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Exam 13: Financial Statement Analysis

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Question 31

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Which type of analysis could reveal that a company is relying heavily on debt financing?

A) Common size statements
B) Horizontal analysis
C) The fixed asset turnover ratio
D) Trend analysis

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

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Question 32

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Which ratio is a test of liquidity?

A) Net profit margin
B) Inventory turnover
C) Times interest earned
D) Debt-to-assets

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

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Question 33

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Choose the appropriate letter to match the term and the definition. Not all definitions will be used. Term _____ Full Disclosure Principle _____ Ratio Analysis _____ Liquidity _____ Going-Concern Assumption _____ Profitability _____ Solvency _____ Trend Analysis _____ Vertical Analysis Definition A) The ability of a company to meet its short-run financial obligations. B) A type of analysis that focuses on relationships within a single financial statement. C) Also known as time-series analysis. D) The standard that companies should present all relevant information needed to interpret a company's financial position and performance. E) The standard that expenses should be recognized when incurred. F) A measure of current earnings performance. G) A result from comparing a company's results to other companies in the industry. H) A measure of long-run survivability. I) The standard that revenue should be recorded when earned, provided payment is reasonably expected. J) Measures that relate financial variables reported in one or more of the financial statements from the same year. K) The characteristic that financial information needs to be valuable to decision makers. L) The standard that takes for granted a company's near term financial survival.

Which of the following is calculated by dividing net sales revenue by average net receivables?

The debt-to-assets ratio is the:

Company X has net sales revenue of $780,000, cost of goods sold of $343,200, and all other expenses of $327,600. The gross profit percentage is closest to:

The primary objective of financial accounting and reporting is to provide:

The general goal of horizontal analyses is to identify significant trends

Which of the following is a liquidity ratio?

If an analyst wants to examine a company's current ability to generate income, which of the following would best be considered?

Trend data can be measured in dollar amounts or percentages

A condensed balance sheet for Liu Company is presented below: Required: Part a. Prepare a vertical analysis of the balance sheet above. Round to the nearest whole percent. Part b. Interpret your analysis. Identify significant items. Comment on key relationships.

If an analyst wanted to assess a company's long-run survival, which of the following categories of ratios would most likely be used?

Which of the measures below is used to measure liquidity?

If you wish to examine how one aspect of a business is doing relative to other aspects of the business at the current time, you are most likely to use:

In which of the following company attributes would a long-term bond holder be most interested?

The following information is taken from the financial statements of a company for the current year: The gross profit percentage for the current year rounded to the nearest whole percent is closest to:

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same, which of the following ratios will be unaffected?

Choose the appropriate letter match each financial performance ratios with the appropriate category. Ratio ___ Debt-to-assets ratio ___ Receivables turnover ratio ___ Fixed asset turnover ratio ___ Current ratio ___ Return on equity ___ Price earnings ratio ___ Times interest earned ratio ___ Quick ratio ___ Inventory turnover ratio ___ Earnings per share Category P - Profitability L - Liquidity S - Solvency

Which of the following ratios is calculated by dividing current assets by current liabilities?