as soon as their target price is reached,which will probably be within the next three months.This investment is characterized as ________ securities.

Accepted Answer

A) available-for-sale 
B) held-to-maturity 
C) discretionary 
D) trading 
A) available-for-sale 
B) held-to-maturity 
C) discretionary 
D) trading

Question 10

To be useful,a ratio must be compared with the same ratio from previous periods,compared with ratios of other companies in the same industry,or compared with industry averages.

Accepted Answer

A) True 
 B)False

Question 11

The following information is provided from Ace Electronics' annual report for the years ended December 31:
 
-Refer to the Ace Electronics annual report above.Using vertical analysis,$\bold{2012}$ Operating expenses would be represented as ________.

Accepted Answer

A) 11% 
B) 74% 
C) 50% 
D) 42% 
A) 11% 
B) 74% 
C) 50% 
D) 42%

Question 12

The following information is provided from EZ Electronics' annual report for the years ended December 31:

-Refer to the EZ Electronics annual report above.Using vertical analysis,2012 cost of goods sold would be represented as ________.

Accepted Answer

A) 100% 
B) 31% 
C) 43% 
D) 33% 
A) 100% 
B) 31% 
C) 43% 
D) 33%

Question 13

The price/earning (P/E)ratio equals the market price of a share of stock divided by that company's earnings per share.

Accepted Answer

A) True 
 B)False

Question 14

The following selected information is from Acme's annual report for the years ended December 31:
 
-Refer to the Acme annual report above.Calculate return on assets for 2010.

Accepted Answer

A) 37.5% 
B) 145% 
C) 60% 
D) The answer cannot be determined from the information given. 
A) 37.5% 
B) 145% 
C) 60% 
D) The answer cannot be determined from the information given.

Question 15

Owning many different stocks is riskier than a large investment in a single company.

Accepted Answer

A) True 
 B)False

Question 16

Profitability ratios are used to determine whether or not a ________.

Accepted Answer

A) company's stock is a good investment 
B) company can earn a satisfactory rate of return 
C) company can pay its bills on time 
D) company can survive over a long period of time 
A) company's stock is a good investment 
B) company can earn a satisfactory rate of return 
C) company can pay its bills on time 
D) company can survive over a long period of time

Question 17

The following information is provided from Ace Electronics' annual report for the years ended December 31:
 
-Refer to the Ace Electronics annual report above.Using horizontal analysis with 2010 as the base year,$\bold{2011}$ Gross profit would be represented as ________.

Accepted Answer

A) 116% 
B) 86% 
C) 14% 
D) 17% 
A) 116% 
B) 86% 
C) 14% 
D) 17%

Question 18

The dividend yield ratio is a ________ ratio.

Accepted Answer

A) liquidity 
B) solvency 
C) profitability 
D) market indicator 
A) liquidity 
B) solvency 
C) profitability 
D) market indicator

Question 19

Ratios used to determine whether or not a company can earn a satisfactory rate of return are ________.

Accepted Answer

A) liquidity ratios 
B) solvency ratios 
C) profitability ratios 
D) market indicators 
A) liquidity ratios 
B) solvency ratios 
C) profitability ratios 
D) market indicators

Question 20

In 2011,a flash flood in Death Valley destroyed Desert Dave's Watering Hole and its entire inventory.Net losses after insurance payments came to $34,000.The Watering Hole was able to claim a casualty loss on its tax return and got a tax reduction of $12,000.
Required: Show how these amounts would be reported on the Watering Hole's income statement for the year ended December 31,2011.

Accepted Answer

Extraordin

In horizontal analysis,each item on an income statement is expressed as a percentage of sales.

A high P/E ratio indicates that ________.

Only investments in debt securities can be classified as held-to-maturity.

Indicate which of the following analytical tools should be used in each situation: a.current ratio b.inventory turnover ratio c.accounts receivable turnover ratio

Vertical analysis is a technique used to evaluate a series of financial statement data over a period of time.

Comprehensive income is the total ________.

The following information is from Megabux, Inc.'s annual report for the years ended December 31: -Refer to the Megabux annual report above.Calculate the gross profit ratio for 2010.

Centrex Corporation purchased 500 shares of Pfizer stock.The managers of Centrex Corporation intend to sell the shares as soon as their target price is reached,which will probably be within the next three months.This investment is characterized as ________ securities.

To be useful,a ratio must be compared with the same ratio from previous periods,compared with ratios of other companies in the same industry,or compared with industry averages.

The following information is provided from EZ Electronics' annual report for the years ended December 31: -Refer to the EZ Electronics annual report above.Using vertical analysis,2012 cost of goods sold would be represented as ________.

The price/earning (P/E)ratio equals the market price of a share of stock divided by that company's earnings per share.

The following selected information is from Acme's annual report for the years ended December 31: -Refer to the Acme annual report above.Calculate return on assets for 2010.

Owning many different stocks is riskier than a large investment in a single company.

Profitability ratios are used to determine whether or not a ________.

The dividend yield ratio is a ________ ratio.

Ratios used to determine whether or not a company can earn a satisfactory rate of return are ________.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 10: Using Financial Statement Analysis to Evaluate Firm Performance

In horizontal analysis,each item on an income statement is expressed as a percentage of sales.

A high P/E ratio indicates that ________.

Only investments in debt securities can be classified as held-to-maturity.

Indicate which of the following analytical tools should be used in each situation: a.current ratio b.inventory turnover ratio c.accounts receivable turnover ratio

Vertical analysis is a technique used to evaluate a series of financial statement data over a period of time.

Comprehensive income is the total ________.

The following information is from Megabux, Inc.'s annual report for the years ended December 31: -Refer to the Megabux annual report above.Calculate the gross profit ratio for 2010.

The following information is provided from EZ Electronics' annual report for the years ended December 31: -Refer to the EZ Electronics annual report above.Using horizontal analysis with 2010 as the base year, 2011\bold{2011}2011 gross profit would be represented as ________.

Centrex Corporation purchased 500 shares of Pfizer stock.The managers of Centrex Corporation intend to sell the shares as soon as their target price is reached,which will probably be within the next three months.This investment is characterized as ________ securities.

To be useful,a ratio must be compared with the same ratio from previous periods,compared with ratios of other companies in the same industry,or compared with industry averages.

The following information is provided from Ace Electronics' annual report for the years ended December 31: -Refer to the Ace Electronics annual report above.Using vertical analysis, 2012\bold{2012}2012 Operating expenses would be represented as ________.

The following information is provided from EZ Electronics' annual report for the years ended December 31: -Refer to the EZ Electronics annual report above.Using vertical analysis,2012 cost of goods sold would be represented as ________.

The price/earning (P/E)ratio equals the market price of a share of stock divided by that company's earnings per share.

The following selected information is from Acme's annual report for the years ended December 31: -Refer to the Acme annual report above.Calculate return on assets for 2010.

Owning many different stocks is riskier than a large investment in a single company.

Profitability ratios are used to determine whether or not a ________.

The following information is provided from Ace Electronics' annual report for the years ended December 31: -Refer to the Ace Electronics annual report above.Using horizontal analysis with 2010 as the base year, 2011\bold{2011}2011 Gross profit would be represented as ________.

The dividend yield ratio is a ________ ratio.

Ratios used to determine whether or not a company can earn a satisfactory rate of return are ________.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Quality of Earnings, corporate Governance, and Ifrs

Filters