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Exam 17: Analysis of Financial Statements

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Question 21

True/False

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Efficiency refers to how productive a company is in using its assets,and is usually measured relative to how much revenue is generated from a certain level of assets.

A) True
B) False

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Question 22

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Refer to the following selected financial information from Hansen's,LLC.Compute the company's return on total assets for Year 2.

A) 9.6%.
B) 15.2%.
C) 2.6%.
D) 22.2%.
E) 14.5%.

F) None of the above
G) D) and E)

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Question 23

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The four building blocks of financial analysis are (1)_____________,(2)____________,(3)____________ and (4)_________________.

General standards of comparisons include the 2: 1 level for the current ratio and 1: 1 level for the acid-test ratio.

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

Refer to the following selected financial information from Fennie's,LLC.Compute the company's days' sales in inventory for Year 2.

A good financial report does not link interpretations and conclusions of analysis with the underlying information.

The gross margin ratio,return on total assets,and basic earnings per share are all _____________ ratios.

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

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

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

The return on total assets can be calculated as profit margin times total asset turnover.

External users of accounting information make the strategic and operating decisions of a company.

Express the following balance sheets for Alberts Company in common-size percents.

Identify and explain the four building blocks of financial statement analysis.

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.

Refer to the following selected financial information from Fennie's,LLC.Compute the company's accounts receivable turnover for Year 2.

Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.

_______________ are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.