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Exam 13: Financial Statement Analysis

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Question 51

Multiple Choice

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Given the following data: In a vertical analysis, cost of goods sold would be expressed as:

A) 166%.
B) 40%.
C) 60%.
D) 250%.

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

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Question 52

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A company's debt ratio is computed as total assets minus total liabilities.

A) True
B) False

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Question 53

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When determining economic value added (EVA), capital charge is the amount that stockholders expect to pay per share of common stock.

Trend percentages are computed only for balance sheet items.

In performing a vertical analysis, the base for cash is:

In the statement of cash flows, an increase in new borrowing, exceeding the payoff of long-term debt, is a sign of weakness.

The statement of cash flows is helpful for spotting weaknesses as well as gauging success.

On the statement of cash flows of a healthy company, net cash from operating activities is generally less than net income.

Red flags in financial statement analysis can include all of the following EXCEPT:

The percentage change in any individual item shown on comparative financial statements is calculated by dividing the dollar amount of the change from the base period to the current period by:

Analyzing the statement of cash flows may help analysts determine the financial health of a company. Which of the following signs below is a NOT indicator of a financially healthy company?

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

Trend analysis using income statement data is widely used for predicting the future.

The analysis of percentage changes in comparative statements is known as:

Prepare a vertical analysis for Westwood Corporation by completing the right column of the following balance sheet with the appropriate percentages. Round percentages to the nearest one-tenth percent.

A financial statement that shows each item as a percentage of one key item on the statement is referred to as:

Given the following data: In a vertical analysis, net income would be expressed as:

Which of the following combines the concepts of accounting income and corporate finance to measure whether the company's operations have increased stockholder wealth?

On a common-size balance sheet each item is expressed as a percentage of:

On a statement of cash flows, which is NOT considered an operating activity?