Question 1

Common-size statements are especially useful in comparing

Accepted Answer

A)  A company's performance across time.
B)  Companies of different size.
C)  Supplemental information included in the corporate annual report.
D)  Companies of the same size.

Question 2

Earnings per share represents how much of a company's current net income could be distributed for each share of stock held by an investor.

Accepted Answer

A) True 
 B)False

Question 3

Earnings per share represents

Accepted Answer

A)  How much of a company's current net income has been distributed for each share of stock held by an investor.
B)  How much of a company's current net income could be distributed for each share of stock held by an investor.
C)  How much of a company's contribution margin is available to be distributed to each stockholder.
D)  How much gross profit of a company could be distributed for each share of stock held by an investor.

Question 4

Trend analysis is very useful for analyzing the financial statements,but not for analyzing supplemental information reported in corporate annual reports.

Accepted Answer

A) True 
 B)False

Question 5

A form of horizontal analysis in which each year's account balance is expressed as a percentage of the base year' is called

Accepted Answer

A)  Trend analysis.
B)  Percentage analysis.
C)  Common size analysis.
D)  Quick analysis.

Question 6

Debt is not a free resource because

Accepted Answer

A)  The use of debt funds is restricted as designated by the debt instrument.
B)  Companies must pay interest on the borrowings.
C)  Companies must restrict cash flow until the debt is repaid.
D)  Companies do not pay interest on the borrowings.

Question 7

Probably the most common measure of short-term liquidity is the

Accepted Answer

A)  Acid-test.
B)  Current ratio.
C)  Quick ratio.
D)  Working capital.

Question 8

The average collection period reveals

Accepted Answer

A)  How many days,on average,it takes between when an order is placed until the cash is collected.
B)  How many days,on average,the company takes to collect cash from a credit sale.
C)  How many days,on average,the company takes to collect past due accounts.
D)  How many days,on average,it takes between when an original contact is made to collect an account until the cash is collected.

Question 9

Investigating liquidity is important because

Accepted Answer

A)  If a company cannot pay its bills on time,it will have difficulty obtaining resources needed to continue operating.
B)  A company needs the ability to take advantage of opportunities as they arise.
C)  Both if a company cannot pay its bills on time,it will have difficulty obtaining resources needed to continue operating and a company needs the ability to take advantage of opportunities as they arise.
D)  Neither if a company cannot pay its bills on time,it will have difficulty obtaining resources needed to continue operating nor a company needs the ability to take advantage of opport

Question 10

The formula for calculating the debt ratio is

Accepted Answer

A)  Total liabilities divided by total assets.
B)  Long-term liabilities divided by total assets.
C)  Total liabilities divided by total liabilities and stockholders' equity.
D)  Total debt divided by total stockholders' equity.

Question 11

Answer the following questions related to common-size financial statements?
a.What are common-size financial statements? How are common-size financial statements used?
b.What is the base for a common-size income statement?
c.What is the base for a common-size balance sheet?
Unit 12-2,

Accepted Answer

a.Common size financial statements expre...

Question 12

Utica Corporation reported the following financial information:
  Required: 
a.What is the trend percentage for cash in 2014 with 2012 as the base year?
b.What is the trend percentage for inventory in 2014 with 2012 as the base year?
Unit 12-1,

Accepted Answer

a.$10,000 ÷ $30,000 ...

Question 13

The income statement for Otto Construction Company appears below:  Average total assets total $240,000.Otto's income tax rate is 25%.
What is the return on assets?

Accepted Answer

A)  15.6%
B)  15.8%
C)  16.8%
D)  17.6%

Question 14

Dun and Bradstreet's Industry Norms and Key Business Ratios and the Almanac of Business and Industrial Financial Ratios are two publications relevant to managers interested in understanding a company's performance relative to its competitors.
Required:
a.What is the meaning of SIC and NAICS?
b.Explain how the SIC and NAICS codes were developed.
Unit 12-4,

Accepted Answer

a.SIC is the Standard Industrial Classif...

Question 15

Another term for vertical analysis is

Accepted Answer

A)  Common-size analysis.
B)  Liquidity analysis.
C)  Horizontal analysis.
D)  Leverage analysis.

Question 16

Which of the following statements relating to earnings per share is not true?

Accepted Answer

A)  Earnings per share is an often-reported measure of the potential return to stockholders.
B)  Earnings per share is a financial measure.
C)  Earnings per share is a cash measure.
D)  Earnings per share is based on the accrual basis of accounting.

Question 17

Which of the following parties are not interested in a company's ability to remain profitable over the long-run?

Accepted Answer

A)  Investors
B)  Employees
C)  Creditors
D)  Investors,Employees,and Creditors.

Question 18

In preparing a common-size balance sheet,you express all individual liability or equity account balances as a percentage of total assets.

Accepted Answer

A) True 
 B)False

Question 19

The inventory turnover is calculated as

Accepted Answer

The answer of The inventory turnover is calculated as ...

