Question 1

Net sales divided by average total assets is the:

Accepted Answer

A)   Profit margin.
B)   Total asset turnover.
C)   Current ratio.
D)   Sales return ratio.
E)   Return on total assets.F) All of the above
G) A) and E)

Question 2

Refer to the following selected financial information from Fennie's, LLC. Compute the company's acid-test ratio for Year 2.

Accepted Answer

A)   2.26.
B)   1.98.
C)   2.95.
D)   3.05.
E)   1.88.F) A) and E)
G) D) and E)

Question 3

Current assets divided by current liabilities is the:

Accepted Answer

A)   Current ratio.
B)   Quick ratio.
C)   Debt ratio.
D)   Liquidity ratio.
E)   Solvency ratio.F) All of the above
G) B) and D)

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

Dividing accounts receivable, net by net sales and multiplying the result by 365 is the:

Accepted Answer

A)   Profit margin.
B)   Days' sales uncollected.
C)   Accounts receivable turnover ratio.
D)   Average accounts receivable ratio.
E)   Current ratio.F) A) and E)
G) None of the above

Question 6

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Accepted Answer

A)   Asset comparative statements.
B)   Percentage comparative statements.
C)   Common-size comparative statements.
D)   Sales comparative statements.
E)   General-purpose financial statements.F) A) and D)
G) A) and E)

Question 7

The common-size percent is computed by:

Accepted Answer

A)   Dividing the analysis amount by the base amount.
B)   Dividing the base amount by the analysis amount.
C)   Dividing the analysis amount by the base amount and multiplying the result by 100.
D)   Dividing the base amount by the analysis amount and multiplying the result by 1,000.
E)   Subtracting the base amount from the analysis amount and multiplying the result by 100.F) A) and E)
G) A) and B)

Question 8

Three of the most common tools of financial analysis are:

Accepted Answer

A)   Financial reporting, ratio analysis, vertical analysis.
B)   Ratio analysis, horizontal analysis, financial reporting.
C)   Horizontal analysis, vertical analysis, ratio analysis.
D)   Trend analysis, financial reporting, ratio analysis.
E)   Vertical analysis, political analysis, horizontal analysis.F) B) and C)
G) A) and D)

Question 9

The ability to generate future revenues and meet long-term obligations is referred to as:

Accepted Answer

A)   Liquidity and efficiency.
B)   Solvency.
C)   Profitability.
D)   Market prospects.
E)   Creditworthiness.F) A) and C)
G) None of the above

Question 10

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...

Question 11

General-purpose financial statements include the (1) _________________, (2) _________________, (3) ___________________________ (4) ________________________ and (5) ___________________________.

Accepted Answer

Income statement, balance shee...

Question 12

The following information is available for the McCartney Corporation:  Calculate the company's inventory turnover and its days' sales in inventory.

Accepted Answer

The answer of The following information is available for the...

Question 13

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

Accepted Answer

A)   43.9.
B)   42.3.
C)   46.2.
D)   80.0.
E)   113.3.F) B) and C)
G) C) and D)

Question 14

Financial statement analysis lessens the need for expert judgment.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

Accepted Answer

A)   $232,700.
B)   $220,600.
C)   $147,200.
D)   $111,700.
E)   $142,700.F) B) and D)
G) None of the above

Question 16

A company's calendar-year financial data are shown below. The company had total assets of $339,000 and total equity of $144,400 for the prior year. No additional shares of common stock were issued during the year. The December 31 market price per share is $49.50. Cash dividends of $19,500 were paid during the year. Calculate the following ratios for the company:
(a) profit margin ratio.
(b) gross margin ratio.
(c) return on total assets.
(d) return on common stockholders' equity.
(e) book value per common share.
(f) basic earnings per share.
(g) price earnings ratio.
(h) dividend yield.

Accepted Answer

The answer of A company's calendar-year financial data are shown...

