Question 1

Bryanwood Company reports the following data:  Based on the above information,what can be said about the company's business strategy?

Accepted Answer

A)  The company has lost control of operating expenses.
B)  The company has reduced cost of goods sold in total dollar amount.
C)  The company has successfully undertaken some cost-cutting measures for operating expenses.
D)  The company has fewer sales in 2019 than 2018.E) B) and C)
F) None of the above

Question 2

MD&A stands for:

Accepted Answer

A)  Management's Discussion and Analysis.
B)  Management's Decisions and Analysis.
C)  Marketing Discussion and Analysis.
D)  Marketing Decisions and Analysis.E) A) and B)
F) All of the above

Question 3

Benchmarking common size variables against a key competitor provides meaningful information only if the companies are similar in size.

Accepted Answer

A) True 
 B)False

Question 4

The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

Accepted Answer

A) True 
 B)False

Question 5

An important component of earnings quality is the conservative recognition of net revenues.

Accepted Answer

A) True 
 B)False

Question 6

It is ________ and ________ to sell or buy shares of a company on the basis of information not available to the general public

Accepted Answer

A)  lawful;ethical
B)  risky;unlawful
C)  risky;unethical
D)  unlawful;unethicalE) A) and B)
F) A) and C)

Question 7

Szidon Company reports the following data:  Using benchmarking,what can be said about Szidon Company?

Accepted Answer

A)  Szidon is inferior to the key competitor because the key competitor's net income percentage is higher.
B)  Szidon is superior to the key competitor because net income is higher.
C)  There is not enough information to make any conclusions.
D)  There is conflicting information so no conclusions can be reached.E) C) and D)
F) B) and C)

Question 8

The balance sheet at December 31,2019 for Zumba Company follows:
  Additional information follows:
1.Net income for the year ended December 31,2019 is $2,020.
2.Cost of goods sold for the year ended December 31,2019 is $4,400.
3.Inventory on January 1,2019 is $1,800.
4.Accounts Receivable,net on January 1,2019 are $4,400.
5.Total assets on January 1,2019 are $20,000.
6.Net credit sales for the year ended December 31,2019 are $14,600.
7.Net income before interest and taxes for the year ended December 31,2019 is $4,800.
8.Interest expense for the year ended December 31,2019 is $550.
9.Total stockholders' equity on January 1,2019 is $3,500.
Compute the following ratios:
1.Current ratio
2.Quick ratio
3.Accounts receivable turnover
4.Days' inventory outstanding
5.Times interest earned
6.Return on assets
7.Return on equity

Accepted Answer

1.Current ratio = $7,900 ÷ $4,000 = 1.98...

Question 9

Operating earnings are earnings from:

Accepted Answer

A)  interest revenue.
B)  the company's core business.
C)  dividend revenue.
D)  all of the above.E) A) and C)
F) B) and D)

Question 10

Trend percentages are a form of horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 11

To stockholders,the larger the net income,the greater the likelihood of:

Accepted Answer

A)  dividends.
B)  the company will purchase treasury stock.
C)  the stock price decreasing.
D)  all of the above.E) B) and D)
F) B) and C)

Question 12

Wilhelm Company's gross profit percentages for the past 3 years are:  Based on the above data,what can be said about the Wilhelm Company?

Accepted Answer

A)  The sales volume is decreasing.
B)  The company is decreasing the income tax expense.
C)  The company is controlling operating expenses.
D)  The company is controlling cost of goods sold.E) All of the above
F) C) and D)

Question 13

Reimer Company reports the following data:  When evaluating the results of operations,what can be said about Reimer Company?

Accepted Answer

A)  Using vertical analysis,the company's profitability declined in 2018.
B)  Using horizontal analysis,the company's profitability declined in 2018.
C)  Using vertical analysis,the company's profitability declined in 2019.
D)  Using horizontal analysis,the company's profitability declined in 2019.E) B) and C)
F) None of the above

Question 14

The description section of a company's business in an annual report does NOT generally include information about:

Accepted Answer

A)  income taxes.
B)  the company's products.
C)  sales and distribution strategies.
D)  product design and development.E) B) and C)
F) A) and B)

Question 15

A measure of a company's ability to collect cash from credit customers is the:

Accepted Answer

A)  accounts receivable turnover.
B)  days' payable outstanding.
C)  inventory turnover.
D)  cash conversion cycle.E) A) and B)
F) A) and C)

Question 16

The amount of a company's net income earned for each share of its outstanding common stock is termed the:

Accepted Answer

A)  return on equity.
B)  price/earnings ratio.
C)  earnings per share.
D)  dividend yield.E) B) and C)
F) A) and C)

Question 17

A company's business section of the annual report provides vital information about the company's products,its marketing and promotion,sales and distribution strategies,product design and development,manufacturing and quality assurance,and inventory management.

