Question 1

To compute the gross profit percentage,divide:

Accepted Answer

A) sales by cost of goods sold. 
B) gross profit by net sales. 
C) net income by stockholders' equity. 
D) operating income by net sales. 
A) sales by cost of goods sold. 
B) gross profit by net sales. 
C) net income by stockholders' equity. 
D) operating income by net sales.

Question 2

Expressing cash and cash equivalents as a percentage of total assets is an example of:

Accepted Answer

A) horizontal analysis. 
B) economic value added. 
C) ratio analysis. 
D) vertical analysis. 
A) horizontal analysis. 
B) economic value added. 
C) ratio analysis. 
D) vertical analysis.

Question 3

The ratio that provides an estimate of the number of days,on average,that it takes for customers to pay their accounts is the:

Accepted Answer

A) days' sales in receivables 
B) current ratio. 
C) accounts receivable turnover. 
D) acid-test ratio. 
A) days' sales in receivables 
B) current ratio. 
C) accounts receivable turnover. 
D) acid-test ratio.

Question 4

Prepare a vertical analysis for Katrina Corporation using the information shown below.Round percentages to the nearest one-tenth percent of one percent.

Accepted Answer

The answer of Prepare a vertical analysis for Katrina Corporation...

Question 5

Economic value added (EVA)can be computed as net income before taxes minus interest expense minus capital charge.

Accepted Answer

A) True 
 B)False

Question 6

If economic value added (EVA)is negative:

Accepted Answer

A) stockholders' wealth has decreased. 
B) stockholders' wealth has increased. 
C) stockholders' wealth has stayed the same. 
D) stockholders' earnings per share have increased. 
A) stockholders' wealth has decreased. 
B) stockholders' wealth has increased. 
C) stockholders' wealth has stayed the same. 
D) stockholders' earnings per share have increased.

Question 7

When performing a vertical analysis of the income statement,each line item is stated as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 8

The leverage ratio is a component of:

Accepted Answer

A) return on assets under DuPont analysis. 
B) return on equity under DuPont analysis. 
C) return on sales under DuPont analysis. 
D) total asset turnover under DuPont analysis. 
A) return on assets under DuPont analysis. 
B) return on equity under DuPont analysis. 
C) return on sales under DuPont analysis. 
D) total asset turnover under DuPont analysis.

Question 9

Carey's Department Store had net sales of $20 million and cost of goods sold of $14 million for the year.The beginning inventory for the year was $3 million.The ending inventory for the year was $5 million.What was the days' inventory outstanding?

Accepted Answer

A) 73 
B) 78 
C) 104 
D) 130 
A) 73 
B) 78 
C) 104 
D) 130

Question 10

The larger the working capital,the better the ability to pay debts.

Accepted Answer

A) True 
 B)False

Question 11

Horizontal analysis is most closely related to:

Accepted Answer

A) trend analysis. 
B) economic value added analysis. 
C) vertical analysis. 
D) benchmarking. 
A) trend analysis. 
B) economic value added analysis. 
C) vertical analysis. 
D) benchmarking.

Question 12

Trend percentages are computed only for balance sheet items.

Accepted Answer

A) True 
 B)False

Question 13

Given the following data:   In vertical analysis,Accounts Receivable,net would be expressed as:

Accepted Answer

A) 5%. 
B) 7%. 
C) 10%. 
D) 20%. 
A) 5%. 
B) 7%. 
C) 10%. 
D) 20%.

Question 14

How is the cash conversion cycle computed?

Accepted Answer

A) days' inventory outstanding + days' sales outstanding - days' payable outstanding 
B) days' inventory outstanding - days' sales outstanding - days' payable outstanding 
C) days' inventory outstanding - days' sales outstanding + days' payable outstanding 
D) days' inventory outstanding + days' sales outstanding + days' payable outstanding 
A) days' inventory outstanding + days' sales outstanding - days' payable outstanding 
B) days' inventory outstanding - days' sales outstanding - days' payable outstanding 
C) days' inventory outstanding - days' sales outstanding + days' payable outstanding 
D) days' inventory outstanding + days' sales outstanding + days' payable outstanding

Question 15

After vertical analysis of a balance sheet,current assets have increased from 42% to 56%,this would always mean that:

Accepted Answer

A) current assets have increased as a percentage of total assets. 
B) the dollar amount of total assets has increased. 
C) the dollar amount of total assets has decreased. 
D) the dollar amount of long-term assets has increased. 
A) current assets have increased as a percentage of total assets. 
B) the dollar amount of total assets has increased. 
C) the dollar amount of total assets has decreased. 
D) the dollar amount of long-term assets has increased.

Question 16

American Furniture Company has an accounts receivable turnover ratio of 20 while the industry average is 10.What can be said about American Furniture Company's accounts receivable turnover ratio?

Accepted Answer

A) American Furniture Company collects accounts receivable slower than the industry average. 
B) American Furniture Company collects accounts receivable faster than the industry average. 
C) American Furniture Company may have a credit policy that is too lenient in granting credit to new customers. 
D) American Furniture Company may have a lax credit department. 
A) American Furniture Company collects accounts receivable slower than the industry average. 
B) American Furniture Company collects accounts receivable faster than the industry average. 
C) American Furniture Company may have a credit policy that is too lenient in granting credit to new customers. 
D) American Furniture Company may have a lax credit department.

