Question 1

Cash,short-term investments and net current receivables are all components of the numerator of the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 2

The cost of capital is defined as the:

Accepted Answer

A) sum of liabilities and stockholders' equity accounts. 
B) weighted average of the returns demanded by the company's stockholders and lenders. 
C) rate of return demanded by stockholders times the rate of return demanded by lenders. 
D) rate of return demanded by the stockholders divided by the rate of return demanded by lenders. 
A) sum of liabilities and stockholders' equity accounts. 
B) weighted average of the returns demanded by the company's stockholders and lenders. 
C) rate of return demanded by stockholders times the rate of return demanded by lenders. 
D) rate of return demanded by the stockholders divided by the rate of return demanded by lenders.

Question 3

The formula for the percentage change in a financial statement line item is the current year amount:

Accepted Answer

A) divided by the base year amount. 
B) minus the base year amount divided by the base year amount. 
C) minus the base year amount divided by current year amount. 
D) added to the base year amount divided by the base year amount. 
A) divided by the base year amount. 
B) minus the base year amount divided by the base year amount. 
C) minus the base year amount divided by current year amount. 
D) added to the base year amount divided by the base year amount.

Question 4

If a company has sales of $250 in 2015 and $225 in 2016,the percentage decrease from 2015 to 2016 is 10%.

Accepted Answer

A) True 
 B)False

Question 5

Given the following data:   In vertical analysis,current liabilities would be expressed as:

Accepted Answer

A) 10%. 
B) 20%. 
C) 40%. 
D) 50%. 
A) 10%. 
B) 20%. 
C) 40%. 
D) 50%.

Question 6

Szidon Company reports the following data:   Using benchmarking,what can be said about Szidon Company?

Accepted Answer

A) Szidon is inferior to the key competitor because the key competitor's net income percentage is higher. 
B) Szidon is superior to the key competitor because net income is higher. 
C) There is not enough information to make any conclusions. 
D) There is conflicting information so no conclusions can be reached. 
A) Szidon is inferior to the key competitor because the key competitor's net income percentage is higher. 
B) Szidon is superior to the key competitor because net income is higher. 
C) There is not enough information to make any conclusions. 
D) There is conflicting information so no conclusions can be reached.

Question 7

Red flags in financial statement analysis can include all of the following EXCEPT:

Accepted Answer

A) a debt ratio higher than average. 
B) a slowdown in inventory turnover. 
C) days' sales in receivables increasing. 
D) Net Cash Provided by Operating Activities exceeds net income. 
A) a debt ratio higher than average. 
B) a slowdown in inventory turnover. 
C) days' sales in receivables increasing. 
D) Net Cash Provided by Operating Activities exceeds net income.

Question 8

XYZ Company has an inventory turnover of 20 times per year.The industry average is 5.0 times per year.What does a high inventory turnover mean?

Accepted Answer

A) The company has too much inventory on hand. 
B) The company may have obsolete inventory on hand. 
C) The company may not be keeping enough inventory on hand which can lead to lost sales. 
D) The company is having a difficult time selling the inventory. 
A) The company has too much inventory on hand. 
B) The company may have obsolete inventory on hand. 
C) The company may not be keeping enough inventory on hand which can lead to lost sales. 
D) The company is having a difficult time selling the inventory.

Question 9

In performing vertical analysis,the base for income tax expense is:

Accepted Answer

A) net sales. 
B) gross revenues. 
C) net income. 
D) gross profit. 
A) net sales. 
B) gross revenues. 
C) net income. 
D) gross profit.

Question 10

An efficient capital market is one in which market prices are above stated cost.

Accepted Answer

A) True 
 B)False

Question 11

A company reports the following information from the statement of cash flows:   Which line item provides a signal that the company may have cash flow problems?

Accepted Answer

A) net cash provided by operating activities 
B) net income 
C) net cash provided by investing activities 
D) net cash used by financing activities 
A) net cash provided by operating activities 
B) net income 
C) net cash provided by investing activities 
D) net cash used by financing activities

Question 12

A firm's ability to pay current liabilities can be evaluated using the quick ratio and the current ratio.

Accepted Answer

A) True 
 B)False

Question 13

On a common-size income statement,income taxes expense is expressed as a percentage of:

Accepted Answer

A) net income. 
B) total stockholders' equity. 
C) total assets. 
D) net sales. 
A) net income. 
B) total stockholders' equity. 
C) total assets. 
D) net sales.

Question 14

In vertical analysis:

Accepted Answer

A) a base amount is optional. 
B) a base amount is required. 
C) line items from balance sheets are examined only. 
D) line items from income statements are examined only. 
A) a base amount is optional. 
B) a base amount is required. 
C) line items from balance sheets are examined only. 
D) line items from income statements are examined only.

Question 15

Which of the following is typically used as the base in a vertical analysis of an income statement?