Accepted Answer

A) True 
 B)False

Question 18

Financial analysis helps mainly to identify the risks of various stocks and then to:

Accepted Answer

A)  make selling decisions.
B)  manage the risk.
C)  make buying decisions.
D)  determine ratios.E) A) and B)
F) C) and D)

Question 19

In performing vertical analysis,the base for operating expenses is:

Accepted Answer

A)  net sales.
B)  gross profit.
C)  net income.
D)  operating income.E) All of the above
F) None of the above

Question 20

Which of the following is typically used as the base in a vertical analysis of an income statement?

Accepted Answer

A)  gross profit
B)  operating income
C)  net income
D)  net salesE) B) and C)
F) C) and D)

Exam 12: Financial Statement Analysis

Correct Answer
verified
1.Current ratio = $7,900 ÷ $4,000 = 1.98...
View Answer

Operating earnings are earnings from:

Correct Answer
verified

Reimer Company reports the following data: When evaluating the results of operations,what can be said about Reimer Company?

Correct Answer
verified

An important component of earnings quality is the conservative recognition of net revenues.

Correct Answer
verified

Financial analysis helps mainly to identify the risks of various stocks and then to:

Correct Answer
verified

In performing vertical analysis,the base for operating expenses is:

Correct Answer
verified

To stockholders,the larger the net income,the greater the likelihood of:

Correct Answer
verified

It is and to sell or buy shares of a company on the basis of information not available to the general public

Correct Answer
verified

The description section of a company's business in an annual report does NOT generally include information about:

Correct Answer
verified

Which of the following is typically used as the base in a vertical analysis of an income statement?

Correct Answer
verified

Wilhelm Company's gross profit percentages for the past 3 years are: Based on the above data,what can be said about the Wilhelm Company?

Correct Answer
verified

Benchmarking common size variables against a key competitor provides meaningful information only if the companies are similar in size.

Correct Answer
verified

The amount of a company's net income earned for each share of its outstanding common stock is termed the:

Correct Answer
verified

Szidon Company reports the following data: Using benchmarking,what can be said about Szidon Company?

Correct Answer
verified

Bryanwood Company reports the following data: Based on the above information,what can be said about the company's business strategy?

Correct Answer
verified

A company's business section of the annual report provides vital information about the company's products,its marketing and promotion,sales and distribution strategies,product design and development,manufacturing and quality assurance,and inventory management.

Correct Answer
verified

MD&A stands for:

Correct Answer
verified

A measure of a company's ability to collect cash from credit customers is the:

Correct Answer
verified

The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

Correct Answer
verified

Trend percentages are a form of horizontal analysis.

Correct Answer
verified

Exam 12: Financial Statement Analysis

Correct Answerverified1.Current ratio = $7,900 ÷ $4,000 = 1.98...View AnswerShow Answer

Operating earnings are earnings from:

Correct AnswerverifiedShow Answer

Reimer Company reports the following data: When evaluating the results of operations,what can be said about Reimer Company?

Correct AnswerverifiedShow Answer

An important component of earnings quality is the conservative recognition of net revenues.

Correct AnswerverifiedShow Answer

Financial analysis helps mainly to identify the risks of various stocks and then to:

Correct AnswerverifiedShow Answer

In performing vertical analysis,the base for operating expenses is:

Correct AnswerverifiedShow Answer

To stockholders,the larger the net income,the greater the likelihood of:

Correct AnswerverifiedShow Answer

It is ________ and ________ to sell or buy shares of a company on the basis of information not available to the general public

Correct AnswerverifiedShow Answer

The description section of a company's business in an annual report does NOT generally include information about:

Correct AnswerverifiedShow Answer

Which of the following is typically used as the base in a vertical analysis of an income statement?

Correct AnswerverifiedShow Answer

Wilhelm Company's gross profit percentages for the past 3 years are: Based on the above data,what can be said about the Wilhelm Company?

Correct AnswerverifiedShow Answer

Benchmarking common size variables against a key competitor provides meaningful information only if the companies are similar in size.

Correct AnswerverifiedShow Answer

The amount of a company's net income earned for each share of its outstanding common stock is termed the:

Correct AnswerverifiedShow Answer

Szidon Company reports the following data: Using benchmarking,what can be said about Szidon Company?

Correct AnswerverifiedShow Answer

Bryanwood Company reports the following data: Based on the above information,what can be said about the company's business strategy?

Correct AnswerverifiedShow Answer

A company's business section of the annual report provides vital information about the company's products,its marketing and promotion,sales and distribution strategies,product design and development,manufacturing and quality assurance,and inventory management.

Correct AnswerverifiedShow Answer

MD&A stands for:

Correct AnswerverifiedShow Answer

A measure of a company's ability to collect cash from credit customers is the:

Correct AnswerverifiedShow Answer

The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

Correct AnswerverifiedShow Answer

Trend percentages are a form of horizontal analysis.

Correct AnswerverifiedShow Answer

Correct Answer
verified
1.Current ratio = $7,900 ÷ $4,000 = 1.98...
View Answer

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It is and to sell or buy shares of a company on the basis of information not available to the general public

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