Question 1

During the year,Dempsey Corporation's current ratio increased while its quick ratio decreased.Which of the following could help explain this situation?

Accepted Answer

A)  A decrease in accounts receivable during the year
B)  An increase in accounts payable during the year
C)  The sale of short-term investments during the year
D)  An increase in inventory levels during the yearE) B) and C)
F) None of the above

Question 2

Cash flow yield is a

Accepted Answer

A)  liquidity ratio.
B)  profitability ratio.
C)  long-term solvency ratio.
D)  market strength ratio.E) None of the above
F) B) and D)

Question 3

Using the income statement below,develop a common-size statement by filling in the blanks provided.Show your work.Round to one decimal place.

Accepted Answer

The answer of Using the income statement below,develop a common-size...

Question 4

The following selected amounts were extracted from the financial statements of Luca Corporation.
 Compute the following for net sales,cost of goods sold,and gross margin.(Round answers to one decimal place. )
a.The percentage change from Year 1 to Year 2
b.The percentage change from Year 2 to Year 3
c.The percentage change from Year 3 to Year 4

Accepted Answer

The answer of The following selected amounts were extracted from...

Question 5

What is the best way to study the relationship of the components of financial statements?

Accepted Answer

A)  Perform ratio analysis.
B)  Perform trend analysis.
C)  Perform horizontal analysis.
D)  Prepare common-size statements.E) C) and D)
F) A) and B)

Question 6

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures.  
-What is the current ratio for this corporation? Round your answer to two decimal places.

Accepted Answer

A)  0.66 times
B)  1.50 times
C)  1.70 times
D)  2.00 timesE) A) and C)
F) All of the above

Question 7

An example of vertical analysis is

Accepted Answer

A)  common-size statements.
B)  trend analysis.
C)  ratio analysis.
D)  profitability analysis.E) A) and D)
F) A) and C)

Question 8

It is possible for horizontal analysis to indicate an increase in revenues from one year to another and a decrease in net income.

Accepted Answer

A) True 
 B)False

Question 9

The length of the operating cycle equals the days' sales uncollected plus the

Accepted Answer

A)  days' payable.
B)  days' inventory on hand.
C)  receivable turnover.
D)  payables turnover.E) A) and C)
F) B) and D)

Question 10

Holiday Corporation provided these figures for the year ended December 31,20x5: Cost of goods sold,$516,117;change in inventory,$67,483 decrease;average accounts payable,$58,209.
What is the company's payables turnover? Round your answer to one decimal place.

Accepted Answer

A)  8.3 times
B)  7.7 times
C)  10.1 times
D)  7.2 timesE) A) and C)
F) B) and C)

Question 11

A primary purpose of vertical analysis is to observe trends over a five-year period.

Accepted Answer

A) True 
 B)False

Question 12

A "big bath"

Accepted Answer

A)  often occurs in years when there is a change in management.
B)  occurs in the current year so management can show improved results in future years.
C)  is often an indication of poor management decisions in the past.
D)  All of these choices.E) A) and B)
F) C) and D)

Question 13

In general,the greater the investment risk taken,the higher the return required as compensation.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following describes the return on assets ratio?

Accepted Answer

A)  Average total assets divided by sales
B)  Net sales divided by net income
C)  Net income divided by average total assets
D)  Average total assets divided by net incomeE) None of the above
F) A) and B)

Question 15

Using the following information from an annual report,prepare a vertical analysis of the consolidated balance sheet at June 30,20x5.(Round percentage answers to one decimal place. )

Accepted Answer

The answer of Using the following information from an annual...

Question 16

The choice of accounting methods does not affect cash flows except for possible differences in income taxes.

Accepted Answer

A) True 
 B)False

Question 17

A change from FIFO to LIFO in a period of rising prices will

Accepted Answer

A)  decrease both the current ratio and the inventory turnover ratio.
B)  increase both the current ratio and the inventory turnover ratio.
C)  increase the current ratio and decrease the inventory turnover ratio.
D)  decrease the current ratio and increase the inventory turnover ratio.E) None of the above
F) A) and D)

Question 18

A general rule in choosing among alternative investments is the greater the risk taken,the

Accepted Answer

A)  greater the return required.
B)  lower the potential expected.
C)  greater the price of the investment.
D)  lower the profits expected.E) A) and D)
F) C) and D)

Question 19

The calculation of free cash flow contains a deduction for

Accepted Answer

A)  interest expense.
B)  depreciation.
C)  net capital expenditures.
D)  net cash flows from operating activities.E) B) and C)
F) A) and D)

Question 20

Common-size statements are useful in assessing the changes in the composition of statements over time.