Question 20

The times interest earned ratio measures a company's ability to

Accepted Answer

A)  Maintain profit after paying interest.
B)  Pay interest and debt on the due date.
C)  Make interest payment out of current earnings.
D)  Pay interest and debt from current assets already on hand.

Exam 12: Financial Statement Analysis

Which of the following statements relating to earnings per share is not true?

Correct Answer
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The income statement for Otto Construction Company appears below: Average total assets total $240,000.Otto's income tax rate is 25%. What is the return on assets?

Correct Answer
verified

A form of horizontal analysis in which each year's account balance is expressed as a percentage of the base year' is called

Correct Answer
verified

The inventory turnover is calculated as

Correct Answer
verified

In preparing a common-size balance sheet,you express all individual liability or equity account balances as a percentage of total assets.

Correct Answer
verified

Common-size statements are especially useful in comparing

Correct Answer
verified

The formula for calculating the debt ratio is

Correct Answer
verified

Earnings per share represents

Correct Answer
verified

Debt is not a free resource because

Correct Answer
verified

Trend analysis is very useful for analyzing the financial statements,but not for analyzing supplemental information reported in corporate annual reports.

Correct Answer
verified

Which of the following parties are not interested in a company's ability to remain profitable over the long-run?

Correct Answer
verified

The average collection period reveals

Correct Answer
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Probably the most common measure of short-term liquidity is the

Correct Answer
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Earnings per share represents how much of a company's current net income could be distributed for each share of stock held by an investor.

Correct Answer
verified

The times interest earned ratio measures a company's ability to

Correct Answer
verified

Another term for vertical analysis is

Correct Answer
verified

Utica Corporation reported the following financial information: Required: a.What is the trend percentage for cash in 2014 with 2012 as the base year? b.What is the trend percentage for inventory in 2014 with 2012 as the base year? Unit 12-1,

Correct Answer
verified
a.$10,000 ÷ $30,000 ...
View Answer

Investigating liquidity is important because

Correct Answer
verified

Answer the following questions related to common-size financial statements? a.What are common-size financial statements? How are common-size financial statements used? b.What is the base for a common-size income statement? c.What is the base for a common-size balance sheet? Unit 12-2,

Correct Answer
verified
a.Common size financial statements expre...
View Answer

Correct Answer
verified
a.SIC is the Standard Industrial Classif...
View Answer

Exam 12: Financial Statement Analysis

Which of the following statements relating to earnings per share is not true?

Correct AnswerverifiedShow Answer

The income statement for Otto Construction Company appears below: Average total assets total $240,000.Otto's income tax rate is 25%. What is the return on assets?

Correct AnswerverifiedShow Answer

A form of horizontal analysis in which each year's account balance is expressed as a percentage of the base year' is called

Correct AnswerverifiedShow Answer

The inventory turnover is calculated as

Correct AnswerverifiedShow Answer

In preparing a common-size balance sheet,you express all individual liability or equity account balances as a percentage of total assets.

Correct AnswerverifiedShow Answer

Common-size statements are especially useful in comparing

Correct AnswerverifiedShow Answer

The formula for calculating the debt ratio is

Correct AnswerverifiedShow Answer

Earnings per share represents

Correct AnswerverifiedShow Answer

Debt is not a free resource because

Correct AnswerverifiedShow Answer

Trend analysis is very useful for analyzing the financial statements,but not for analyzing supplemental information reported in corporate annual reports.

Correct AnswerverifiedShow Answer

Which of the following parties are not interested in a company's ability to remain profitable over the long-run?

Correct AnswerverifiedShow Answer

The average collection period reveals

Correct AnswerverifiedShow Answer

Probably the most common measure of short-term liquidity is the

Correct AnswerverifiedShow Answer

Earnings per share represents how much of a company's current net income could be distributed for each share of stock held by an investor.

Correct AnswerverifiedShow Answer

The times interest earned ratio measures a company's ability to

Correct AnswerverifiedShow Answer

Another term for vertical analysis is

Correct AnswerverifiedShow Answer

Utica Corporation reported the following financial information: Required: a.What is the trend percentage for cash in 2014 with 2012 as the base year? b.What is the trend percentage for inventory in 2014 with 2012 as the base year? Unit 12-1,

Correct Answerverifieda.$10,000 ÷ $30,000 ...View AnswerShow Answer

Investigating liquidity is important because

Correct AnswerverifiedShow Answer

Answer the following questions related to common-size financial statements? a.What are common-size financial statements? How are common-size financial statements used? b.What is the base for a common-size income statement? c.What is the base for a common-size balance sheet? Unit 12-2,

Correct Answerverifieda.Common size financial statements expre...View AnswerShow Answer

Correct Answerverifieda.SIC is the Standard Industrial Classif...View AnswerShow Answer

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verified
a.$10,000 ÷ $30,000 ...
View Answer

Correct Answer
verified

Correct Answer
verified
a.Common size financial statements expre...
View Answer

Correct Answer
verified
a.SIC is the Standard Industrial Classif...
View Answer