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Exam 13: Financial Statement Analysis

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Question 51

Multiple Choice

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Which of the following is not included in the calculation of the numerator in the acid-test ratio?

A) prepaid expenses and inventory
B) cash and prepaid expenses
C) inventory and net current receivables
D) short-term investments and net current receivables

E) A) and B)
F) All of the above

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Question 52

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Earnings per common share measures the market value of one common share.

A) True
B) False

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Question 53

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When performing vertical analysis on a balance, the current liabilities are compared typically to total liabilities.

Vertical analysis could be used to determine what is happening to cost of goods sold from one year to the next.

Prepare vertical analysis calculations by filling in the far right column of the following balance sheet with the appropriate percentages. Current assets Current liabilities Shareholders' equity

A common size statement aids in comparing different companies as their amounts are stated in percentages of the total base rather than numbers.

A common-size statement eases the comparison of different companies because their amounts are stated in percentages.

Prepare a vertical analysis for Young's Point Corporation's balance sheet to determine the component percentages of its assets, liabilities, and shareholders' equity. Round percentages to the nearest one-tenth percent. Assets Liabilities Shareholders' equity

Which of the following would be most likely to reveal that cost of goods sold increased by $75,000 from 2013 to 2014?

Accounts receivable turnover is calculated as:

Given the following data for total sales: A table showing trend percentages for 2011-2014, respectively, using 2011 as the base year, would show:

The current ratio is calculated as:

When performing vertical analysis on a balance, accounts receivable is calculated as a percentage of total assets.

Assume a company has a current ratio of 1.5 and working capital equal to $25,000. If the company's current liabilities are equal to $50,000, its total current assets are:

Which of the following ratios measures profitability?

Most investors only need one year's worth of financial information to evaluate an organization.

The dividend yield ratio shows the percentage of a stock's market value returned as dividends to shareholders each accounting period.

If the current ratio increases from one year to the next, it does not necessarily follow that the amount of working capital will also increase.

It is generally considered more useful to know the absolute dollar amount of change in financial statement amounts from year to year than to know the percentage change.

The following data represent selected information from the comparative income statement and balance sheet for Hot Rolled Corporation for the years ended December 31, 2014 and 2013: •10,000 shares of common shares have been issued and outstanding since the company was established. They had a market value of $90 per share on December 31, 2013, and they were selling for $91.50 on December 31, 2014. Refer to the table above. For the year ending on December 31, 2013, Hot Rolled Corporation's rate of return on net sales was: