Question 1

The price/earnings (P/E) ratio is an indication of investor confidence in a company.

Accepted Answer

A) True 
 B)False

Question 2

Publicly held corporations must file annual reports with the SEC. All such reports are available

Accepted Answer

A)  only to the SEC, the company's owners and management, and the company's auditors. 
B)  only to other SEC companies and the issuing company's owners and management. 
C)  only to the SEC, the company's management, and the company's auditors. 
D)  to the general public. 
A)  only to the SEC, the company's owners and management, and the company's auditors. 
B)  only to other SEC companies and the issuing company's owners and management. 
C)  only to the SEC, the company's management, and the company's auditors. 
D)  to the general public.

Question 3

In a common-size income statement, net income is represented by 100 percent.

Accepted Answer

A) True 
 B)False

Question 4

The cash flow yield equals net income divided by net cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 5

Disclosure of segment information is useless in the analysis of diversified companies.

Accepted Answer

A) True 
 B)False

Question 6

The receivable turnover is useful in assessing the profitability of receivables.

Accepted Answer

A) True 
 B)False

Question 7

Both diversified companies and conglomerates operate in a single, well-defined industry.

Accepted Answer

A) True 
 B)False

Question 8

Using the following information from an annual report, prepare a horizontal analysis of the consolidated statements of earnings. (Round percentage answers to one decimal place.)

Accepted Answer

The answer of Using the following information from an annual...

Question 9

Using the following information from an annual report, prepare a vertical analysis of the consolidated statement of earnings for the fiscal year ended June 30, 2009. (Round percentage answers to one decimal place.)

Accepted Answer

@#IMG-DLM& *Rounding has cause

Question 10

Dividends yield is a market strength ratio.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following describes the interest coverage ratio?

Accepted Answer

A)  Income before income taxes plus interest expense divided by interest expense 
B)  Income after income taxes plus interest expense divided by interest expense 
C)  Income after income taxes divided by interest expense 
D)  Income before income taxes minus interest expense divided by interest expense 
A)  Income before income taxes plus interest expense divided by interest expense 
B)  Income after income taxes plus interest expense divided by interest expense 
C)  Income after income taxes divided by interest expense 
D)  Income before income taxes minus interest expense divided by interest expense

Question 12

Which of the following ratios involves the market price of a company's stock?

Accepted Answer

A)  Return on equity 
B)  Dividends yield 
C)  Profit margin 
D)  Cash flow yield 
A)  Return on equity 
B)  Dividends yield 
C)  Profit margin 
D)  Cash flow yield

Question 13

A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be comparable.

Accepted Answer

A) True 
 B)False

Question 14

A company with $50,000 in current assets, $25,000 in quick assets, and $30,000 in current liabilities makes a payment of a $1,500 current debt. As a result of this transaction, the current ratio and quick ratio will

Accepted Answer

A)  both decrease. 
B)  increase and decrease, respectively. 
C)  both increase. 
D)  remain the same and decrease, respectively. 
A)  both decrease. 
B)  increase and decrease, respectively. 
C)  both increase. 
D)  remain the same and decrease, respectively.

Question 15

Form 10-Q refers to the annual report filed with the SEC.

Accepted Answer

A) True 
 B)False

Question 16

Accounting methods may be a source of incomparability among companies.

Accepted Answer

A) True 
 B)False

Question 17

Return on assets is most closely related to

Accepted Answer

A)  interest coverage and the debt to equity ratios. 
B)  profit margin and the debt to equity ratio. 
C)  profit margin and asset turnover. 
D)  inventory turnover and profit margin. 
A)  interest coverage and the debt to equity ratios. 
B)  profit margin and the debt to equity ratio. 
C)  profit margin and asset turnover. 
D)  inventory turnover and profit margin.

Question 18

Inventory turnover is a measure of liquidity that focuses on the relative size of inventory.

Accepted Answer

A) True 
 B)False

Question 19

In a common-size income statement for a retail store, the 100 percent amount is for

Accepted Answer

A)  net revenues. 
B)  cost of goods sold. 
C)  gross profit. 
D)  net income. 
A)  net revenues. 
B)  cost of goods sold. 
C)  gross profit. 
D)  net income.

Question 20

A quick ratio that is much smaller than the current ratio indicates that

Accepted Answer

A)  inventories represent a large portion of current assets. 
B)  the company has a low inventory turnover. 
C)  inventories represent a small portion of current assets. 
D)  the company has a high inventory turnover. 
A)  inventories represent a large portion of current assets. 
B)  the company has a low inventory turnover. 
C)  inventories represent a small portion of current assets. 
D)  the company has a high inventory turnover.

Exam 16: Financial Performance Measurement

The price/earnings (P/E) ratio is an indication of investor confidence in a company.

Publicly held corporations must file annual reports with the SEC. All such reports are available

In a common-size income statement, net income is represented by 100 percent.

The cash flow yield equals net income divided by net cash flows from operating activities.

Disclosure of segment information is useless in the analysis of diversified companies.

The receivable turnover is useful in assessing the profitability of receivables.

Both diversified companies and conglomerates operate in a single, well-defined industry.

Using the following information from an annual report, prepare a horizontal analysis of the consolidated statements of earnings. (Round percentage answers to one decimal place.)

Using the following information from an annual report, prepare a vertical analysis of the consolidated statement of earnings for the fiscal year ended June 30, 2009. (Round percentage answers to one decimal place.)

Dividends yield is a market strength ratio.

Which of the following describes the interest coverage ratio?

Which of the following ratios involves the market price of a company's stock?

A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be comparable.

A company with $50,000 in current assets, $25,000 in quick assets, and $30,000 in current liabilities makes a payment of a $1,500 current debt. As a result of this transaction, the current ratio and quick ratio will

Form 10-Q refers to the annual report filed with the SEC.

Accounting methods may be a source of incomparability among companies.

Return on assets is most closely related to

Inventory turnover is a measure of liquidity that focuses on the relative size of inventory.

In a common-size income statement for a retail store, the 100 percent amount is for

A quick ratio that is much smaller than the current ratio indicates that

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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