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Exam 17: Analysis of Financial Statements

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Question 61

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Refer to the following selected financial information from Fennie's, LLC. Compute the company's inventory turnover for Year 2.

A) 4.72.
B) 4.33.
C) 3.17.
D) 5.78.
E) 3.86.

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

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Question 62

Multiple Choice

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Intracompany standards for financial statement analysis:

A) Are often based on a company's prior performance.
B) Are often set by competitors.
C) Are set by the company's industry.
D) Are based on rules of thumb.
E) Are published in Dun and Bradstreet.

F) A) and E)
G) C) and D)

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Question 63

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Describe ratio analysis including its purpose, application, and interpretation.

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

The building blocks of financial statement analysis include:

The measurement of key relations among financial statement items is known as:

A good financial report does not link interpretations and conclusions of analysis with the underlying information.

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

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount, and in which the base amount is expressed as 100%, are called:

Express the following income statement information in common-size percents (round to nearest whole percent). Comment on the results.

The comparison of a company's financial condition and performance to a base amount is known as ___________________________.

Ratios may be expressed as (1) _______________________, (2) _______________________, or (3) _______________________.

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

Comparative calendar year financial data for a company are shown below. Calculate the following ratios for 2012: (a) return on total assets. (b) return on common stockholders' equity.

Guidelines (rules-of-thumb) are developed from:

Which of the following items is not likely an extraordinary item?

Trend percentage is calculated by dividing _________________________ by ___________________________ and multiplying the result by 100.

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

A good financial statement analysis report often includes the following sections: executive summary, analysis overview, evidential matter, assumptions, key factors, and inferences.

Vertical analysis is used to reveal patterns in data covering successive periods.