Question 1

Match each ratio that follows to its use (items a-h) . Items may be used more than once.
-Ratio of liabilities to stockholders' equity

Accepted Answer

A)  Assess the profitability of the assets
B)  Assess how effectively assets are used
C)  Indicate the ability to pay current liabilities
D)  Indicate how much of the company is financed by debt and equity
E)  Indicate instant debt-paying abilityF) Assess the profitability of the investment by common stockholdersG) Indicate future earnings prospectsH) Indicate the extent to which earnings are being distributed to common stockholdersI) C) and E)
J) None of the above

Question 2

A loss on disposal of a segment would be reported on the income statement as a (n)

Accepted Answer

A)  administrative expense
B)  other expense
C)  deduction from income from continuing operations
D)  selling expenseE) All of the above
F) C) and D)

Question 3

Based on the following data for the current year,what is the number of days' sales in receivables?

Accepted Answer

A)  7.3
B)  2.5
C)  14.6
D)  25E) B) and D)
F) A) and C)

Question 4

The ability of a business to pay its debts as they come due and to earn a reasonable net income includes

Accepted Answer

A)  solvency and leverage
B)  solvency and profitability
C)  solvency and liquidity
D)  solvency and equityE) C) and D)
F) A) and D)

Question 5

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability.As a result of this transaction,the current ratio and working capital will

Accepted Answer

A)  both decrease
B)  both increase
C)  increase and remain the same, respectively
D)  remain the same and decrease, respectivelyE) A) and C)
F) A) and D)

Question 6

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

Accepted Answer

A)  judge the relative potential of two companies of similar size in different industries
B)  determine which companies in a single industry are of the same value
C)  determine which companies in a single industry are of the same size
D)  make a better comparison of two companies of different sizes in the same industryE) B) and C)
F) All of the above

Question 7

A company reports the following:​  The company's earnings per share on common stock is

Accepted Answer

A)  $13.33
B)  $8.50
C)  $7.50
D)  $35.00E) B) and C)
F) A) and B)

Question 8

In horizontal analysis,each item is expressed as a percentage of the

Accepted Answer

A)  base year figure
B)  retained earnings figure
C)  total assets figure
D)  net income figureE) None of the above
F) All of the above

Question 9

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

Accepted Answer

A) True 
 B)False

Question 10

A company reports the following:​  Calculate the company's price-earnings ratio.Round your answer to one decimal place.

Accepted Answer

Price-Earnings Ratio = Market Price per ...

Question 11

If a company has issued only one class of stock,the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 12

The purpose of an audit is to

Accepted Answer

A)  determine whether or not a company is a good investment
B)  render an opinion on the fairness of the statements
C)  determine whether or not a company complies with corporate social responsibility
D)  determine whether or not a company is a good credit riskE) B) and D)
F) B) and C)

Question 13

Use the information below for Harding Company to answer the questions that follow.
​
 
-Based on the data for Harding Company,what is the quick ratio,rounded to one decimal point?

Accepted Answer

A)  2.7
B)  2.6
C)  1.7
D)  0.9E) B) and C)
F) None of the above

Question 14

The current ratio is

Accepted Answer

A)  used to evaluate a company's liquidity and short-term debt-paying ability
B)  a solvency measure that indicates the margin of safety for bondholders
C)  calculated by dividing current liabilities by current assets
D)  calculated by subtracting current liabilities from current assetsE) B) and C)
F) A) and D)

Question 15

The denominator of the return on total assets ratio is the average total assets.

Accepted Answer

A) True 
 B)False

Question 16

Match each ratio that follows to its use (items a-h) . Items may be used more than once.
-Dividends per share

Accepted Answer

A)  Assess the profitability of the assets
B)  Assess how effectively assets are used
C)  Indicate the ability to pay current liabilities
D)  Indicate how much of the company is financed by debt and equity
E)  Indicate instant debt-paying abilityF) Assess the profitability of the investment by common stockholdersG) Indicate future earnings prospectsH) Indicate the extent to which earnings are being distributed to common stockholdersI) C) and D)
J) B) and D)

Question 17

Cash and accounts receivable for Ashfall Co.are provided below.​  Based on this information,what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis? Round percentages to one decimal place.

Accepted Answer

The answer of Cash and accounts receivable for Ashfall Co.are...

Question 18

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

Accepted Answer

The answer of A company reports the following:​  Determine...

Question 19

In computing the return on total assets,interest expense is subtracted from net income before dividing by average total assets.

Accepted Answer

A) True 
 B)False

Question 20

The following information pertains to Dallas Company.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.​AssetsLiabilities and Stockholders' Equity   Income Statement  ​  What is the return on stockholders' equity?

Accepted Answer

A)  7.3%
B)  13.6%
C)  20.5%
D)  40.9%E) A) and B)
F) All of the above

Exam 17: Financial Statement Analysis

Match each ratio that follows to its use (items a-h) . Items may be used more than once. -Ratio of liabilities to stockholders' equity

Correct AnswerverifiedShow Answer

The denominator of the return on total assets ratio is the average total assets.

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The following information pertains to Dallas Company.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.​AssetsLiabilities and Stockholders' Equity Income Statement ​ What is the return on stockholders' equity?

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Match each ratio that follows to its use (items a-h) . Items may be used more than once. -Dividends per share

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

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In computing the return on total assets,interest expense is subtracted from net income before dividing by average total assets.

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The current ratio is

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A company reports the following:​ The company's earnings per share on common stock is

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Cash and accounts receivable for Ashfall Co.are provided below.​ Based on this information,what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis? Round percentages to one decimal place.

Correct AnswerverifiedShow Answer

A loss on disposal of a segment would be reported on the income statement as a (n)

Correct AnswerverifiedShow Answer

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

Correct AnswerverifiedShow Answer

The ability of a business to pay its debts as they come due and to earn a reasonable net income includes

Correct AnswerverifiedShow Answer

If a company has issued only one class of stock,the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

Correct AnswerverifiedShow Answer

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

Correct AnswerverifiedShow Answer

In horizontal analysis,each item is expressed as a percentage of the

Correct AnswerverifiedShow Answer

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability.As a result of this transaction,the current ratio and working capital will

Correct AnswerverifiedShow Answer

Based on the following data for the current year,what is the number of days' sales in receivables?

Correct AnswerverifiedShow Answer

A company reports the following:​ Calculate the company's price-earnings ratio.Round your answer to one decimal place.

Correct AnswerverifiedPrice-Earnings Ratio = Market Price per ...View AnswerShow Answer

Use the information below for Harding Company to answer the questions that follow. ​ -Based on the data for Harding Company,what is the quick ratio,rounded to one decimal point?

Correct AnswerverifiedShow Answer

The purpose of an audit is to

Correct AnswerverifiedShow Answer

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Correct Answer
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The following information pertains to Dallas Company.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.AssetsLiabilities and Stockholders' Equity Income Statement What is the return on stockholders' equity?

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

Correct Answer
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Correct Answer
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Correct Answer
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A company reports the following: The company's earnings per share on common stock is

Correct Answer
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Cash and accounts receivable for Ashfall Co.are provided below. Based on this information,what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis? Round percentages to one decimal place.

Correct Answer
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Correct Answer
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Correct Answer
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A company reports the following: Calculate the company's price-earnings ratio.Round your answer to one decimal place.

Correct Answer
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Price-Earnings Ratio = Market Price per ...
View Answer

Use the information below for Harding Company to answer the questions that follow. -Based on the data for Harding Company,what is the quick ratio,rounded to one decimal point?

Correct Answer
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Correct Answer
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