Question 17

Signs of a cash healthy company do NOT include:

Accepted Answer

A) net cash provided by operating activities exceeds net income 
B) operating activities are the major source of cash 
C) investing activities include more purchases than sales of long-term assets 
D) borrowing $100 million and repaying $1 million 
A) net cash provided by operating activities exceeds net income 
B) operating activities are the major source of cash 
C) investing activities include more purchases than sales of long-term assets 
D) borrowing $100 million and repaying $1 million

Question 18

You are the CEO of Company A and you are using an industry leader(Leader Company)for benchmarking.Company A is much smaller than Company B in terms of total assets and total sales revenue.We should compare the:

Accepted Answer

A) gross profit of Company A to the gross profit of Leader Company 
B) net income of Company A to the net income of Leader Company 
C) net sales of Company A to the net sales of Leader Company 
D) net income to net sales ratio of Company A to net income to net sales ratio of Leader Company 
A) gross profit of Company A to the gross profit of Leader Company 
B) net income of Company A to the net income of Leader Company 
C) net sales of Company A to the net sales of Leader Company 
D) net income to net sales ratio of Company A to net income to net sales ratio of Leader Company

Question 19

Horizontal analysis compares a financial statement line item in the current year with the same line item in the prior year.

Accepted Answer

A) True 
 B)False

Question 20

What is accounts payable turnover?

Accepted Answer

A) A ratio calculated as Purchases divided by ending balance in Accounts Payable. 
B) A ratio calculated as Cost of Goods Sold divided by average Accounts Payable. 
C) A ratio calculated as Purchases divided by average Accounts Payable. 
D) B and C 
A) A ratio calculated as Purchases divided by ending balance in Accounts Payable. 
B) A ratio calculated as Cost of Goods Sold divided by average Accounts Payable. 
C) A ratio calculated as Purchases divided by average Accounts Payable. 
D) B and C

To compute the gross profit percentage,divide:

Expressing cash and cash equivalents as a percentage of total assets is an example of:

The ratio that provides an estimate of the number of days,on average,that it takes for customers to pay their accounts is the:

Prepare a vertical analysis for Katrina Corporation using the information shown below.Round percentages to the nearest one-tenth percent of one percent.

Economic value added (EVA)can be computed as net income before taxes minus interest expense minus capital charge.

If economic value added (EVA)is negative:

When performing a vertical analysis of the income statement,each line item is stated as a percentage of net income.

The leverage ratio is a component of:

Carey's Department Store had net sales of $20 million and cost of goods sold of $14 million for the year.The beginning inventory for the year was $3 million.The ending inventory for the year was $5 million.What was the days' inventory outstanding?

The larger the working capital,the better the ability to pay debts.

Horizontal analysis is most closely related to:

Trend percentages are computed only for balance sheet items.

Given the following data: In vertical analysis,Accounts Receivable,net would be expressed as:

How is the cash conversion cycle computed?

After vertical analysis of a balance sheet,current assets have increased from 42% to 56%,this would always mean that:

American Furniture Company has an accounts receivable turnover ratio of 20 while the industry average is 10.What can be said about American Furniture Company's accounts receivable turnover ratio?

Signs of a cash healthy company do NOT include:

You are the CEO of Company A and you are using an industry leader(Leader Company)for benchmarking.Company A is much smaller than Company B in terms of total assets and total sales revenue.We should compare the:

Horizontal analysis compares a financial statement line item in the current year with the same line item in the prior year.

What is accounts payable turnover?

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Long-Term Investments: The Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

The Statement of Cash Flows

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Exam 13: Financial Statement Analysis

To compute the gross profit percentage,divide:

Expressing cash and cash equivalents as a percentage of total assets is an example of:

The ratio that provides an estimate of the number of days,on average,that it takes for customers to pay their accounts is the:

Prepare a vertical analysis for Katrina Corporation using the information shown below.Round percentages to the nearest one-tenth percent of one percent.

Economic value added (EVA)can be computed as net income before taxes minus interest expense minus capital charge.

If economic value added (EVA)is negative:

When performing a vertical analysis of the income statement,each line item is stated as a percentage of net income.

The leverage ratio is a component of:

Carey's Department Store had net sales of $20 million and cost of goods sold of $14 million for the year.The beginning inventory for the year was $3 million.The ending inventory for the year was $5 million.What was the days' inventory outstanding?

The larger the working capital,the better the ability to pay debts.

Horizontal analysis is most closely related to:

Trend percentages are computed only for balance sheet items.

Given the following data: In vertical analysis,Accounts Receivable,net would be expressed as:

How is the cash conversion cycle computed?

After vertical analysis of a balance sheet,current assets have increased from 42% to 56%,this would always mean that:

American Furniture Company has an accounts receivable turnover ratio of 20 while the industry average is 10.What can be said about American Furniture Company's accounts receivable turnover ratio?

Signs of a cash healthy company do NOT include:

You are the CEO of Company A and you are using an industry leader(Leader Company)for benchmarking.Company A is much smaller than Company B in terms of total assets and total sales revenue.We should compare the:

Horizontal analysis compares a financial statement line item in the current year with the same line item in the prior year.

What is accounts payable turnover?

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Long-Term Investments: The Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

The Statement of Cash Flows

Filters