Question 1

Use the balance sheets of Glover shown below to calculate the following ratios for 2016 (round to the hundredths):
(a)Current ratio.
(b)Acid-test ratio.
(c)Debt ratio.
(d)Equity ratio.

Accepted Answer

The answer of Use the balance sheets of Glover shown...

Question 2

A component of operating efficiency and profitability,calculated by expressing net income as a percent of net sales,is the:

Accepted Answer

A)  Acid-test ratio.
B)  Merchandise turnover.
C)  Price earnings ratio.
D)  Accounts receivable turnover.
E)  Profit margin ratio.F) B) and C)
G) None of the above

Question 3

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Accepted Answer

A) True 
 B)False

Question 4

Selected balances from a company's financial statements are shown below.Calculate the following ratios for 2016:
(a)accounts receivable turnover
(b)inventory turnover
(c)days' sales uncollected
(d)days' sales in inventory
(d)profit margin
(e)return on total assets.

Accepted Answer

The answer of Selected balances from a company's financial statements...

Question 5

Refer to the following selected financial information from Shakley's Incorporated.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) B) and C)
G) A) and B)

Question 6

Financial analysis only refers to the communication of relevant financial information to decision makers.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the following selected financial information from Shakley's Incorporated.Compute the company's debt-to-equity ratio for Year 2.

Accepted Answer

A)  1.75.
B)  2.34.
C)  0.75.
D)  1.34.
E)  2.63.F) A) and E)
G) C) and D)

Question 8

Horizontal analysis:

Accepted Answer

A)  Is a method used to evaluate changes in financial data across time.
B)  Is also called vertical analysis.
C)  Is the presentation of financial ratios.
D)  Is a tool used to evaluate financial statement items relative to industry statistics.
E)  Evaluates financial data across industries.F) A) and E)
G) None of the above

Question 9

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________________________.

Accepted Answer

The answer of The income level most likely to continue...

Question 10

The greater the times interest earned ratio,the greater the risk a company is exposed to.

Accepted Answer

A) True 
 B)False

Question 11

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

Accepted Answer

A)  55.6%.
B)  88.8%.
C)  61.5%.
D)  44.4%.
E)  125.1%.F) B) and D)
G) A) and B)

Question 12

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 13

Refer to the following selected financial information from Dodge Company.Compute the company's acid-test ratio.

Accepted Answer

A)  2.75.
B)  2.66.
C)  0.92.
D)  1.12.
E)  1.63.F) B) and E)
G) D) and E)

Question 14

Earnings per share are calculated only on income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 15

Net sales divided by average total assets is the:

Accepted Answer

A)  Profit margin.
B)  Total asset turnover.
C)  Current ratio.
D)  Sales return ratio.
E)  Return on total assets.F) C) and D)
G) A) and B)

Question 16

For the following financial statement items,calculate trend percentages using 2014 as the base year:

Accepted Answer

The answer of For the following financial statement items,calculate trend...

Question 17

Profitability is the ability to generate future revenues and meet long-term obligations.

Accepted Answer

A) True 
 B)False

Question 18

The comparison of a company's financial condition and performance to a base amount is known as _________________.

Accepted Answer

The answer of The comparison of a company's financial condition...

Question 19

If a company is comparing this year's financial performance to last year's financial performance,it is using horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 20

Comparative calendar year financial data for a company are shown below.Calculate the following ratios for 2016:
(a)return on total assets
(b)return on common stockholders' equity.

Accepted Answer

The answer of Comparative calendar year financial data for a...

Exam 17: Analysis of Financial Statements

The greater the times interest earned ratio,the greater the risk a company is exposed to.

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Use the balance sheets of Glover shown below to calculate the following ratios for 2016 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.

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Refer to the following selected financial information from Shakley's Incorporated.Compute the company's times interest earned for Year 2.

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A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

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Profitability is the ability to generate future revenues and meet long-term obligations.

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For the following financial statement items,calculate trend percentages using 2014 as the base year:

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

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Net sales divided by average total assets is the:

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The comparison of a company's financial condition and performance to a base amount is known as _________________.

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The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________________________.

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If a company is comparing this year's financial performance to last year's financial performance,it is using horizontal analysis.

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Selected balances from a company's financial statements are shown below.Calculate the following ratios for 2016: (a)accounts receivable turnover (b)inventory turnover (c)days' sales uncollected (d)days' sales in inventory (d)profit margin (e)return on total assets.

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Refer to the following selected financial information from Dodge Company.Compute the company's acid-test ratio.

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Earnings per share are calculated only on income from continuing operations.

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Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

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A component of operating efficiency and profitability,calculated by expressing net income as a percent of net sales,is the:

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Comparative calendar year financial data for a company are shown below.Calculate the following ratios for 2016: (a)return on total assets (b)return on common stockholders' equity.

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Refer to the following selected financial information from Shakley's Incorporated.Compute the company's debt-to-equity ratio for Year 2.

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Horizontal analysis:

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Financial analysis only refers to the communication of relevant financial information to decision makers.

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