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Exam 14: Financial Statement Analysis

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Question 41

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In horizontal analysis, the current year is the base year.

A) True
B) False

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Question 42

Multiple Choice

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Which of the following is required by the Sarbanes-Oxley Act?

A) a price-earnings ratio
B) a report on internal control
C) a vertical analysis
D) a common-sized statement

E) A) and C)
F) A) and B)

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Question 43

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-The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because of

The particular analytical measures chosen to analyze a company may be influenced by all of the following except

Why would you or why wouldn't you compare an organization like Ford Motor Company to the local car dealer "Johnson City Ford/Lincoln/Mercury" using vertical and horizontal analysis?

The following items are reported on a company's balance sheet: Determine the (a) current ratio, and (b) quick ratio. Round your answer to one decimal place.

The dividend yield is equal to the dividends per share divided by the par value per share of common stock.

Accumulated other comprehensive income is presented in the financial statements

Match each definition that follows with the term (a-h) it defines. -useful for comparing one company to another or to industry averages

Match each ratio that follows to its use (items a-h) . Items may be used more than once. -current ratio

A loss due to a discontinued operation should be reported on the income statement

Which of the following is not an unusual item?

Revenue and expense data for Young Technologies Inc. are as follows: (a)Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round to the nearest whole percent.(b)Comment on the significant changes disclosed by the comparative income statement.

A clean audit opinion is not the same as an unmodified opinion.

Brock Company's financial information is listed below. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.Assets Liabilities and Stockholders' Equity Income Statement What is the current ratio?

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.Assets Liabilities and Stockholders' Equity Income Statement -What is the asset turnover for Diane Company?

Times interest earned is computed as

Based on the following data for the current year, what is the number of days' sales in inventory?

Ratios and various other analytical measures are not a substitute for sound judgment, nor do they provide definitive guides for action.

Manx Company owns one investment, purchased several years ago for $20,000. As of the end of the year two years ago, the investment had increased in value to $26,000. As of the end of the current year, the investment had decreased somewhat in value to $24,000. Manx anticipates selling the investment in the coming year, and expects to receive $28,000. Under fair value accounting, what would be the value of the investments account on the current year's December 31 balance sheet?