Filters
Question type
Study Flashcards

Match each term with the appropriate definition.Not all definitions will be used. -Net Income


A) The practice of reporting information in percentages rather than monetary amounts.
B) A nonrecurring item on the income statement that reflects gains and losses associated with extraordinary events.
C) Another name for a trend analysis.
D) An increase in an asset or a decrease in a liability that results from peripheral activities.
E) A section of the annual report that can be used in interpreting the results of financial statement analysis.
F) The ratio calculated by dividing the price of a share of stock by the earnings per share.
G) After-tax earnings adjusted for gains and losses that may disappear before they are realized.
H) A nonrecurring item associated with abandoning or selling an operation.
I) The practice of reporting accounting data in the national monetary unit.
J) Also known as ratio analysis.
K) The ratio calculated by dividing the net income by the number of common shares outstanding.
L) The earnings of a company after taxes.

M) E) and G)
N) C) and I)

Correct Answer

verifed

verified

Which of the following measures would assist in assessing the profitability of a company?


A) Debt-to-assets ratio
B) Fixed asset turnover ratio
C) Receivables turnover ratio
D) Current ratio

E) B) and D)
F) None of the above

Correct Answer

verifed

verified

The ratio that measures the percentage of financing from creditors is the:


A) current ratio.
B) times interest earned ratio.
C) debt-to-assets ratio.
D) Price/Earnings ratio.

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

Correct Answer

verifed

verified

Which of the following statements is not true?


A) Horizontal analyses help financial statement users recognize changes that unfold over time.
B) Vertical analyses focus on relationships between items on the same financial statement.
C) Ratio analyses focus on relationships between items on one or more of the financial statements.
D) Horizontal analyses help financial statement users recognize changes that occur between companies.

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

Correct Answer

verifed

verified

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?


A) Liquidity
B) Market share
C) Profitability
D) Solvency

E) B) and D)
F) B) and C)

Correct Answer

verifed

verified

A current ratio of 2.5 means that for every dollar of:


A) accounts payable,there is $2.50 of cash.
B) current liabilities,there is $2.50 of current assets.
C) current assets,there is $2.50 of current liabilities.
D) total liabilities,there is $2.50 of cash.

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?


A) Fixed asset turnover
B) Net profit margin
C) Inventory turnover
D) Earnings per share

E) All of the above
F) None of the above

Correct Answer

verifed

verified

Ratio analysis:


A) is required by GAAP as part of every company's income statement and balance sheet.
B) will always identify the best investment decision.
C) will tell you how a company will perform in the future.
D) allows you to evaluate how well a company has performed relative to other different-sized companies within the same industry.

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

Correct Answer

verifed

verified

A condensed balance sheet for Morningstar,Inc.is presented below: A condensed balance sheet for Morningstar,Inc.is presented below: Required: Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent. Part b.Interpret your analysis.Identify significant items.Comment on key relationships. Required: Part a.Prepare a vertical analysis of the balance sheet above.Round to the nearest whole percent. Part b.Interpret your analysis.Identify significant items.Comment on key relationships.

Correct Answer

verifed

verified

Part a
blured image
Part b
Morningstar,Inc.'s most s...

View Answer

Match each term with the appropriate definition.Not all definitions will be used. -Profitability


A) Also known as time-series analysis.
B) The ability of a company to meet its short-run financial obligations.
C) The standard that companies should present all relevant information needed to interpret a company's financial position and performance.
D) A measure of current earnings performance.
E) Measures that relate financial variables reported in one or more of the financial statements from the same year.
F) A type of analysis that focuses on relationships within a single financial statement.
G) A result from comparing a company's results to other companies in the industry.
H) The standard that revenue should be recorded when earned,provided payment is reasonably expected.
I) A measure of long-run survivability.
J) The standard that expenses should be recognized when incurred.
K) The characteristic that financial information needs to be valuable to decision makers.
L) The standard that takes for granted a company's near term financial survival.

M) B) and J)
N) A) and J)

Correct Answer

verifed

verified

Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?


A) Excessive reliance on debt financing.
B) Loss of key personnel without comparable replacement.
C) Inadequate maintenance of long-lived assets.
D) Declining profit margins.

E) None of the above
F) C) and D)

Correct Answer

verifed

verified

Assume that Charmin and Barker are two retailers selling different goods.Charmin reports a days to sell ratio of 6 days and Barker reports a days to sell ratio of 64 days.What types of merchandise are Charmin and Barker likely to sell,given their measures of days to sell?


A) Charmin sells clothing and Barker sells wine.
B) Charmin sells consumer electronics and Barker sells gasoline.
C) Charmin sells footwear and Barker sells consumer electronics.
D) Charmin sells groceries and Barker sells autos.

