Exam 13: Financial Statement Analysis Available Online in the Connect Library

The following information is from the financial records of Norfolk Company for 2012: Required: Calculate the number of times interest is earned for Norfolk in 2012.

Select the correct statement regarding vertical analysis.

In vertical analysis, each item is expressed as a percentage of:

The accounting profession assumes that financial statement users have a reasonable knowledge of business.

Which of the following is an objective of ratio analysis?

Which of the following statement is correct regarding the quick ratio?

For 2012, Wylie Corporation reported after-tax net income of $1,100,000. During the year, the number of outstanding shares of 6% $100 par preferred stock remained constant at 5,000, and 500,000 shares of common stock were outstanding all year. The company's total stockholders' equity at December 31, 2012, was $10,500,000. Wylie's common stock was selling at $38 per share at the end of the year. All dividends for the year were paid, including a dividend of $1.50 per share to common stockholders. Required: Compute the following: (a) Earnings per share (b) Book value per share of common stock (c) Price-earnings ratio (d) Dividend yield

Croatan Company's current ratio for 2012 was 1.42, which was slightly above the current ratio for similar companies in its industry. Croatan's quick ratio for 2012 was 0.68, which is substantially lower than for similar companies in its industry. What conclusion would you reach based on this information?

The quick ratio although similar to the current ratio is more conservative.

Which ratio measures the percentage of company's assets that are financed by debt?

The Crestar Company reported net income of $100,000 on 20,000 outstanding common shares. Preferred dividends total $12,000. On the most recent trading day, the preferred shares sold at $50 and the common shares sold at $80. What is this company's current price-earnings ratio? (rounded)

The current ratio is one of the most common measures of liquidity.

The Destin Company reported net income of $50,000 on sales of $300,000. The company has total assets of $500,000 and total liabilities of $100,000. What is the company's return on equity ratio?

Which of the following is a factor involved in communicating useful information?

Select the incorrect statement regarding the information disclosed in financial statements.

Which ratio would you use to examine a company's ability to pay its debts in the short term?

The study of an individual item or account over several accounting periods, such as months, quarters or years is known as:

Accrual accounting requires the use of many estimates, including:

Jones Company has cash of $20,000, accounts receivable of $30,000, inventory of $16,000, and equipment of $50,000. Assuming current liabilities of $24,000, this company's working capital is: