Question 1

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Accepted Answer

A) True 
 B)False

Question 2

Assume the following sales data for a company:  What is the percentage increase in sales from 2014 to 2015?

Accepted Answer

A)   100%
B)   65%
C)   165%
D)   60.1%E) A) and B)
F) A) and C)

Question 3

The following items are reported on a company's balance sheet:

Accepted Answer

Determine the (a) cu...

Question 4

In computing the ratio of net sales to assets, long-term investments are excluded from average total assets.

Accepted Answer

A) True 
 B)False

Question 5

A balance sheet that displays only component percentages is called

Accepted Answer

A)   trend balance sheet
B)   comparative balance sheet
C)   condensed balance sheet
D)   common-sized balance sheetE) A) and B)
F) A) and C)

Question 6

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Accepted Answer

A)   vertical analysis
B)   horizontal analysis
C)   liquidity analysis
D)   solvency analysisE) A) and B)
F) None of the above

Question 7

What type of analysis is indicated by the following?

Accepted Answer

A)   vertical analysis
B)   horizontal analysis
C)   liquidity analysis
D)   common-size analysisE) None of the above
F) All of the above

Question 8

The following items were taken from the financial statements of Stanton, Inc., over a three-year period:

Accepted Answer

Compute the following for each...

Question 9

In 2012 Robert Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000. They had 50,000 shares of common stock outstanding during the entire year. Robert Corporation's common stock is selling for $50 per share on the New York Stock Exchange. Robert Corporation's price-earnings ratio is

Accepted Answer

A)   10 times.
B)   5 times.
C)   2 times.
D)   8 times.E) None of the above
F) B) and C)

Question 10

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

Accepted Answer

A) True 
 B)False

Question 11

Earnings per share amounts are only required to be presented for income from continuing operations and net income on the face of the statement.

Accepted Answer

A) True 
 B)False

Question 12

The following information was taken from Slater Company's balance sheet:

Accepted Answer

Determine the company's (a) Ra...

Question 13

The numerator of the rate earned on common stockholders' equity ratio is equal to

Accepted Answer

A)   net income
B)   net income minus preferred dividends
C)   income before income tax
D)   operating income minus interest expenseE) A) and D)
F) A) and C)

Question 14

Match each item with its definition.
-Discontinued Operations

Accepted Answer

A)  Useful for comparing one company to another or a company with industry averages
B)  Focuses on a company’s ability to generate net income
C)  The percentage analysis of the relationship of each component in a financial statement to a total within the statement.
D)  An analysis of a company’s ability to pay its current liabilities.
E)  Occurs when a company abandons a segment.F) A percentage analysis of increases and decreases in related items in comparative financial statements.G) Something that is both unusual and infrequent.H) This requires a restatement of prior period financial statements.I) B) and G)
J) C) and F)

Question 15

Which of the following should be classified as an extraordinary item on the income statement?

Accepted Answer

A)   Gain on a sale of a long term investment.
B)   Loss due to discontinued operations.
C)   Restructuring charges.
D)   Loss resulting from an infrequent natural disaster.E) B) and C)
F) All of the above

Question 16

Why would you or why wouldn't you compare an organization like Ford Motor Company to the local car dealer "Johnson City Ford/Lincoln/Mercury" in vertical and horizontal analysis?

Accepted Answer

Ford Motor Company is an automobile manu...

Question 17

A loss on disposal of a segment would be reported in the income statement as a(n)

Accepted Answer

A)   administrative expense
B)   other expense
C)   deduction from income from continuing operations
D)   selling expenseE) B) and C)
F) None of the above

Question 18

Income statement information for Sharif Corporation is provided below:

Accepted Answer

Required: Prepare a vertical a...

Question 19

A company reports the following income statement and balance sheet information for the current year:

Accepted Answer

Determine the rate earned on total asset...

Question 20

Balance sheet and income statement data indicate the following:  Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point) ?

