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Exam 17: Financial Statement Analysis

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Question 61

Multiple Choice

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Mercer,Inc.provides the following data for 2019: The gross profit as a percentage of net sales is ________.(Round your answer to two decimal places. )

A) 37.96%
B) 39.80%
C) 60.20%
D) 40.8%

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Question 62

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The formula for calculating the cash ratio is ________.

A) (Cash) / Total liabilities
B) (Cash + Cash equivalents) / Total current liabilities
C) (Cash + Cash equivalents) / Total assets
D) (Cash equivalents) / Total current liabilities

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Question 63

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Benchmarking often compares a company against a key competitor or the industry average.

Provide a description of the contents of each of the following components of the annual report.

The price/earnings ratio shows the market price of $1 of earnings.

The rate of return on total assets measures a company's success in using its assets to earn a profit.

The debt ratio is the ratio of total debt divided by total equity.

Glasgow,Inc.provides the following: Perform a vertical analysis of Glasgow's balance sheet for each year.(Round to one decimal place. )

Commons,Inc.provides the following information for 2018: The company has no preferred stock outstanding.Calculate the dividend yield for common stock.(Round your answer to two decimal places. )

Which of the following best describes trend analysis?

Benchmarking is the comparison of a company's current year results with a previous year's performance.

The audit report in the annual report is prepared by an internal auditor of a company.

To accurately determine the financial performance of a company,it is necessary to compare its performance from year to year,with a competing company,and with the same industry as a whole.

Surround,Inc.provides the following data: Calculate the debt to equity ratio.(Round your answer to two decimal places. )

There are three main ways to analyze financial statements.Which of the following does NOT represent one of these ways of analyzing financial statements?

Investors and creditors can evaluate a company by examining only one year of data.

A high current ratio indicates that current liabilities are greater than current assets.

Milton,Inc.provides the following income statement for 2019: Calculate the times-interest-earned ratio.(Round your answer to two decimal places. )

To accurately determine the financial performance of a company,it is necessary to compare the company's performance ________.

Walton,Inc.provides the following data: Additional information for the year ending December 31,2019: Calculate the rate of return on total assets for 2019.(Round your answer to two decimal places. )