E) A) and B)
F) C) and D)

Correct Answer

verifed

verified

Dearborn Company has earnings per share of $2.40,it paid a dividend of $1.00 per share,and the market price of the company's stock is $90 per share.The price/earnings ratio is closest to:


A) 37.50.
B) 64.29.
C) 2.40.
D) 2.00.

E) C) and D)
F) A) and B)

Correct Answer

verifed

verified

The going-concern assumption states that the:


A) company will always maximize the profit for stockholders.
B) company is not expected to go out of business in the near future.
C) company is a separate concern from the stockholders.
D) company's results will be reported in a consistent manner from period to period.

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

Match each term with the appropriate definition.Not all definitions will be used. -Solvency


A) Also known as time-series analysis.
B) The ability of a company to meet its short-run financial obligations.
C) The standard that companies should present all relevant information needed to interpret a company's financial position and performance.
D) A measure of current earnings performance.
E) Measures that relate financial variables reported in one or more of the financial statements from the same year.
F) A type of analysis that focuses on relationships within a single financial statement.
G) A result from comparing a company's results to other companies in the industry.
H) The standard that revenue should be recorded when earned,provided payment is reasonably expected.
I) A measure of long-run survivability.
J) The standard that expenses should be recognized when incurred.
K) The characteristic that financial information needs to be valuable to decision makers.
L) The standard that takes for granted a company's near term financial survival.

M) E) and L)
N) G) and J)

Correct Answer

verifed

verified

Vertical analysis is the comparison of a company's financial information over time.

A) True
B) False

Correct Answer

verifed

verified

Tilden Industries reported net sales revenue of $1,700,000 and paid no dividends during the current year.The following information is also available at the end of the current and prior years:  Current Year  Prior Year  Total Current Assets $1,000,000$900,000 Property, Plant, and Equipment, Net 1,700,0001,400,000 Total Current Liabilities 450,000390,000 Total Long-Tem Liabilities 600,000500,000 Common Stock, $5 Par 1,000,0001,000,000 Paid-In Capital in Excess of Par 200,000200,000 Retained Earnings 450,000210,000\begin{array}{lrr}&\text { Current Year } & \text { Prior Year }\\\text { Total Current Assets } & \$ 1,000,000 & \$ 900,000 \\\text { Property, Plant, and Equipment, Net } & 1,700,000 & 1,400,000 \\\text { Total Current Liabilities } & 450,000 & 390,000 \\\text { Total Long-Tem Liabilities } & 600,000 & 500,000 \\\text { Common Stock, \$5 Par } & 1,000,000 & 1,000,000 \\\text { Paid-In Capital in Excess of Par } & 200,000 & 200,000 \\\text { Retained Earnings } & 450,000 & 210,000\end{array} There was no preferred stock outstanding during the current year. Required: Part a.Calculate the return on equity for the current year. Part b.Calculate the debt-to-assets ratio for the current year. Part c.Calculate the fixed asset turnover ratio for the current year. Part d.Calculate the current ratio for the current year. Round all ratios to two decimal points.

Correct Answer

verifed

verified

Part a
Average common stockholders' equi...

View Answer

The assumption that a business is capable of continuing its operations long enough to meet its obligations is called the:


A) solvency assumption.
B) going-concern assumption.
C) profitability assumption.
D) liquidity assumption.

E) A) and B)
F) C) and D)

Correct Answer

verifed

verified

Company X has net sales revenue of $1,250,000,cost of goods sold of $760,000,and all other expenses of $290,000.The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000.The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000. Required: Compute the return on equity (ROE)ratio.

Correct Answer

verifed

verified

blured image
Average stockholders' equity = (Beginni...

View Answer

Wayne,Inc.has net sales revenue of $348,800,cost of goods sold of $274,400,and net income of $2,400.If interest expense is $8,000 and income tax expense is $800,the times interest earned ratio is:


A) 1.4.
B) 0.33.
C) 1.3.
D) 0.40.

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Showing 161 - 180 of 183

Related Exams

Exam 1

Business Decisions and Financial Accounting

228 Questions

Exam 2

The Balance Sheet

223 Questions

Exam 3

The Income Statement

233 Questions

Exam 4

Adjustments,Financial Statements,and Financial Results

252 Questions

Exam 5

Fraud,Internal Control,and Cash

187 Questions

Exam 6

Merchandising Operations and the Multistep Income Statement

209 Questions

Exam 7

Inventory and Cost of Goods Sold

218 Questions

Exam 8

Receivables,Bad Debt Expense,and Interest Revenue

240 Questions

Exam 9

Long-Lived Tangible and Intangible Assets

299 Questions

Exam 10

Liabilities

260 Questions

Exam 11

Stockholders Equity

278 Questions

Exam 12

Statement of Cash Flows

222 Questions

Show Answer