Question 1

Match these terms to their correct definition.
-compares a single corporation across time.

Accepted Answer

A)  Common size statements
B)  Cross-sectional analysis
C)  Dupont analysis
D)  Horizontal analysis
E)  Ratio analysisF) Short-term liquidity ratiosG) Time series analysisH) Vertical analysisI) A) and E)
J) C) and D)

Question 2

If a company's current ratio is 1.5 and the current liabilities are $150,000, then the current assets are

Accepted Answer

A)  $300,000
B)  $225,000
C)  $100,000
D)  $75,000E) C) and D)
F) All of the above

Question 3

Which of the following ratios is the best measure for analyzing a company's efficiency in using assets to produce sales revenues?

Accepted Answer

A)  current ratio
B)  return on assets
C)  asset turnover ratio
D)  debt-to-total assets ratioE) A) and B)
F) A) and C)

Question 4

In a common size income statement to be used in vertical analysis, the 100% amount is

Accepted Answer

A)  net income.
B)  operating income.
C)  gross profit.
D)  net sales.E) All of the above
F) B) and C)

Question 5

Which stockholder ratio requires the use of dividends per share and the current market price?

Accepted Answer

A)  return on common equity
B)  dividend payout ratio
C)  earnings per share
D)  dividend yield ratioE) All of the above
F) None of the above

Question 6

In a common size balance sheet to be used in vertical analysis, the 100% amount is

Accepted Answer

A)  current assets.
B)  working capital.
C)  total assets.
D)  total stockholders' equity.E) A) and B)
F) A) and C)

Question 7

For each of the following sentences, select the phrase or group of words that best completes the statement.
-The relationship between net sales and total assets.

Accepted Answer

A)  Debt-to-equity ratio
B)  Dividend payout ratio
C)  Dividend yield ratio
D)  Earnings per share
E)  LeverageF) Return on assets ratioG) Return on common equity ratioH) Stock repurchase payoutI) D) and H)
J) None of the above

Question 8

Public companies file their annual reports on Form ____________________.

Accepted Answer

The answer of Public companies file their annual reports on...

Question 9

The quick ratio

Accepted Answer

A)  is generally larger than the current ratio.
B)  decreases when a company's assets becomes more liquid.
C)  increases when a company has more cash sales than credit sales.
D)  is larger when a company's assets are more liquid.E) C) and D)
F) A) and C)

Question 10

Why is liquidity important for businesses?

Accepted Answer

Liquidity is a relative measur...

Question 11

For each of the following sentences, select the phrase or group of words that best completes the statement.
-Debt-to-equity ratio

Accepted Answer

A)  Debt-to-equity ratio
B)  Dividend payout ratio
C)  Dividend yield ratio
D)  Earnings per share
E)  LeverageF) Return on assets ratioG) Return on common equity ratioH) Stock repurchase payoutI) D) and G)
J) None of the above

Question 12

Which of the following will decrease the quick ratio?

Accepted Answer

A)  collection of accounts receivable
B)  sale of inventory on credit
C)  sale of inventory for cash
D)  purchase of a computer with cashE) A) and D)
F) All of the above

Question 13

The inventory turnover ratio is represented by which of the following formulas?

Accepted Answer

A)  net credit sales / average inventory
B)  average inventory / net credit sales
C)  cost of goods sold / average inventory
D)  average inventory / cost of goods soldE) None of the above
F) All of the above

Question 14

Along with its other financial statements, a public corporation must present its most recent two years of income statements within Item I of its Form 10-K.

Accepted Answer

A) True 
 B)False

Question 15

If a financial analyst wants to measure the relationship between profitability and the investment made by stockholders, the analyst should use the

Accepted Answer

A)  return on equity ratio.
B)  earnings per share.
C)  net profit margin percentage.
D)  operating margin percentage.E) All of the above
F) None of the above

Question 16

For each of the following sentences, select the phrase or group of words that best completes the statement.
-Current ratio

Accepted Answer

A)  Debt-to-equity ratio
B)  Dividend payout ratio
C)  Dividend yield ratio
D)  Earnings per share
E)  LeverageF) Return on assets ratioG) Return on common equity ratioH) Stock repurchase payoutI) B) and C)
J) A) and C)

Question 17

Rhodes Bakery
The balance sheet taken from the company's 2020 10-K is provided below: 
-Refer to Rhodes Bakery. Prepare a common size balance sheet to be used in vertical analysis.

Accepted Answer

The answer of Rhodes Bakery
The balance sheet taken from the...

Question 18

Most companies

Accepted Answer

A)  agree that a current ratio of 0.75 is sufficient for business operations.
B)  try to maintain protection from creditors by keeping only a small amount of cash available.
C)  are not concerned with the debt management ratios when cash flows are good.
D)  strive for an appropriate balance between debt and equity financing.E) All of the above
F) A) and B)

Question 19

For each of the following sentences, select the phrase or group of words that best completes the statement.
-Earnings per share

Accepted Answer

A)  Debt-to-equity ratio
B)  Dividend payout ratio
C)  Dividend yield ratio
D)  Earnings per share
E)  LeverageF) Return on assets ratioG) Return on common equity ratioH) Stock repurchase payoutI) G) and H)
J) A) and D)

Question 20

What importance is placed on a company's stock price in the ratio analysis of a company? Explain.

Accepted Answer

The desire of the investors to relate th...

Exam 12: Financial Statement Analysis

For each of the following sentences, select the phrase or group of words that best completes the statement. -The relationship between net sales and total assets.

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Which of the following will decrease the quick ratio?

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Most companies

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Match these terms to their correct definition. -compares a single corporation across time.

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Which stockholder ratio requires the use of dividends per share and the current market price?

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The quick ratio

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For each of the following sentences, select the phrase or group of words that best completes the statement. -Debt-to-equity ratio

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If a financial analyst wants to measure the relationship between profitability and the investment made by stockholders, the analyst should use the

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For each of the following sentences, select the phrase or group of words that best completes the statement. -Current ratio

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What importance is placed on a company's stock price in the ratio analysis of a company? Explain.

Correct AnswerverifiedThe desire of the investors to relate th...View AnswerShow Answer

In a common size income statement to be used in vertical analysis, the 100% amount is

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For each of the following sentences, select the phrase or group of words that best completes the statement. -Earnings per share

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Why is liquidity important for businesses?

Correct AnswerverifiedLiquidity is a relative measur...View AnswerShow Answer

Rhodes Bakery The balance sheet taken from the company's 2020 10-K is provided below: -Refer to Rhodes Bakery. Prepare a common size balance sheet to be used in vertical analysis.

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Along with its other financial statements, a public corporation must present its most recent two years of income statements within Item I of its Form 10-K.

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If a company's current ratio is 1.5 and the current liabilities are $150,000, then the current assets are

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The inventory turnover ratio is represented by which of the following formulas?

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In a common size balance sheet to be used in vertical analysis, the 100% amount is

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Public companies file their annual reports on Form ____________________.

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Which of the following ratios is the best measure for analyzing a company's efficiency in using assets to produce sales revenues?

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The desire of the investors to relate th...
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Liquidity is a relative measur...
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