Accepted Answer

A)   3.7
B)   4.4
C)   4.5
D)   3.5E) None of the above
F) A) and B)

Exam 14: Financial Statement Analysis

The numerator of the rate earned on common stockholders' equity ratio is equal to

Correct Answer
verified

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Correct Answer
verified

The following information was taken from Slater Company's balance sheet:

Correct Answer
verified
Determine the company's (a) Ra...
View Answer

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

Correct Answer
verified

A loss on disposal of a segment would be reported in the income statement as a(n)

Correct Answer
verified

Which of the following should be classified as an extraordinary item on the income statement?

Correct Answer
verified

A balance sheet that displays only component percentages is called

Correct Answer
verified

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Correct Answer
verified

The following items were taken from the financial statements of Stanton, Inc., over a three-year period:

Correct Answer
verified
Compute the following for each...
View Answer

A company reports the following income statement and balance sheet information for the current year:

Correct Answer
verified
Determine the rate earned on total asset...
View Answer

Why would you or why wouldn't you compare an organization like Ford Motor Company to the local car dealer "Johnson City Ford/Lincoln/Mercury" in vertical and horizontal analysis?

Correct Answer
verified
Ford Motor Company is an automobile manu...
View Answer

Match each item with its definition. -Discontinued Operations

Correct Answer
verified

Correct Answer
verified

The following items are reported on a company's balance sheet:

Correct Answer
verified
Determine the (a) cu...
View Answer

Assume the following sales data for a company: What is the percentage increase in sales from 2014 to 2015?

Correct Answer
verified

Income statement information for Sharif Corporation is provided below:

Correct Answer
verified
Required: Prepare a vertical a...
View Answer

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point) ?

Correct Answer
verified

Earnings per share amounts are only required to be presented for income from continuing operations and net income on the face of the statement.

Correct Answer
verified

In computing the ratio of net sales to assets, long-term investments are excluded from average total assets.

Correct Answer
verified

What type of analysis is indicated by the following?

Correct Answer
verified

Exam 14: Financial Statement Analysis

The numerator of the rate earned on common stockholders' equity ratio is equal to

Correct AnswerverifiedShow Answer

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Correct AnswerverifiedShow Answer

The following information was taken from Slater Company's balance sheet:

Correct AnswerverifiedDetermine the company's (a) Ra...View AnswerShow Answer

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

Correct AnswerverifiedShow Answer

A loss on disposal of a segment would be reported in the income statement as a(n)

Correct AnswerverifiedShow Answer

Which of the following should be classified as an extraordinary item on the income statement?

Correct AnswerverifiedShow Answer

A balance sheet that displays only component percentages is called

Correct AnswerverifiedShow Answer

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Correct AnswerverifiedShow Answer

The following items were taken from the financial statements of Stanton, Inc., over a three-year period:

Correct AnswerverifiedCompute the following for each...View AnswerShow Answer

A company reports the following income statement and balance sheet information for the current year:

Correct AnswerverifiedDetermine the rate earned on total asset...View AnswerShow Answer

Why would you or why wouldn't you compare an organization like Ford Motor Company to the local car dealer "Johnson City Ford/Lincoln/Mercury" in vertical and horizontal analysis?

Correct AnswerverifiedFord Motor Company is an automobile manu...View AnswerShow Answer

Match each item with its definition. -Discontinued Operations

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The following items are reported on a company's balance sheet:

Correct AnswerverifiedDetermine the (a) cu...View AnswerShow Answer

Assume the following sales data for a company: What is the percentage increase in sales from 2014 to 2015?

Correct AnswerverifiedShow Answer

Income statement information for Sharif Corporation is provided below:

Correct AnswerverifiedRequired: Prepare a vertical a...View AnswerShow Answer

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point) ?

Correct AnswerverifiedShow Answer

Earnings per share amounts are only required to be presented for income from continuing operations and net income on the face of the statement.

Correct AnswerverifiedShow Answer

In computing the ratio of net sales to assets, long-term investments are excluded from average total assets.

Correct AnswerverifiedShow Answer

What type of analysis is indicated by the following?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Determine the company's (a) Ra...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Compute the following for each...
View Answer

Correct Answer
verified
Determine the rate earned on total asset...
View Answer

Correct Answer
verified
Ford Motor Company is an automobile manu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Determine the (a) cu...
View Answer

Correct Answer
verified

Correct Answer
verified
Required: Prepare a vertical a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified