Question 1

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

Accepted Answer

A) True 
 B)False  False

Question 2

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Accepted Answer

A) True 
 B)False  True

Question 3

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

Accepted Answer

A)  $232,700. 
B)  $220,600. 
C)  $147,200. 
D)  $111,700. 
E)  $142,700. 
A)  $232,700. 
B)  $220,600. 
C)  $147,200. 
D)  $111,700. 
E)  $142,700. A

Question 4

The greater the times interest earned ratio, the greater the risk a company is exposed to.

Accepted Answer

A) True 
 B)False

Question 5

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

Accepted Answer

A) True 
 B)False

Question 6

Match each of the following terms with the appropriate definitions.

Accepted Answer

The answer of Match each of the following terms with...

Question 7

External users of accounting information make the strategic and operating decisions of a company.

Accepted Answer

A) True 
 B)False

Question 8

Intracompany standards for financial statement analysis:

Accepted Answer

A)  Are often based on a company's prior performance. 
B)  Are often set by competitors. 
C)  Are set by the company's industry. 
D)  Are based on rules of thumb. 
E)  Are published in Dun and Bradstreet. 
A)  Are often based on a company's prior performance. 
B)  Are often set by competitors. 
C)  Are set by the company's industry. 
D)  Are based on rules of thumb. 
E)  Are published in Dun and Bradstreet.

Question 9

Comparative calendar-year financial data for a company are shown below. Calculate the following ratios for the company for 2012:
(a) accounts receivable turnover
(b) day's sales uncollected
(c) inventory turnover
(d) days' sales in inventory

Accepted Answer

The answer of Comparative calendar-year financial data for a company...

Question 10

______________________ ratios include the price-earnings ratio and dividend yield.

Accepted Answer

The answer of ______________________ ratios include the price-earnings ratio and...

Question 11

A trend percent, or index number, is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

Accepted Answer

A) True 
 B)False

Question 12

Comparative horizontal analysis is used to reveal patterns in data covering successive periods.

Accepted Answer

A) True 
 B)False

Question 13

Refer to the following selected financial information from Fennie's, LLC. Compute the company's inventory turnover for Year 2.

Accepted Answer

A)  4.72. 
B)  4.33. 
C)  3.17. 
D)  5.78. 
E)  3.86. 
A)  4.72. 
B)  4.33. 
C)  3.17. 
D)  5.78. 
E)  3.86.

Question 14

Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012:
(a) accounts receivable turnover
(b) inventory turnover
(c) days' sales uncollected
(d) days' sales in inventory
(d) profit margin.
(e) return on total assets.

Accepted Answer

The answer of Selected balances from a company's financial statements...

Question 15

Describe the purpose of horizontal financial statement analysis and how it is applied.

Accepted Answer

Horizontal analysis is a tool to evaluat

Question 16

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Accepted Answer

A) True 
 B)False

Question 17

Current assets minus current liabilities is:

Accepted Answer

A)  Profit margin. 
B)  Financial leverage. 
C)  Current ratio. 
D)  Working capital. 
E)  Quick assets. 
A)  Profit margin. 
B)  Financial leverage. 
C)  Current ratio. 
D)  Working capital. 
E)  Quick assets.

Question 18

The four building blocks of financial analysis are (1) __________________, (2) ________________________, (3) ____________________ and (4) ___________________.

Accepted Answer

Liquidity and effici

Question 19

A company's sales in Year 1 were $280,000, and its sales in Year 2 were $341,600. Using Year 1 as the base year, what is the sales trend percent for Year 2?

Accepted Answer

$341,600/$

Question 20

General-purpose financial statements include the (1) staement of comprehensive income (income statement), (2) statement of financial position (balance sheet), (3) statement of changes in equity, (4) statement of cash flows, and (5) notes to these statements.

Accepted Answer

A) True 
 B)False

Exam 17: Analysis of Financial Statements

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

The greater the times interest earned ratio, the greater the risk a company is exposed to.

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

Match each of the following terms with the appropriate definitions.

External users of accounting information make the strategic and operating decisions of a company.

Intracompany standards for financial statement analysis:

Comparative calendar-year financial data for a company are shown below. Calculate the following ratios for the company for 2012: (a) accounts receivable turnover (b) day's sales uncollected (c) inventory turnover (d) days' sales in inventory

______________________ ratios include the price-earnings ratio and dividend yield.

A trend percent, or index number, is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

Comparative horizontal analysis is used to reveal patterns in data covering successive periods.

Refer to the following selected financial information from Fennie's, LLC. Compute the company's inventory turnover for Year 2.

Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012: (a) accounts receivable turnover (b) inventory turnover (c) days' sales uncollected (d) days' sales in inventory (d) profit margin. (e) return on total assets.

Describe the purpose of horizontal financial statement analysis and how it is applied.

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Current assets minus current liabilities is:

The four building blocks of financial analysis are (1) __________________, (2) ________________________, (3) ____________________ and (4) ___________________.

A company's sales in Year 1 were $280,000, and its sales in Year 2 were $341,600. Using Year 1 as the base year, what is the sales trend percent for Year 2?

General-purpose financial statements include the (1) staement of comprehensive income (income statement), (2) statement of financial position (balance sheet), (3) statement of changes in equity, (4) statement of cash flows, and (5) notes to these statements.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

The four building blocks of financial analysis are (1) , (2) , (3) and (4) _.