Question 1

Explain the concept of financial leverage. What causes financial leverage to be favorable or unfavorable?

Accepted Answer

The answer of Explain the concept of financial leverage. What...

Question 2

Primary measures of performance do not include:

Accepted Answer

A)  Current ratio 
B)  Return on equity 
C)  Asset turnover 
D)  Return on assets

Question 3

Horizontal analysis is used to evaluate trends in the financial condition of an organization.

Accepted Answer

A) True 
 B)False

Question 4

Explain the purpose of evaluation standards in financial analysis, the standards that managers use most frequently, and what common size analysis can reveal.

Accepted Answer

The answer of Explain the purpose of evaluation standards in...

Question 5

Primary measures of performance include:

Accepted Answer

A)  Earnings per share 
B)  Return on equity 
C)  Asset turnover 
D)  All of these responses are primary measures of performance.

Question 6

Oakridge Hobby Shop's inventory turned over six times during the year. Similar shops have an inventory turnover equal to twelve times per year.
What explains Oakridge's state of inventory management?

Accepted Answer

A)  Oakridge sold too much inventory during the year. 
B)  Oakridge is performing twice as well as its competitors. 
C)  Oakridge needs to increase sales and decrease the amount of goods on hand. 
D)  Oakridge should increase the amount of goods on hand to accommodate the additional inventory demand.

Question 7

-Which of the following would result from a horizontal analysis of Robbins Corporation's balance sheet?

Accepted Answer

A)  Inventories are 5.11% of total assets for 2017. 
B)  Accounts receivable increased $10,000 or 40.0% during 2017 . 
C)  Accounts receivable is 7.78% of total assets for 2017. 
D)  Accounts receivable is 4.0 times larger than inventories in 2017.

Question 8

Factors that influence the financial statements and evaluation methods include:

Accepted Answer

A)  Inadequacy of a single financial analysis measure 
B)  Alternative accounting methods and procedures 
C)  Inflation or deflation 
D)  All of the above

Question 9

Horizontal analysis is analysis:

Accepted Answer

A)  Or comparison of a firm's current financial measures to those of previous periods 
B)  In which all items are presented as a percentage of a base item on the same financial statement 
C)  In which a statistic is calculated for the relationship between two items on a single financial statement or for two items on different financial statements 
D)  Of all ratios that increased or decreased over past accounting periods

Question 10

The dollar change and percentage change in the accounts payable account from 2016 to 2017 is calculated for Barker Enterprises. This is an example of:

Accepted Answer

A)  Horizontal analysis 
B)  Vertical analysis 
C)  Performance analysis 
D)  Solvency analysis

Question 11

Financial statement analysis is the process of interpreting and evaluating financial statements by using data and disclosures contained in them to produce additional financial measures.

Accepted Answer