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Exam 13: Analyzing and Interpreting Financial Statements

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Question 41

Multiple Choice

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Quick assets divided by current liabilities is the:

A) Acid-test ratio.
B) Current ratio.
C) Working capital ratio.
D) Current liability turnover ratio.
E) Quick asset turnover ratio.

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Question 42

Multiple Choice

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The common-size percent is computed by:

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.

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Question 43

Multiple Choice

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Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The current ratio is:

Intra-company analysis is based on comparisons with competitors.

Dividing Accounts Receivable, net by Net Sales and multiplying the result by 365 is the:

Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2017: (a) accounts receivable turnover (b) inventory turnover (c) days' sales uncollected (d) days' sales in inventory (e) profit margin. (f) return on total assets.

Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.

The base amount for a common-size balance sheet is usually total assets.

Identify and describe three common tools of financial statement analysis.

The ability to generate positive market expectations is called:

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Flaherty Corporation used data for 3 years to perform a trend analysis of its operating expenses, which were $54,305 in Year 1; $63,421 in Year 2 and $70,340 in Year 3. Using Year 1 as the base year, the operating expense trend percent (rounded to the nearest whole percent) for Year 2 is:

Information from a manufacturing company's current year income statement follows. Calculate the company's (a) profit margin ratio, (b) gross margin ratio, and (c) times interest earned.

In horizontal analysis the percent change is computed by:

A good financial statement analysis report usually includes the following six sections: (1) ________________________, (2) ______________________, (3) _________________, (4) __________________ (5) ____________________, and (6) ______________________.

Calculate the percent increase or decrease for each of the following financial statement items:

What is the purpose of a good financial statement analysis report? What are the key components?

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

Selected current year company information follows: The total asset turnover is:

Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as: