Question 1

Refer to the following selected financial information from Shakley's Incorporated. Compute the company's times interest earned for Year 2.   Year 2  Year 1  Net sales $478,500$426,250 Cost of goods sold 276,300250,120 Interest expense 9,70010,700 Net income before tax 67,25052,680 Net income after tax 46,05039,900 Total assets 317,100288,000 Total liabilities 181,400167,300 Total equity 135,700120,700\begin{array} { | l | r | r | } \hline & { 	ext { Year 2 } } &  { 	ext { Year 1 } } \\hline 	ext { Net sales } & \$ 478,500 & \$ 426,250 \\hline 	ext { Cost of goods sold } & 276,300 & 250,120 \\hline 	ext { Interest expense } & 9,700 & 10,700 \\hline 	ext { Net income before tax } & 67,250 & 52,680 \\hline 	ext { Net income after tax } & 46,050 & 39,900 \\hline 	ext { Total assets } & 317,100 & 288,000 \\hline 	ext { Total liabilities } & 181,400 & 167,300 \\hline 	ext { Total equity } & 135,700 & 120,700 \\hline\end{array} Net sales  Cost of goods sold  Interest expense  Net income before tax  Net income after tax  Total assets  Total liabilities  Total equity ​ Year 2 $478,500276,3009,70067,25046,050317,100181,400135,700​ Year 1 $426,250250,12010,70052,68039,900288,000167,300120,700​​

Accepted Answer

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

Question 2

Selected current year company information follows:   Net income $15,953 Net sales 712,855 Total liabilities, beginning-year 83,932 Total liabilities, end-of-year 103,201 Total stockholders’ equity, beginning-year .... 198,935 Total stockholders’ equity, end-of-year 121,851\begin{array} { l | r } 	ext { Net income } & \$ 15,953 \\hline 	ext { Net sales } & 712,855 \\hline 	ext { Total liabilities, beginning-year } & 83,932 \\hline 	ext { Total liabilities, end-of-year } & 103,201 \\hline 	ext { Total stockholders&#x27; equity, beginning-year .... } & 198,935 \\hline 	ext { Total stockholders&#x27; equity, end-of-year } & 121,851\end{array} Net income  Net sales  Total liabilities, beginning-year  Total liabilities, end-of-year  Total stockholders’ equity, beginning-year ....  Total stockholders’ equity, end-of-year ​$15,953712,85583,932103,201198,935121,851​​  The total asset turnover is:

Accepted Answer

A)   2.81 times
B)   6.28 times
C)   3.64 times
D)   2.24 times
E)   4.67 times F) B) and C)
G) A) and B)

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Accepted Answer

A) True 
 B)False

Question 6

Horizontal analysis:

Accepted Answer

A)   Evaluates financial data across industries.
B)   Is the presentation of financial ratios.
C)   Is a tool used to evaluate financial statement items relative to industry statistics.
D)   Is a method used to evaluate changes in financial data across time.
E)   Is also called vertical analysis.F) B) and C)
G) A) and D)

Question 7

Quick assets divided by current liabilities is the:

Accepted Answer

A)   Working capital ratio.
B)   Acid-test ratio.
C)   Quick asset turnover ratio.
D)   Current ratio.
E)   Current liability turnover ratio.F) C) and E)
G) D) and E)

Question 8

External users of financial information:

Accepted Answer

A)   Make operating decisions for a company.
B)   Are not directly involved in operating the company.
C)   Make strategic decisions for a company.
D)   Include internal auditors and consultants.
E)   Are those individuals involved in managing and operating the company.F) A) and B)
G) C) and E)

Question 9

One of several ratios that reflects solvency includes the:

Accepted Answer

A)   Days' sales in inventory.
B)   Total asset turnover.
C)   Acid-test ratio.
D)   Current ratio.
E)   Times interest earned ratio.F) B) and C)
G) A) and E)

Question 10

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Accepted Answer

A)   12.73%.
B)   7.85%.
C)   .0785%.
D)   7850%.
E)   1273%.F) A) and C)
G) C) and E)

Question 11

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Accepted Answer

A) True 
 B)False

Question 12

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

Accepted Answer

A)   $0.36 million.
B)   $2.3 million.
C)   $0.25 million.
D)   $2.7 million.
E)   $1.1 million.F) A) and B)
G) A) and C)

Question 13

All of the following statements regarding a business segment are true except:

Accepted Answer

A)   A company's gain or loss from selling or closing down a segment is reported separately.
B)   A business segment is a part of a company's operations that serves a particular product line.
C)   A segment has assets, liabilities, and financial results of operations that can be distinguished from those of other parts of the company.
D)   A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately.
E)   The income tax effects of a discontinued segment are combined with income tax from continuing operations.F) B) and D)
G) D) and E)

Question 14

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Accepted Answer

A)   Inventory turnover ratio.
B)   Days' sales in inventory.
C)   Current ratio.
D)   Profit margin.
E)   Total asset turnover.F) A) and C)
G) C) and E)

Question 15

What is the purpose of a good financial statement analysis report? What are the key components?

Accepted Answer

A good financial statement analysis repo...

Exam 17: Analysis of Financial Statements

What is the purpose of a good financial statement analysis report? What are the key components?

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A good financial statement analysis repo...
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Correct Answer
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The ability to meet short-term obligations and to efficiently generate revenues is called:

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Horizontal analysis:

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Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

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

Correct Answer
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Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

Correct Answer
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Correct Answer
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Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Correct Answer
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All of the following statements regarding a business segment are true except:

Correct Answer
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General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Correct Answer
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One of several ratios that reflects solvency includes the:

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A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Correct Answer
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External users of financial information:

Correct Answer
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Quick assets divided by current liabilities is the:

Correct Answer
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Exam 17: Analysis of Financial Statements

What is the purpose of a good financial statement analysis report? What are the key components?

Correct AnswerverifiedA good financial statement analysis repo...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

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Horizontal analysis:

Correct AnswerverifiedShow Answer

Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much revenue is generated from a certain level of assets.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Correct AnswerverifiedShow Answer

All of the following statements regarding a business segment are true except:

Correct AnswerverifiedShow Answer

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.

Correct AnswerverifiedShow Answer

One of several ratios that reflects solvency includes the:

Correct AnswerverifiedShow Answer

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

Correct AnswerverifiedShow Answer

External users of financial information:

Correct AnswerverifiedShow Answer

Quick assets divided by current liabilities is the:

Correct AnswerverifiedShow Answer

Correct Answer
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A good financial statement analysis repo...
View Answer

Correct Answer
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