Question 1

Evaluation of company performance can include comparison and/or assessment of all but which of the following?

Accepted Answer

A)  Past performance.
B)  Current performance.
C)  Current financial position.
D)  Future performance and risk.
E)  External user needs and demands.F) A) and D)
G) A) and B)

Question 2

The comparison of a company's financial condition and performance across time is known as ____________________.

Accepted Answer

The answer of The comparison of a company's financial condition...

Question 3

The comparative balance sheet for Silverlight Co. is shown below. Express the balance sheet in common-size percentages.

Accepted Answer

The answer of The comparative balance sheet for Silverlight Co....

Question 4

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the following selected financial information from Frankle Corp. Compute the company's working capital.

Accepted Answer

A)  $536,650.
B)  $230,200.
C)  $568,200.
D)  $198,650.
E)  $231,450.F) A) and B)
G) A) and E)

Question 6

A company's sales in Year 1 were $280,000, and its sales in Year 2 were $341,600. Using Year 1 as the base year, what is the sales trend percent for Year 2?

Accepted Answer

$341,600/$...

Question 7

One of several ratios that reflects solvency includes the:

Accepted Answer

A)  Acid-test ratio.
B)  Current ratio.
C)  Times interest earned ratio.
D)  Total asset turnover.
E)  Days' sales in inventory.F) All of the above
G) B) and E)

Question 8

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Accepted Answer

A) True 
 B)False

Question 9

Martinez Corporation reported Net Sales of $765,000 and Net Income of $142,000. The profit margin is:

Accepted Answer

A)  539.0%.
B)  5.39%.
C)  81.4%.
D)  1.86%.
E)  18.56%.F) A) and D)
G) B) and D)

Question 10

Income statement items that are reported after the normal revenue and expenses but still part of continuing operations must be (1) _______________ and/or (2) ____________.

Accepted Answer

The answer of Income statement items that are reported after...

Question 11

Financial statement analysis involves all of the following except:

Accepted Answer

A)  The application of analytical tools to general-purpose financial statements and related data for making business decisions.
B)  Transforming accounting data into useful information for decision-making.
C)  Helping users to make better decisions.
D)  Helping to reduce uncertainty in decision-making.
E)  Assuring that the company will be more profitable in the future.F) C) and D)
G) None of the above

Question 12

Describe the purpose of horizontal financial statement analysis and how it is applied.

Accepted Answer

Horizontal analysis is a tool to evaluat...

Question 13

Use the balance sheets of Glover shown below to calculate the following ratios for 2017 (round to the hundredths):
(a) Current ratio.
(b) Acid-test ratio.
(c) Debt ratio.
(d) Equity ratio.

Accepted Answer

The answer of Use the balance sheets of Glover shown...

Question 14

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Accepted Answer

A) True 
 B)False

Question 15

Working capital is computed as current liabilities minus current assets.

Accepted Answer

A) True 
 B)False

Question 16

Desjardin Landscaping's income statement reports net income of $75,300, which includes deductions for interest expense of $11,500 and income taxes of $34,900. Its times interest earned is:

Accepted Answer

A)  10.6 times
B)  7.5 times
C)  4.0 times
D)  6.5 times
E)  0.15 timesF) B) and C)
G) A) and E)

Question 17

A financial statement analysis report does not include:

Accepted Answer

A)  An auditor statement.
B)  An analysis overview.
C)  Evidential matter.
D)  Qualitative and quantitative key factors.
E)  Inferences such as forecasts.F) A) and B)
G) B) and E)

Question 18

A corporation reports the following year-end balance sheet data. Calculate the following ratios:
(a) working capital
(b) acid-test ratio
(c) current ratio
(d) debt ratio
(e) equity ratio
(f) debt-to-equity ratio

Accepted Answer

The answer of A corporation reports the following year-end balance...

Question 19

Vertical analysis is the comparison of a company's financial condition and performance across time.

Accepted Answer

A) True 
 B)False

Question 20

Financial reporting refers to:

Accepted Answer

A)  The application of analytical tools to general-purpose financial statements.
B)  The communication of financial information useful for decision making.
C)  General-purpose financial statements only.
D)  Ratio analysis only.
E)  Profitability.F) C) and E)
G) A) and D)

Exam 13: Analyzing and Interpreting Financial Statements

Use the balance sheets of Glover shown below to calculate the following ratios for 2017 (round to the hundredths): (a) Current ratio. (b) Acid-test ratio. (c) Debt ratio. (d) Equity ratio.

Correct AnswerverifiedShow Answer

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Correct AnswerverifiedShow Answer

Vertical analysis is the comparison of a company's financial condition and performance across time.

Correct AnswerverifiedShow Answer

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Correct AnswerverifiedShow Answer

Evaluation of company performance can include comparison and/or assessment of all but which of the following?

Correct AnswerverifiedShow Answer

A corporation reports the following year-end balance sheet data. Calculate the following ratios: (a) working capital (b) acid-test ratio (c) current ratio (d) debt ratio (e) equity ratio (f) debt-to-equity ratio

Correct AnswerverifiedShow Answer

Working capital is computed as current liabilities minus current assets.

Correct AnswerverifiedShow Answer

Financial statement analysis involves all of the following except:

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The comparative balance sheet for Silverlight Co. is shown below. Express the balance sheet in common-size percentages.

Correct AnswerverifiedShow Answer

A company's sales in Year 1 were $280,000, and its sales in Year 2 were $341,600. Using Year 1 as the base year, what is the sales trend percent for Year 2?

Correct Answerverified$341,600/$...View AnswerShow Answer

One of several ratios that reflects solvency includes the:

Correct AnswerverifiedShow Answer

Financial reporting refers to:

Correct AnswerverifiedShow Answer

Income statement items that are reported after the normal revenue and expenses but still part of continuing operations must be (1) _______________ and/or (2) ____________.

Correct AnswerverifiedShow Answer

The comparison of a company's financial condition and performance across time is known as ____________________.

Correct AnswerverifiedShow Answer

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Correct AnswerverifiedShow Answer

Martinez Corporation reported Net Sales of $765,000 and Net Income of $142,000. The profit margin is:

Correct AnswerverifiedShow Answer

A financial statement analysis report does not include:

Correct AnswerverifiedShow Answer

Describe the purpose of horizontal financial statement analysis and how it is applied.

Correct AnswerverifiedHorizontal analysis is a tool to evaluat...View AnswerShow Answer

Refer to the following selected financial information from Frankle Corp. Compute the company's working capital.

Correct AnswerverifiedShow Answer

Desjardin Landscaping's income statement reports net income of $75,300, which includes deductions for interest expense of $11,500 and income taxes of $34,900. Its times interest earned is:

Correct AnswerverifiedShow Answer

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$341,600/$...
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Income statement items that are reported after the normal revenue and expenses but still part of continuing operations must be (1) ___ and/or (2) .

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Horizontal analysis is a tool to evaluat...
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