Question 1

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) A) and D)
G) B) and E)

Question 2

Extraordinary items:

Accepted Answer

A)  Are not reported on a corporate income statement.
B)  Are included in income from operations.
C)  Are unusual and infrequent.
D)  Include changes in accounting principle.
E)  Are disclosed before discontinued operations on the income statement.F) B) and C)
G) None of the above

Question 3

The greater the times interest earned ratio,the more risk a company is exposed to.

Accepted Answer

A) True 
 B)False

Question 4

Current assets minus current liabilities is equal to:

Accepted Answer

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

Question 5

Profitability is the company's ability to generate future revenues and meet long-term financial obligations.

Accepted Answer

A) True 
 B)False

Question 6

The current ratio is calculated as current liabilities divided by current assets.

Accepted Answer

A) True 
 B)False

Question 7

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Accepted Answer

A) True 
 B)False

Question 8

Explain the form and content of a complete income statement.

Accepted Answer

A complete income statement has five pot...

Question 9

The standards for comparisons in financial statement analysis include (1) _______________, (2) ________________, (3) _________________ and (4) _______________.

Accepted Answer

intracompany,competi...

Question 10

A company has long-term notes payable of $175,625,taxes of $9,500,ending merchandise inventory of $450,290,interest expense of $14,050,net sales of $720,000 a gross profit ratio of 35%,a times interest earned ratio of 4.23,and total assets of $1,300,417.What is the company's earnings before interest and taxes?

Accepted Answer

A)  $252,000
B)  $65,814
C)  $269,710
D)  106,696
E)  $59,432F) D) and E)
G) B) and E)

Question 11

The current year-end balance sheet data for a company are shown below:

Calculate this company's:
(1) Working capital
(2) Acid-test ratio

Accepted Answer

(1) Working capital = $360,000...

Question 12

The ability to provide financial rewards sufficient to attract and retain financing is called:

Accepted Answer

A)  Liquidity and efficiency.
B)  Solvency.
C)  Profitability.
D)  Market prospects.
E)  Creditworthiness.F) B) and E)
G) B) and D)

Question 13

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is equal to the:

Accepted Answer

A)  Inventory turnover ratio.
B)  Profit margin.
C)  Days' sales in inventory.
D)  Current ratio.
E)  Total asset turnover.F) A) and B)
G) A) and C)

Question 14

Corona Company's balance sheet accounts follow: 
-What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?

Accepted Answer

A)  25.20
B)  23.03
C)  20.99
D)  24.58
E)  22.17F) C) and E)
G) C) and D)

Question 15

A company has an inventory turnover ratio of 2.90,merchandise inventory for 2014 of $46,095,and cost of goods sold of $173,420.What is the average inventory?

Accepted Answer

The answer of A company has an inventory turnover ratio...

Question 16

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

Accepted Answer

The answer of The gross margin ratio,return on total assets...

Question 17

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Accepted Answer

A) True 
 B)False

Question 18

Comparative financial statements are reports that show financial amounts placed side by side in columns on a single statement for analysis purposes.

Accepted Answer

A) True 
 B)False

Question 19

In horizontal analysis the percent change is computed by:

Accepted Answer

A)  Subtracting the analysis period amount from the base period amount.
B)  Subtracting the base period amount from the analysis period amount.
C)  Subtracting the analysis period amount from the base period amount,dividing the result by the base period amount,and then multiplying that amount by 100.
D)  Subtracting the base period amount from the analysis period amount,dividing the result by the base period amount,and then multiplying that amount by 100.
E)  Subtracting the base period amount from the analysis amount,then dividing the result by the analysis period amount.F) D) and E)
G) A) and E)

Question 20

The comparative balance sheet for Golden Co.is shown below.Express these amounts in a comparative,common-size balance sheet.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30">_TB6947_00...

Exam 13: Analyzing and Interpreting Financial Statements

Corona Company's balance sheet accounts follow: -What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?

Correct Answer
verified

Explain the form and content of a complete income statement.

