Question 1

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.

Accepted Answer

A) True 
 B)False

Question 2

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

A) True 
 B)False

Question 3

____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

The answer of ____________ is a method of analysis used...

Question 4

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 5

Standards for comparison are not generally necessary when making judgments about a company's performance.

Accepted Answer

A) True 
 B)False

Question 6

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

Accepted Answer

A)  0.65 times.
B)  14.3 times.
C)  28.6 times.
D)  15.3 times.
E)  16.3 times.F) B) and D)
G) B) and C)

Question 7

A financial statement analysis report does not include:

Accepted Answer

A)  An auditor statement.
B)  An analysis overview.
C)  Evidential matter.
D)  Qualitative and quantitative key factors.
E)  Inferences such as forecasts.F) B) and C)
G) A) and B)

Question 8

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet.Its common-size percent for cash equals:

Accepted Answer

A)  17.1%.
B)  58.6%.
C)  100%.
D)  5.86%.
E)  1707%.F) A) and E)
G) A) and D)

Question 9

Use the following selected information from Wheeler,LLC to determine the 2015 and 2014 common size percentages for operating expenses using Net sales as the base.

Accepted Answer

A)  36.4% for 2015 and 41.1% for 2014.
B)  55.0% for 2015 and 56.0% for 2014.
C)  23.9% for 2015 and 23.0% for 2014.
D)  103.8% for 2015 and 100.0% for 2014.
E)  20.0% for 2015 and 23.0% for 2014.F) C) and E)
G) A) and E)

Question 10

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent,rate,or proportion.

Accepted Answer

A) True 
 B)False

Question 11

Comparative statements for Warmer Corporation are shown below:  Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2014 as the base year.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"> During 2015,sales declined,cost of sale...

Question 12

Refer to the following selected financial information from Frankle Corp.Compute the company's current ratio.

Accepted Answer

A)  6.44.
B)  2.84.
C)  6.27.
D)  3.60.
E)  1.44.F) A) and B)
G) B) and E)

Question 13

A high level of expected risk suggests a low price-earnings (PE)ratio.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the following selected financial information from Marston Company.Compute the company's days' sales uncollected for Year 2.

Accepted Answer

A)  43.9.
B)  43.7.
C)  46.2.
D)  85.4.
E)  42.7.F) C) and E)
G) B) and C)

Question 15

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

Accepted Answer

A)  1.93%.
B)  2.14%.
C)  4.67%.
D)  5.41%.
E)  18.50%.F) A) and B)
G) C) and D)

Question 16

One purpose of financial statement analysis for internal users is to provide strategic information to improve company efficiency and effectiveness in providing products and services.

Accepted Answer

A) True 
 B)False

Question 17

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) A) and E)
G) A) and D)

Question 18

Dividing Accounts receivable,net by Net sales and multiplying the result by 365 is the:

Accepted Answer

A)  Profit margin.
B)  Days' sales uncollected.
C)  Accounts receivable turnover ratio.
D)  Average accounts receivable ratio.
E)  Current ratio.F) C) and D)
G) None of the above

Question 19

Evaluation of company performance does not include analysis of (1)past and current performance, (2)current financial position,and (3)future performance and risk.

Accepted Answer

A) True 
 B)False

Question 20

The building blocks of financial statement analysis do not include:

Accepted Answer

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

Exam 17: Analysis of Financial Statements

Standards for comparison are not generally necessary when making judgments about a company's performance.

Correct AnswerverifiedShow Answer

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet.Its common-size percent for cash equals:

Correct AnswerverifiedShow Answer

Refer to the following selected financial information from Marston Company.Compute the company's days' sales uncollected for Year 2.

Correct AnswerverifiedShow Answer

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

Correct AnswerverifiedShow Answer

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent,rate,or proportion.

Correct AnswerverifiedShow Answer

Dividing Accounts receivable,net by Net sales and multiplying the result by 365 is the:

Correct AnswerverifiedShow Answer

One purpose of financial statement analysis for internal users is to provide strategic information to improve company efficiency and effectiveness in providing products and services.

Correct AnswerverifiedShow Answer

The building blocks of financial statement analysis do not include:

Correct AnswerverifiedShow Answer

A financial statement analysis report does not include:

Correct AnswerverifiedShow Answer

Evaluation of company performance does not include analysis of (1)past and current performance, (2)current financial position,and (3)future performance and risk.

Correct AnswerverifiedShow Answer

The common-size percent is computed by:

Correct AnswerverifiedShow Answer

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

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

Refer to the following selected financial information from Frankle Corp.Compute the company's current ratio.

Correct AnswerverifiedShow Answer

Use the following selected information from Wheeler,LLC to determine the 2015 and 2014 common size percentages for operating expenses using Net sales as the base.

Correct AnswerverifiedShow Answer

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

Correct AnswerverifiedShow Answer

____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Correct AnswerverifiedShow Answer

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.

Correct AnswerverifiedShow Answer

A high level of expected risk suggests a low price-earnings (PE)ratio.

Correct AnswerverifiedShow Answer

Comparative statements for Warmer Corporation are shown below: Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2014 as the base year.Comment on the results.

Correct Answerverified During 2015,sales declined,cost of sale...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
During 2015,sales declined,cost of sale...
View Answer