Accepted Answer

A) gross profit 
B) operating income 
C) net income 
D) net sales 
A) gross profit 
B) operating income 
C) net income 
D) net sales

Question 16

When computing trend percentages:

Accepted Answer

A) the current year is always equal to 100%. 
B) the base year is always the latest year. 
C) the base year is always equal to 100%. 
D) the base year is equal to the current year plus the previous year divided by two. 
A) the current year is always equal to 100%. 
B) the base year is always the latest year. 
C) the base year is always equal to 100%. 
D) the base year is equal to the current year plus the previous year divided by two.

Question 17

On a statement of cash flows,repayment of long-term debt is considered:

Accepted Answer

A) an operating activity. 
B) an investing activity. 
C) a financing activity. 
D) a noncash investing and financing activity. 
A) an operating activity. 
B) an investing activity. 
C) a financing activity. 
D) a noncash investing and financing activity.

Question 18

Common-size financial statements report only dollar amounts.

Accepted Answer

A) True 
 B)False

Question 19

How is the percentage change (for horizontal analysis)for sales from 2014 to 2015 computed?

Accepted Answer

A) Year 2015 sales ÷ Year 2014 sales 
B) (Year 2015 sales - Year 2014 sales)÷ Year 2014 sales 
C) (Year 2015 sales - Year 2014 sales)÷ Year 2015 sales 
D) (Year 2015 sales ÷ Year 2014 sales)× 100 
A) Year 2015 sales ÷ Year 2014 sales 
B) (Year 2015 sales - Year 2014 sales)÷ Year 2014 sales 
C) (Year 2015 sales - Year 2014 sales)÷ Year 2015 sales 
D) (Year 2015 sales ÷ Year 2014 sales)× 100

Question 20

Dynasty Incorporated has the following data available at December 31,2015:
   Prepare a vertical analysis of this company's balance sheet.Round to the nearest one-tenth of one percent.

Accepted Answer

The answer of Dynasty Incorporated has the following data available...

Cash,short-term investments and net current receivables are all components of the numerator of the acid-test ratio.

The cost of capital is defined as the:

The formula for the percentage change in a financial statement line item is the current year amount:

If a company has sales of $250 in 2015 and $225 in 2016,the percentage decrease from 2015 to 2016 is 10%.

Given the following data: In vertical analysis,current liabilities would be expressed as:

Szidon Company reports the following data: Using benchmarking,what can be said about Szidon Company?

Red flags in financial statement analysis can include all of the following EXCEPT:

XYZ Company has an inventory turnover of 20 times per year.The industry average is 5.0 times per year.What does a high inventory turnover mean?

In performing vertical analysis,the base for income tax expense is:

An efficient capital market is one in which market prices are above stated cost.

A company reports the following information from the statement of cash flows: Which line item provides a signal that the company may have cash flow problems?

A firm's ability to pay current liabilities can be evaluated using the quick ratio and the current ratio.

On a common-size income statement,income taxes expense is expressed as a percentage of:

In vertical analysis:

Which of the following is typically used as the base in a vertical analysis of an income statement?

When computing trend percentages:

On a statement of cash flows,repayment of long-term debt is considered:

Common-size financial statements report only dollar amounts.

How is the percentage change (for horizontal analysis)for sales from 2014 to 2015 computed?

Dynasty Incorporated has the following data available at December 31,2015: Prepare a vertical analysis of this company's balance sheet.Round to the nearest one-tenth of one percent.

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

Exam 13: Financial Statement Analysis

Cash,short-term investments and net current receivables are all components of the numerator of the acid-test ratio.

The cost of capital is defined as the:

The formula for the percentage change in a financial statement line item is the current year amount:

If a company has sales of $250 in 2015 and $225 in 2016,the percentage decrease from 2015 to 2016 is 10%.

Given the following data: In vertical analysis,current liabilities would be expressed as:

Szidon Company reports the following data: Using benchmarking,what can be said about Szidon Company?

Red flags in financial statement analysis can include all of the following EXCEPT:

XYZ Company has an inventory turnover of 20 times per year.The industry average is 5.0 times per year.What does a high inventory turnover mean?

In performing vertical analysis,the base for income tax expense is:

An efficient capital market is one in which market prices are above stated cost.

A company reports the following information from the statement of cash flows: Which line item provides a signal that the company may have cash flow problems?

A firm's ability to pay current liabilities can be evaluated using the quick ratio and the current ratio.

On a common-size income statement,income taxes expense is expressed as a percentage of:

In vertical analysis:

Which of the following is typically used as the base in a vertical analysis of an income statement?

When computing trend percentages:

On a statement of cash flows,repayment of long-term debt is considered:

Common-size financial statements report only dollar amounts.

How is the percentage change (for horizontal analysis)for sales from 2014 to 2015 computed?

Dynasty Incorporated has the following data available at December 31,2015: Prepare a vertical analysis of this company's balance sheet.Round to the nearest one-tenth of one percent.

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