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Exam 13: How to Read, Analyze, and Interpret Financial Reports

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Question 31

True/False

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A ratio of 4:5:2 means that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

A) True
B) False

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Question 32

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In analyzing the income statement of Bob Company, cost of goods sold decreased from 2013 to 2014 by 8.2%. The cost of goods sold was $19,000 in 2014. The cost of goods sold to nearest dollar in 2013 was:

A) $20,697.17
B) $20,679.71
C) $20,769.71
D) $20,796.71
E) None of these

F) D) and E)
G) C) and D)

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Question 33

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Horizontal analysis need not be done using comparative reports.

Jay Corporation has earned $175,900 after tax. The accountant calculated the return on equity as 12.5%. Jay Corporation's stockholders' equity to the nearest dollar is:

The income statement shows the financial condition of a business over a period of time.

Mel King has asked you to prepare a classified balance sheet for Pad Co. as of December 31, 2014. Ending merchandise inventory was $1,800:

From 2013 to 2014, accounts receivable increased from $4,000 to $4,800. The percent increase is:

A current ratio is calculated by current assets times current liabilities.

Assets that last longer than one year are called plant and equipment.

Assets represent things of value owed by the business.

The asset turnover of Ryan Company is 7.2. The total assets of Ryan are $88,000. Ryan's net sales were:

Which one is not used to calculate net sales?

In horizontal analysis the old year is the base.