Correct Answer
verified
A complete income statement has five pot...
View Answer

The current ratio is calculated as current liabilities divided by current assets.

Correct Answer
verified

The comparative balance sheet for Golden Co.is shown below.Express these amounts in a comparative,common-size balance sheet.

Correct Answer
verified
_TB6947_00...
View Answer

Correct Answer
verified

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is equal to the:

Correct Answer
verified

Profitability is the company's ability to generate future revenues and meet long-term financial obligations.

Correct Answer
verified

Current assets minus current liabilities is equal to:

Correct Answer
verified

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Correct Answer
verified

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

Correct Answer
verified

In horizontal analysis the percent change is computed by:

Correct Answer
verified

Horizontal analysis:

Correct Answer
verified

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Correct Answer
verified

A company has an inventory turnover ratio of 2.90,merchandise inventory for 2014 of $46,095,and cost of goods sold of $173,420.What is the average inventory?

Correct Answer
verified

The standards for comparisons in financial statement analysis include (1) _______, (2) , (3) _ and (4) _______.

Correct Answer
verified
intracompany,competi...
View Answer

The greater the times interest earned ratio,the more risk a company is exposed to.

Correct Answer
verified

The ability to provide financial rewards sufficient to attract and retain financing is called:

Correct Answer
verified

The current year-end balance sheet data for a company are shown below: Calculate this company's: (1) Working capital (2) Acid-test ratio

Correct Answer
verified
(1) Working capital = $360,000...
View Answer

Extraordinary items:

Correct Answer
verified

Comparative financial statements are reports that show financial amounts placed side by side in columns on a single statement for analysis purposes.

Correct Answer
verified

Exam 13: Analyzing and Interpreting Financial Statements

Corona Company's balance sheet accounts follow: -What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783,and $927,587 respectively?

Correct AnswerverifiedShow Answer

Explain the form and content of a complete income statement.

Correct AnswerverifiedA complete income statement has five pot...View AnswerShow Answer

The current ratio is calculated as current liabilities divided by current assets.

Correct AnswerverifiedShow Answer

The comparative balance sheet for Golden Co.is shown below.Express these amounts in a comparative,common-size balance sheet.

Correct Answerverified_TB6947_00...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is equal to the:

Correct AnswerverifiedShow Answer

Profitability is the company's ability to generate future revenues and meet long-term financial obligations.

Correct AnswerverifiedShow Answer

Current assets minus current liabilities is equal to:

Correct AnswerverifiedShow Answer

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In horizontal analysis the percent change is computed by:

Correct AnswerverifiedShow Answer

Horizontal analysis:

Correct AnswerverifiedShow Answer

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Correct AnswerverifiedShow Answer

A company has an inventory turnover ratio of 2.90,merchandise inventory for 2014 of $46,095,and cost of goods sold of $173,420.What is the average inventory?

Correct AnswerverifiedShow Answer

The standards for comparisons in financial statement analysis include (1) _______________, (2) ________________, (3) _________________ and (4) _______________.

Correct Answerverifiedintracompany,competi...View AnswerShow Answer

The greater the times interest earned ratio,the more risk a company is exposed to.

Correct AnswerverifiedShow Answer

The ability to provide financial rewards sufficient to attract and retain financing is called:

Correct AnswerverifiedShow Answer

The current year-end balance sheet data for a company are shown below: Calculate this company's: (1) Working capital (2) Acid-test ratio

Correct Answerverified(1) Working capital = $360,000...View AnswerShow Answer

Extraordinary items:

Correct AnswerverifiedShow Answer

Comparative financial statements are reports that show financial amounts placed side by side in columns on a single statement for analysis purposes.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
A complete income statement has five pot...
View Answer

Correct Answer
verified

Correct Answer
verified
_TB6947_00...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The standards for comparisons in financial statement analysis include (1) _______, (2) , (3) _ and (4) _______.

Correct Answer
verified
intracompany,competi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(1) Working capital = $360,000...
View Answer

Correct Answer
verified

Correct Answer
verified