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Exam 17: Financial Statement Analysis

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Question 51

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Dollar amounts of working capital are difficult to assess when comparing companies of different sizes or in comparing such amounts with industry figures.

A) True
B) False

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Question 52

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Factors which reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability.

A) True
B) False

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Question 53

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The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

The Cash and Accounts Receivable for a company are provided below: Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

In a common size income statement, the 100% figure is:

A company reports the following: Determine the (a) accounts receivable turnover, and (b) number of days' sales in receivables. Round your answer to one decimal place.

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

Vertical analysis refers to comparing the financial statements of a single company for several years.

The following data are taken from the financial statements:

Ratios and various other analytical measures are not a substitute for sound judgment, nor do they provide definitive guides for action.

Horizontal analysis of comparative financial statements includes the

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Liabilities and Stockholders' Equity Income Statement What is the ratio of net sales to total assets for this company? Round your answer to two decimal points.

Which of the following is not included in the computation of the quick ratio?

The relationship of $325,000 to $125,000, expressed as a ratio, is

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (Round intermediate calculation to two decimal place and final answers to one decimal place) ?

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

Short-term creditors are typically most interested in assessing

An extraordinary item results from

Horizontal analysis is a technique for evaluating financial statement data

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.