Question 1

Which of the following is typically NOT one of the questions asked when analyzing a business' operations?

Accepted Answer

A)  How is the business investing its money?
B)  When was the business started?
C)  Is the business a going concern?
D)  Can the business pay its debt obligations?E) A) and C)
F) B) and C)

Question 2

Management discussion and analysis is:

Accepted Answer

A)  part of a business's annual report.
B)  prepared by the external auditors.
C)  a summary of all the business's press releases for the year.
D)  both A and B.E) B) and C)
F) A) and D)

Question 3

Horizontal analysis is only done on the Income Statement.

Accepted Answer

A) True 
 B)False

Question 4

Serenity Sounds,Inc.reported the following for 2012:

What are the earnings per share for Serenity Sounds,Inc.(to the nearest cent) ?

Accepted Answer

A)  $37.00/share
B)  $28.75/share
C)  $0.41/share
D)  $3.70/shareE) None of the above
F) A) and B)

Question 5

Which of the following is NOT a liquidity ratio?

Accepted Answer

A)  Current ratio
B)  Accounts Payable payment period
C)  Accounts Receivable turnover ratio
D)  Receivables collection periodE) A) and D)
F) B) and D)

Question 6

A measure of how well earnings support dividend payments is:

Accepted Answer

A)  earnings per share.
B)  dividend payout ratio.
C)  dividends per share.
D)  dividend yield.E) All of the above
F) B) and C)

Question 7

Two measures that are often looked at in valuing a business are:

Accepted Answer

A)  Earnings per Share and Dividend per Share.
B)  Earnings per Share and Dividend Yield.
C)  Price Earnings Ratio and Dividend Yield.
D)  Price Earnings Ratio and Dividend per Share.E) A) and B)
F) A) and C)

Question 8

Evergreen Supply Co.sells hiking and other outdoor equipment.It also sells a few trail books and outdoor guides about the area.In their Income Statement,the revenue from the books and guides would probably be recorded as:

Accepted Answer

A)  operating income.
B)  other income.
C)  other expenses.
D)  extraordinary income.E) None of the above
F) A) and D)

Question 9

Which of the following is a solvency ratio?

Accepted Answer

A)  Cash conversion cycle
B)  Earnings per share
C)  Debt ratio
D)  Gross profit percentageE) None of the above
F) All of the above

Question 10

Statements that are often used to compare different size businesses are called:

Accepted Answer

A)  comparative analysis.
B)  cash flow analysis.
C)  common-size statements.
D)  horizontal analysis.E) C) and D)
F) A) and B)

Question 11

Which of the following is a profitability ratio?

Accepted Answer

A)  Cash conversion cycle
B)  Earnings per share
C)  Debt ratio
D)  Gross profit percentageE) None of the above
F) A) and D)

Question 12

Everyday business activities are reported in the:

Accepted Answer

A)  continuing and discontinued operations section.
B)  discontinued operations section.
C)  continuing operations section.
D)  extraordinary items section.E) A) and B)
F) All of the above

Question 13

Gains and losses on plant,property,and equipment are reported:

Accepted Answer

A)  as a retrospective application.
B)  in the discontinued operations section.
C)  in the continuing operations section.
D)  in the extraordinary items section.E) B) and D)
F) A) and D)

Question 14

Island Coffee's cash reported on the comparative Balance Sheet was $235,000 in 2013 and $245,300 in 2014.The percentage change in cash from 2013 to 2014 was:

Accepted Answer

A)  +4.20%.
B)  +4.38%.
C)  -4.38%.
D)  -4.20%.E) A) and C)
F) A) and B)

Question 15

The most recent period in a horizontal analysis is called the base period.

Accepted Answer

A) True 
 B)False

Question 16

A company has $56,000 in cash;$12,000 in Accounts Receivable;$25,000 in short-term investments and $100,000 in merchandise inventory.The company also has $60,000 in current liabilities.The company's quick ratio is:

Accepted Answer

A)  3) 217.
B)  1) 550.
C)  1) 133.
D)  0) 933.E) A) and B)
F) C) and D)

Question 17

A low price earnings ratio typically means the future of a business is very bright.

Accepted Answer

A) True 
 B)False

Question 18

Shore Stone Supply has an average days' in receivable of 41 days.Shore's Accounts Receivable turnover is closest to:

Accepted Answer

A)  41.
B)  9) 
C)  10.
D)  14.E) A) and B)
F) C) and D)

Question 19

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Accepted Answer

A)  comparative financial statements.
B)  common-size statements.
C)  cash flow analysis.
D)  horizontal analysis.E) A) and D)
F) A) and B)

Question 20

Inventory and prepaid expenses are NOT included in the computation of the:

Accepted Answer

A)  quick ratio.
B)  current ratio.
C)  debt ratio.
D)  working capital ratio.E) C) and D)
F) A) and B)

Exam 12: Financial Statement Analysis

Horizontal analysis is only done on the Income Statement.

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Shore Stone Supply has an average days' in receivable of 41 days.Shore's Accounts Receivable turnover is closest to:

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A measure of how well earnings support dividend payments is:

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Island Coffee's cash reported on the comparative Balance Sheet was $235,000 in 2013 and $245,300 in 2014.The percentage change in cash from 2013 to 2014 was:

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Statements that are often used to compare different size businesses are called:

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Two measures that are often looked at in valuing a business are:

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Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

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Everyday business activities are reported in the:

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Management discussion and analysis is:

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Which of the following is NOT a liquidity ratio?

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The most recent period in a horizontal analysis is called the base period.

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Which of the following is typically NOT one of the questions asked when analyzing a business' operations?

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Which of the following is a profitability ratio?

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Inventory and prepaid expenses are NOT included in the computation of the:

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A company has $56,000 in cash;$12,000 in Accounts Receivable;$25,000 in short-term investments and $100,000 in merchandise inventory.The company also has $60,000 in current liabilities.The company's quick ratio is:

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Serenity Sounds,Inc.reported the following for 2012: What are the earnings per share for Serenity Sounds,Inc.(to the nearest cent) ?

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Which of the following is a solvency ratio?

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A low price earnings ratio typically means the future of a business is very bright.

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Gains and losses on plant,property,and equipment are reported:

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Evergreen Supply Co.sells hiking and other outdoor equipment.It also sells a few trail books and outdoor guides about the area.In their Income Statement,the revenue from the books and guides would probably be recorded as:

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