Question 1

A company had a market price of $37.50 per share,earnings per share of $1.25,and dividends per share of $0.40.Its price-earnings ratio is equal to:

Accepted Answer

A) 3.1. 
B) 30.0. 
C) 93.8. 
D) 32.0. 
E) 3.3.

Question 2

General-purpose financial statements include the (1) ___________________, (2) ___________________, (3) _____________________________, (4) ________________________ and (5) _____________________________.

Accepted Answer

The answer of General-purpose financial statements include the (1) ___________________,...

Question 3

Reporting of discontinued segments includes:

Accepted Answer

A) Income or loss from operating the discontinued segment net of tax and gain or loss from disposal of the segment's net assets net of tax. 
B) Extraordinary items. 
C) Changes in accounting principle. 
D) Items that are both unusual and infrequent. 
E) Writing off of receivables.

Question 4

Selected comparative income statement amounts for a company are shown below.Using 2013 as the base year for a horizontal analysis,compute the account with the most significant change. $$\begin{array} { | l | r | r | } 
\hline &  { 2013 } & { 2014 } \
\hline \text { Sales } & \$ 400,000 & \$ 520,000 \
\hline \text { General arid adrriristrative experises } & \$ 27,000 & \$ 29,700 \
\hline \text { Irterest expense } & \$ 1,000 & \$ 1,700 \
\hline \text { Miscellarreous experse } & \$ 100 & \$ 200 \
\hline
\end{array}$$

Accepted Answer

A) Sales. 
B) General and administrative expenses. 
C) Interest expense. 
D) Miscellaneous expense. 
E) Cannot be determined from the given data.

Question 5

A company had a market price of $83.12 per share,dividends per share of $5.40,and earnings per share of $4.87.Its price-earnings ratio is equal to:

Accepted Answer

A) 0.056. 
B) 0.065. 
C) 8.09. 
D) 15.39. 
E) 17.07.

Question 6

A rough guideline states that for a company with no discounts offered,days' sales uncollected should not exceed 1⅓ times the days in its credit period,if discounts are not offered.

Accepted Answer

A) True 
 B)False

Question 7

A good financial statement analysis report often includes the following sections: Executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Accepted Answer

A) True 
 B)False

Question 8

Annual cash dividends per share divided by market price per share is equal to the:

Accepted Answer

A) Price-earnings ratio. 
B) Price-dividends ratio. 
C) Profit margin. 
D) Dividend yield ratio. 
E) Earnings per share.

Question 9

Internal users of financial information:

Accepted Answer

A) Are not directly involved in operating a company. 
B) Are those individuals involved in managing and operating the company. 
C) Include shareholders and lenders. 
D) Include directors and customers. 
E) Include suppliers,regulators and the press.

Question 10

Net income divided by average total assets is equal to the:

Accepted Answer

A) Profit margin. 
B) Total asset turnover. 
C) Return on total assets. 
D) Days' income in assets. 
E) Current ratio.

Question 11

The ability to meet short-term obligations and to generate revenues using the least amount of resources is called:

Accepted Answer

A) Liquidity and efficiency. 
B) Solvency. 
C) Profitability. 
D) Market prospects. 
E) Creditworthiness.

Question 12

A _____________________________ is a part of a company's operations that serves a particular line of business or class of customers.

Accepted Answer

The answer of A _____________________________ is a part of a...

Question 13

The common-size percent is computed by:

Accepted Answer

A) Dividing the analysis amount by the base amount. 
B) Dividing the base amount by the analysis amount. 
C) Dividing the analysis amount by the base amount and multiplying the result by 100. 
D) Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E) Subtracting the base amount from the analysis amount and multiplying the result by 100.

Question 14

Ratios analysis eliminates all of the differences of GAAP versus IFRS financial reporting.

Accepted Answer

A) True 
 B)False

Question 15

A component of operating efficiency and profitability,calculated by expressing net income as a percent of net sales,is equal to the:

Accepted Answer

A) Acid-test ratio. 
B) Merchandise turnover. 
C) Price earnings ratio. 
D) Accounts receivable turnover. 
E) Profit margin ratio.

Question 16

The three most common tools of financial analysis are:

Accepted Answer

A) Financial reporting,ratio analysis,vertical analysis. 
B) Ratio analysis,horizontal analysis,financial reporting. 
C) Horizontal analysis,vertical analysis,ratio analysis. 
D) Trend analysis,financial reporting,ratio analysis. 
E) Vertical analysis,political analysis,horizontal analysis.

Question 17

Industry standards for financial statement analysis:

Accepted Answer

A) Are based on a company's prior performance. 
B) Are set by the government. 
C) Are set by the financial performance and condition of the company's industry. 
D) Are based on rules of thumb. 
E) Compare a company's income with the prior year's income.

Question 18

Information from a manufacturing company's current year income statement follows:
  Calculate the company's times interest earned.

Accepted Answer

The answer of Information from a manufacturing company's current year...

Question 19

If a company's activities include operations that are being discontinued,the income or loss from the discontinued operations are included on the income statement as part of income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 20

A good financial statement analysis report usually includes the following six sections: (1) ________________________, (2) ______________________, (3) _________________, (4) __________________ (5) ____________________ and (6) ______________________.

Accepted Answer

The answer of A good financial statement analysis report usually...

Exam 13: Analyzing and Interpreting Financial Statements

A company had a market price of $37.50 per share,earnings per share of $1.25,and dividends per share of $0.40.Its price-earnings ratio is equal to:

General-purpose financial statements include the (1) _________, (2) _, (3) _, (4) and (5) _________.

Reporting of discontinued segments includes:

A company had a market price of $83.12 per share,dividends per share of $5.40,and earnings per share of $4.87.Its price-earnings ratio is equal to:

A rough guideline states that for a company with no discounts offered,days' sales uncollected should not exceed 1⅓ times the days in its credit period,if discounts are not offered.

A good financial statement analysis report often includes the following sections: Executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Annual cash dividends per share divided by market price per share is equal to the:

Internal users of financial information:

Net income divided by average total assets is equal to the:

The ability to meet short-term obligations and to generate revenues using the least amount of resources is called:

A _____________________________ is a part of a company's operations that serves a particular line of business or class of customers.

The common-size percent is computed by:

Ratios analysis eliminates all of the differences of GAAP versus IFRS financial reporting.

A component of operating efficiency and profitability,calculated by expressing net income as a percent of net sales,is equal to the:

The three most common tools of financial analysis are:

Industry standards for financial statement analysis:

Information from a manufacturing company's current year income statement follows: Calculate the company's times interest earned.

If a company's activities include operations that are being discontinued,the income or loss from the discontinued operations are included on the income statement as part of income from continuing operations.

A good financial statement analysis report usually includes the following six sections: (1) __________, (2) , (3) _, (4) (5) and (6) ____________.