FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Analysis of Financial Statements

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 111

True/False

Review LaterAdd Note

Review Later

General standards of comparisons, developed from experience, include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

A) True
B) False

Correct Answer

verified

Show Answer

Question 112

Multiple Choice

Review LaterAdd Note

Review Later

Financial statement analysis involves all of the following except:

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) B) and E)
G) A) and E)

Correct Answer

verified

Show Answer

Question 113

True/False

Review LaterAdd Note

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

Industry standards for financial statement analysis:

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

A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals 7.85%.

Carducci Corporation reported Net sales of $3.6 million and beginning Total assets of $0.9 million and ending Total assets of $1.3 million. The average Total asset amount is:

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet. Its common-size percent for cash equals:

All of the following are true of a financial statement analysis report, except:

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for operating expenses using Net sales as the base. $\begin{array} { | l | r | r |} \hline & { 2017 } &{ \mathbf { 2 0 1 6 } } \\\hline \text { Net sales } & \$ 276,200 & \$ 231,400 \\\hline \text { Cost of goods sold } & 151,900 & 129,590 \\\hline \text { Operating expenses } & 55,240 & 53,240 \\\hline \text { Net earnings } & 27,82 \mathrm {~d} & 19,820 \\\hline\end{array}$

The evaluation of company performance and financial condition focuses solely on past performance.

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Net sales divided by average total assets is the:

Zhang Company reported Cost of goods sold of $835,000 and average Inventory of $41,750. The Inventory turnover ratio is:

When no value is in the base period, no percent change is computable.

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Calculate the percent increase or decrease for each of the following financial statement items: $\begin{array} { | l | r | r | r | } \hline & \text { Year } 2 & \text { Year 1 } \\\hline \text { Cash } & \$ 37,500 & \$ 30,000 \\\hline \text { Accounts receivable } & 63,000 & 52,500 \\\hline \text { Inventory } & 67,500 & 90,000 \\\hline \text { Accounts payable } & 35,100 & 27,000 \\\text { Sales } & 187,500 & 150,000 \\\hline \text { Equipment } & 165,000 & 125,000 \\\hline\end{array}$

Liquidity and efficiency are the ability to meet short-term obligations and to efficiently generate revenue.

The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

The ability to generate positive market expectations is called: