Question 1

Common-size statements:

Accepted Answer

A)  Reveal changes in the relative importance of each financial statement item to a base amount.
B)  Do not emphasize the relative importance of each item.
C)  Compare financial statements over time.
D)  Show the dollar amount of change for financial statement items.
E)  Reveal patterns in data across successive periods.F) A) and E)
G) B) and D)

Question 2

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

Accepted Answer

The answer of The current ratio and acid-test ratio are...

Question 3

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

Accepted Answer

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

Question 4

Refer to the following selected financial information from Whirlpool Company.

-Compute the company's days' sales uncollected for Year 2.(Use 365 days a year.)

Accepted Answer

A)  43.9.
B)  43.7.
C)  46.2.
D)  85.4.
E)  42.7.F) A) and E)
G) A) and C)

Question 5

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Vertical analysis is used to reveal patterns in data covering two or more successive periods.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the following selected financial information from Mojave Corp.Compute the company's times interest earned.

Accepted Answer

A)  6.2.
B)  2.5.
C)  8.7.
D)  9.7.
E)  3.7.F) All of the above
G) None of the above

Question 9

Use the following selected information from Whitman Corp.

-To determine the Year 1 and Year 2 common size percentages for operating expenses using Net sales as the base.

Accepted Answer

A)  36.4% for Year 2 and 41.1% for Year 1.
B)  55.0% for Year 2 and 56.0% for Year 1.
C)  23.9% for Year 2 and 23.0% for Year 1.
D)  103.8% for Year 2 and 100.0% for Year 1.
E)  20.0% for Year 2 and 23.0% for Year 1.F) C) and E)
G) None of the above

Question 10

A corporation reports the following year-end balance sheet data.

-The company's debt-to-equity ratio equals:

Accepted Answer

A)  0.58
B)  1.27
C)  2.07
D)  0.37
E)  0.63F) All of the above
G) A) and E)

Question 11

Debt financing is considered riskier than equity financing because of its required payments of interest and principal.

Accepted Answer

A) True 
 B)False

Question 12

If a company is comparing this year's financial performance to last year's financial performance,it is using horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 13

A company with a low inventory turnover requires a smaller investment in inventory than one producing the same sales with a higher turnover.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the following selected financial information from Texas Electronics.

-Compute the company's days' sales uncollected for Year 2.(Use 365 days a year.)

Accepted Answer

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

Question 15

Internal users of accounting information manage and operate the company.

Accepted Answer

A) True 
 B)False

Question 16

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)  Fair value reporting.
E)  Liquidation analysis.F) A) and E)
G) B) and E)

Question 17

Trend analysis is computing percents that show patterns in data across periods.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the following selected financial information from Whirlpool Company.

-Compute the company's accounts receivable turnover for Year 2.

Accepted Answer

A)  8.36.
B)  8.37.
C)  4.78.
D)  8.59.
E)  8.54.F) A) and E)
G) B) and C)

Question 19

The ability to meet short-term obligations and to efficiently generate revenues is called:

Accepted Answer

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

Question 20

Use the following selected information from Whitman Corp.

-To determine the Year 1 and Year 2 common size percentages for cost of goods sold using Net sales as the base.

Accepted Answer

A)  36.4% for year 2 and 41.1% for year 1.
B)  55.0% for year 2 and 56.0% for year 1.
C)  119.4% for year 2 and 100.0% for year 1.
D)  117.2% for year 2 and 100.0% for year 1.
E)  65.1% for year 2 and 56.0% for year 1.F) None of the above
G) All of the above

Exam 13: Analysis of Financial Statements

Use the following selected information from Whitman Corp. -To determine the Year 1 and Year 2 common size percentages for operating expenses using Net sales as the base.

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Refer to the following selected financial information from Mojave Corp.Compute the company's times interest earned.

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Internal users of accounting information manage and operate the company.

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Net income divided by net sales is the:

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A corporation reports the following year-end balance sheet data. -The company's debt-to-equity ratio equals:

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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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Refer to the following selected financial information from Whirlpool Company. -Compute the company's accounts receivable turnover for Year 2.

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Debt financing is considered riskier than equity financing because of its required payments of interest and principal.

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

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Refer to the following selected financial information from Whirlpool Company. -Compute the company's days' sales uncollected for Year 2.(Use 365 days a year.)

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

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

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Common-size statements:

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Use the following selected information from Whitman Corp. -To determine the Year 1 and Year 2 common size percentages for cost of goods sold using Net sales as the base.

Correct AnswerverifiedShow Answer

A company with a low inventory turnover requires a smaller investment in inventory than one producing the same sales with a higher turnover.

Correct AnswerverifiedShow Answer

Trend analysis is computing percents that show patterns in data across periods.

Correct AnswerverifiedShow Answer

The ability to meet short-term obligations and to efficiently generate revenues is called:

Correct AnswerverifiedShow Answer

If a company is comparing this year's financial performance to last year's financial performance,it is using horizontal analysis.

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Texas Electronics. -Compute the company's days' sales uncollected for Year 2.(Use 365 days a year.)

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Vertical analysis is used to reveal patterns in data covering two or more successive periods.

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