Question 17

A financial statement analysis report:

Accepted Answer

A)   Enables readers to see the process and rationale of analysis.
B)   Forces preparers to organize their reasoning and to verify the logic of analysis.
C)   Serves as a method of communication to users.
D)   Helps users and preparers to refine conclusions based on evidence from key building blocks.
E)   All of these.F) C) and D)
G) B) and D)

Question 18

The percent change is computed by subtracting the analysis period amount from the base period amount, dividing the result by the base period amount and multiplying that result by 100.

Accepted Answer

A) True 
 B)False

Question 19

The average number of times a company's inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance, is the:

Accepted Answer

A)   Accounts receivable turnover.
B)   Inventory turnover.
C)   Days' sales uncollected.
D)   Current ratio.
E)   Price earnings ratio.F) D) and E)
G) A) and C)

Question 20

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) A) and C)
G) A) and B)

Exam 17: Analysis of Financial Statements

General-purpose financial statements include the (1) _________, (2) _, (3) _ (4) and (5) _________.

Correct Answer
verified
Income statement, balance shee...
View Answer

The following information is available for the McCartney Corporation: Calculate the company's inventory turnover and its days' sales in inventory.

Correct Answer
verified

The average number of times a company's inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance, is the:

Correct Answer
verified

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

Correct Answer
verified

The common-size percent is computed by:

Correct Answer
verified

Dividing accounts receivable, net by net sales and multiplying the result by 365 is the:

Correct Answer
verified

Three of the most common tools of financial analysis are:

Correct Answer
verified

Financial statement analysis lessens the need for expert judgment.

Correct Answer
verified

A financial statement analysis report:

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Correct Answer
verified

Net sales divided by average total assets is the:

Correct Answer
verified

Current assets divided by current liabilities is the:

Correct Answer
verified

The ability to generate future revenues and meet long-term obligations is referred to as:

Correct Answer
verified

The percent change is computed by subtracting the analysis period amount from the base period amount, dividing the result by the base period amount and multiplying that result by 100.

Correct Answer
verified

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

Correct Answer
verified

Refer to the following selected financial information from Fennie's, LLC. Compute the company's acid-test ratio for Year 2.

Correct Answer
verified

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

Correct Answer
verified

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

Correct Answer
verified

Exam 17: Analysis of Financial Statements

General-purpose financial statements include the (1) _________________, (2) _________________, (3) ___________________________ (4) ________________________ and (5) ___________________________.

Correct AnswerverifiedIncome statement, balance shee...View AnswerShow Answer

The following information is available for the McCartney Corporation: Calculate the company's inventory turnover and its days' sales in inventory.

Correct AnswerverifiedShow Answer

The average number of times a company's inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance, is the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The common-size percent is computed by:

Correct AnswerverifiedShow Answer

Dividing accounts receivable, net by net sales and multiplying the result by 365 is the:

Correct AnswerverifiedShow Answer

Three of the most common tools of financial analysis are:

Correct AnswerverifiedShow Answer

Financial statement analysis lessens the need for expert judgment.

Correct AnswerverifiedShow Answer

A financial statement analysis report:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

Correct AnswerverifiedShow Answer

Net sales divided by average total assets is the:

Correct AnswerverifiedShow Answer

Current assets divided by current liabilities is the:

Correct AnswerverifiedShow Answer

The ability to generate future revenues and meet long-term obligations is referred to as:

Correct AnswerverifiedShow Answer

The percent change is computed by subtracting the analysis period amount from the base period amount, dividing the result by the base period amount and multiplying that result by 100.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Fennie's, LLC. Compute the company's acid-test ratio for Year 2.

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Fennie's, LLC. Compute the company's working capital for Year 2.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

General-purpose financial statements include the (1) _________, (2) _, (3) _ (4) and (5) _________.

Correct Answer
verified
Income statement, balance shee...
View Answer

Correct Answer
verified

Correct Answer
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