Question 1

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accepted Answer

A) True 
 B)False

Question 2

____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

The answer of ____________ is a method of analysis used...

Question 3

Carducci Corporation reported Net Sales of $3.6 million and beginning Total Assets of $0.9 million and ending Total Assets of 1.3 million. The average total asset amount is:

Accepted Answer

A)  $2.3 million.
B)  $2.7 million.
C)  $0.25 million.
D)  $0.36 million.
E)  $1.1 million.F) B) and E)
G) All of the above

Question 4

Ratios must refer to economically important relationships, such as a sale price compared to its cost.

Accepted Answer

A) True 
 B)False

Question 5

The comparison of a company's financial condition and performance across time is known as:

Accepted Answer

A)  Horizontal analysis.
B)  Vertical analysis.
C)  Political analysis.
D)  Financial reporting.
E)  Investment analysis.F) A) and B)
G) B) and E)

Question 6

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2.

Accepted Answer

A)  0.9.
B)  1.1.
C)  0.5.
D)  1.9.
E)  2.1.F) B) and D)
G) A) and B)

Question 8

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

Accepted Answer

A) True 
 B)False

Question 9

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Accepted Answer

A) True 
 B)False

Question 10

Current assets minus current liabilities is:

Accepted Answer

A)  Profit margin.
B)  Financial leverage.
C)  Current ratio.
D)  Working capital.
E)  Quick assets.F) C) and E)
G) C) and D)

Question 11

Financial analysis only refers to the communication of relevant financial information to decision makers.

Accepted Answer

A) True 
 B)False

Question 12

Comparative calendar year financial data for a company are shown below. Calculate the following ratios for 2017:
(a) return on total assets
(b) return on common stockholders' equity.

Accepted Answer

The answer of Comparative calendar year financial data for a...

Question 13

Net income divided by net sales is the:

Accepted Answer

A)  Return on total assets.
B)  Profit margin.
C)  Current ratio.
D)  Total asset turnover.
E)  Days' sales in inventory.F) All of the above
G) B) and D)

Question 14

Washburn Company reported sales of $1,722,000 for Year 1 and $1,831,000 for Year 2. Using Year 1 as the base year, what was the percentage change for sales from Year 1 to Year 2?

Accepted Answer

A)  6.33% decrease.
B)  5.95% decrease.
C)  6.33% increase.
D)  5.95% increase.
E)  6.17% increasE.(1,831,000 - 1,722,000) /1,722,000 = 6.33% increaseF) B) and C)
G) A) and D)

Question 15

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

Accepted Answer

A) True 
 B)False

Question 16

A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals 7.85%.
($14,000/$178,300) * 100 = 7.85%

Accepted Answer

A) True 
 B)False

Question 17

Calculate the percent increases for each of the following balance sheet items.

Accepted Answer

The answer of Calculate the percent increases for each of...

Question 18

Horizontal analysis:

Accepted Answer

A)  Is a method used to evaluate changes in financial data across time.
B)  Is also called vertical analysis.
C)  Is the presentation of financial ratios.
D)  Is a tool used to evaluate financial statement items relative to industry statistics.
E)  Evaluates financial data across industries.F) D) and E)
G) B) and C)

Question 19

Liquidity refers to the availability of resources to meet short-term cash requirements.

Accepted Answer

A) True 
 B)False

Question 20

Earnings per share are calculated only on income from continuing operations.

Accepted Answer

A) True 
 B)False

Exam 13: Analyzing and Interpreting Financial Statements

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion.

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Liquidity refers to the availability of resources to meet short-term cash requirements.

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Net income divided by net sales is the:

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General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

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____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

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Earnings per share are calculated only on income from continuing operations.

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Ratios must refer to economically important relationships, such as a sale price compared to its cost.

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Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2.

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Washburn Company reported sales of $1,722,000 for Year 1 and $1,831,000 for Year 2. Using Year 1 as the base year, what was the percentage change for sales from Year 1 to Year 2?

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Horizontal analysis:

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The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

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A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals 7.85%. ($14,000/$178,300) * 100 = 7.85%

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Current assets minus current liabilities is:

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Calculate the percent increases for each of the following balance sheet items.

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Financial analysis only refers to the communication of relevant financial information to decision makers.

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Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

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Comparative calendar year financial data for a company are shown below. Calculate the following ratios for 2017: (a) return on total assets (b) return on common stockholders' equity.

Correct AnswerverifiedShow Answer

The comparison of a company's financial condition and performance across time is known as:

Correct AnswerverifiedShow Answer

Carducci Corporation reported Net Sales of $3.6 million and beginning Total Assets of $0.9 million and ending Total Assets of 1.3 million. The average total asset amount is:

Correct AnswerverifiedShow Answer

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

Correct AnswerverifiedShow Answer

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