Question 1

Refer to the following selected financial information from Gomez Electronics.

-Compute the company's times interest earned for Year 2.

Accepted Answer

A)  6.9.
B)  4.8.
C)  5.8.
D)  14.0.
E)  7.9.F) A) and B)
G) A) and E)

Question 2

To compute trend percentages the analyst should:

Accepted Answer

A)  Select a base period,divide analysis period amount by the base period amount and multiply that amount by 100.
B)  Subtract the analysis period number from the base period number.
C)  Subtract the base period amount from the analysis period amount,divide the result by the analysis period amount,then multiply that amount by 100.
D)  Compare amounts across industries using Dun and Bradstreet.
E)  Compare amounts to a competitor.F) C) and D)
G) B) and C)

Question 3

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Accepted Answer

A) True 
 B)False

Question 4

The current year-end balance sheet data for a company are shown below.Calculate the company's:
(a)working capital
(b)current ratio
(c)acid-test ratio.
Assets:

Accepted Answer

The answer of The current year-end balance sheet data for...

Question 5

________ ratios include the price-earnings ratio and dividend yield.

Accepted Answer

The answer of ________ ratios include the price-earnings ratio and...

Question 6

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Accepted Answer

A) True 
 B)False

Question 7

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Accepted Answer

A) True 
 B)False

Question 8

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) None of the above
G) A) and D)

Question 9

Use the following selected information from Whitman Corp.

-To determine the Year 1 and Year 2 trend percentages for net sales using Year 1 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 64.6% for Year 1.F) A) and D)
G) C) and E)

Question 10

A good financial statement analysis report often includes the following sections: executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Accepted Answer

A) True 
 B)False

Question 11

Express the following income statement information in common-size percentages (round to nearest whole percent).Comment on the results.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Comments: Although a smaller percent of...

Question 12

Express the following balance sheets for Safety Company in common-size percentages.

Accepted Answer

The answer of Express the following balance sheets for Safety...

Question 13

Gains and losses that are neither unusual nor infrequent are reported as:

Accepted Answer

A)  A separate line item when computing earnings per share.
B)  A prior period adjustment on the statement of retained earnings.
C)  A gain or loss from disposing of the discontinued segment's net assets.
D)  A gain or loss from operation of a discontinued segment.
E)  Part of continuing operations.F) A) and B)
G) C) and D)

Question 14

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Accepted Answer

A) True 
 B)False

Question 15

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

Accepted Answer

A)  −104%
B)  100%
C)  −4.0
D)  96%
E)  4.2%F) A) and C)
G) B) and C)

Question 16

Match each of the appropriate formulas with correct term.
-

Accepted Answer

A)  Days' sales in inventory
B)  Dividend yield
C)  Total asset turnover
D)  Inventory turnover
E)  Return on common stockholders' equityF) Gross margin ratioG) Days' sales uncollectedH) Profit margin ratioI) Times interest earnedJ) Debt ratioK) A) and F)
L) F) and H)

Question 17

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

Accepted Answer

A)  Period-to-period statements.
B)  Controlling statements.
C)  Successive statements.
D)  Comparative statements.
E)  Serial statements.F) C) and D)
G) A) and C)

Question 18

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Accepted Answer

A) True 
 B)False

Question 19

Match each of the appropriate formulas with correct term.
-

Accepted Answer

A)  Days' sales in inventory
B)  Dividend yield
C)  Total asset turnover
D)  Inventory turnover
E)  Return on common stockholders' equityF) Gross margin ratioG) Days' sales uncollectedH) Profit margin ratioI) Times interest earnedJ) Debt ratioK) G) and J)
L) E) and I)

Question 20

Earnings per share is calculated using income before interest and income taxes.

Accepted Answer

A) True 
 B)False

Exam 13: Analysis of Financial Statements

________ ratios include the price-earnings ratio and dividend yield.

Correct AnswerverifiedShow Answer

A good financial statement analysis report often includes the following sections: executive summary,analysis overview,evidential matter,assumptions,key factors,and inferences.

Correct AnswerverifiedShow Answer

Gains and losses that are neither unusual nor infrequent are reported as:

Correct AnswerverifiedShow Answer

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Correct AnswerverifiedShow Answer

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

Correct AnswerverifiedShow Answer

The current year-end balance sheet data for a company are shown below.Calculate the company's: (a)working capital (b)current ratio (c)acid-test ratio. Assets:

Correct AnswerverifiedShow Answer

To compute trend percentages the analyst should:

Correct AnswerverifiedShow Answer

Financial statements with data for two or more successive accounting periods placed in columns side by side,sometimes with changes shown in both dollar amounts and percentages,are referred to as:

Correct AnswerverifiedShow Answer

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Correct AnswerverifiedShow Answer

Match each of the appropriate formulas with correct term. -

Correct AnswerverifiedShow Answer

The common-size percent is computed by:

Correct AnswerverifiedShow Answer

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000.Using Year 1 as the base year,the percent change for Year 2 compared to the base year is:

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Gomez Electronics. -Compute the company's times interest earned for Year 2.

Correct AnswerverifiedShow Answer

Earnings per share is calculated using income before interest and income taxes.

Correct AnswerverifiedShow Answer

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Correct AnswerverifiedShow Answer

Match each of the appropriate formulas with correct term. -

Correct AnswerverifiedShow Answer

Use the following selected information from Whitman Corp. -To determine the Year 1 and Year 2 trend percentages for net sales using Year 1 as the base.

Correct AnswerverifiedShow Answer

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Correct AnswerverifiedShow Answer

Express the following balance sheets for Safety Company in common-size percentages.

Correct AnswerverifiedShow Answer

Express the following income statement information in common-size percentages (round to nearest whole percent).Comment on the results.

Correct Answerverified Comments: Although a smaller percent of...View AnswerShow Answer

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