Accepted Answer

A) True 
 B)False

Exam 14: Financial Statement Analysis

Common-size statements are useful in assessing the changes in the composition of statements over time.

Correct Answer
verified

Holiday Corporation provided these figures for the year ended December 31,20x5: Cost of goods sold,$516,117;change in inventory,$67,483 decrease;average accounts payable,$58,209. What is the company's payables turnover? Round your answer to one decimal place.

Correct Answer
verified

A general rule in choosing among alternative investments is the greater the risk taken,the

Correct Answer
verified

In general,the greater the investment risk taken,the higher the return required as compensation.

Correct Answer
verified

Correct Answer
verified

The choice of accounting methods does not affect cash flows except for possible differences in income taxes.

Correct Answer
verified

A "big bath"

Correct Answer
verified

A primary purpose of vertical analysis is to observe trends over a five-year period.

Correct Answer
verified

A change from FIFO to LIFO in a period of rising prices will

Correct Answer
verified

Using the income statement below,develop a common-size statement by filling in the blanks provided.Show your work.Round to one decimal place.

Correct Answer
verified

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures. -What is the current ratio for this corporation? Round your answer to two decimal places.

Correct Answer
verified

The length of the operating cycle equals the days' sales uncollected plus the

Correct Answer
verified

During the year,Dempsey Corporation's current ratio increased while its quick ratio decreased.Which of the following could help explain this situation?

Correct Answer
verified

It is possible for horizontal analysis to indicate an increase in revenues from one year to another and a decrease in net income.

Correct Answer
verified

Cash flow yield is a

Correct Answer
verified

Which of the following describes the return on assets ratio?

Correct Answer
verified

Using the following information from an annual report,prepare a vertical analysis of the consolidated balance sheet at June 30,20x5.(Round percentage answers to one decimal place. )

Correct Answer
verified

An example of vertical analysis is

Correct Answer
verified

What is the best way to study the relationship of the components of financial statements?

Correct Answer
verified

The calculation of free cash flow contains a deduction for

Correct Answer
verified

Exam 14: Financial Statement Analysis

Common-size statements are useful in assessing the changes in the composition of statements over time.

Correct AnswerverifiedShow Answer

Holiday Corporation provided these figures for the year ended December 31,20x5: Cost of goods sold,$516,117;change in inventory,$67,483 decrease;average accounts payable,$58,209. What is the company's payables turnover? Round your answer to one decimal place.

Correct AnswerverifiedShow Answer

A general rule in choosing among alternative investments is the greater the risk taken,the

Correct AnswerverifiedShow Answer

In general,the greater the investment risk taken,the higher the return required as compensation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The choice of accounting methods does not affect cash flows except for possible differences in income taxes.

Correct AnswerverifiedShow Answer

A "big bath"

Correct AnswerverifiedShow Answer

A primary purpose of vertical analysis is to observe trends over a five-year period.

Correct AnswerverifiedShow Answer

A change from FIFO to LIFO in a period of rising prices will

Correct AnswerverifiedShow Answer

Using the income statement below,develop a common-size statement by filling in the blanks provided.Show your work.Round to one decimal place.

Correct AnswerverifiedShow Answer

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures. -What is the current ratio for this corporation? Round your answer to two decimal places.

Correct AnswerverifiedShow Answer

The length of the operating cycle equals the days' sales uncollected plus the

Correct AnswerverifiedShow Answer

During the year,Dempsey Corporation's current ratio increased while its quick ratio decreased.Which of the following could help explain this situation?

Correct AnswerverifiedShow Answer

It is possible for horizontal analysis to indicate an increase in revenues from one year to another and a decrease in net income.

Correct AnswerverifiedShow Answer

Cash flow yield is a

Correct AnswerverifiedShow Answer

Which of the following describes the return on assets ratio?

Correct AnswerverifiedShow Answer

Using the following information from an annual report,prepare a vertical analysis of the consolidated balance sheet at June 30,20x5.(Round percentage answers to one decimal place. )

Correct AnswerverifiedShow Answer

An example of vertical analysis is

Correct AnswerverifiedShow Answer

What is the best way to study the relationship of the components of financial statements?

Correct AnswerverifiedShow Answer

The calculation of free cash flow contains a deduction for

Correct AnswerverifiedShow Answer

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