Question 1

Liquidity ratios measure the ability of the enterprise to survive over a long period of time.

Accepted Answer

A) True 
 B)False

Question 2

The following items were taken from the financial statements of Mint, Inc., over a three-year period:  Instructions
Compute the following for each of the above time periods. 
a. The amount and percentage change from 2013 to 2014.
b. The amount and percentage change from 2014 to 2015.

Accepted Answer

The answer of The following items were taken from the...

Question 3

Comprehensive income includes all revenues, expenses, gains, losses, and dividends.

Accepted Answer

A) True 
 B)False

Question 4

Horizontal analysis is also known as

Accepted Answer

A)   linear analysis.
B)   vertical analysis.
C)   trend analysis.
D)   common size analysis.E) A) and D)
F) A) and C)

Question 5

In performing a vertical analysis, the base for sales revenues on the income statement is

Accepted Answer

A)   net sales.
B)   sales revenue.
C)   net income.
D)   cost of goods available for sale.E) None of the above
F) A) and C)

Question 6

A common measure of liquidity is

Accepted Answer

A)   return on assets.
B)   accounts receivable turnover.
C)   profit margin.
D)   debt to equity.E) A) and B)
F) B) and C)

Question 7

The current ratio is a measure of all the ratios calculated for the current year.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would not be considered an example of a discontinued operation?

Accepted Answer

A)   Shifting production processes within an operation
B)   Elimination of a major class of customers
C)   Elimination of an entire activity
D)   Disposal of a significant component of a businessE) B) and D)
F) None of the above

Question 9

Vertical analysis is a technique that expresses each item in a financial statement

Accepted Answer

A)   in dollars and cents.
B)   as a percent of the item in the previous year.
C)   as a percent of a base amount.
D)   starting with the highest value down to the lowest value.E) A) and C)
F) All of the above

Question 10

A solvency ratio measures the income or operating success of an enterprise for a given period of time.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Accepted Answer

A)   Total revenues
B)   Income from operations
C)   Net income
D)   Gross profitE) None of the above
F) All of the above

Question 12

When preparing an income statement, which of the following is the proper order for income statement components?

Accepted Answer

A)   Comprehensive income, Other comprehensive income items, irregular items, Net income
B)   Net income, irregular items, Comprehensive income, Other comprehensive income items
C)   Irregular items, Net income, Other comprehensive income items, Comprehensive income
D)   Irregular items, Net income, Comprehensive income, Other comprehensive income itemsE) A) and D)
F) B) and C)

Question 13

The accounts receivable turnover and inventory turnover are used to analyze

Accepted Answer

A)   long-term solvency.
B)   profitability.
C)   liquidity.
D)   leverage.E) A) and B)
F) A) and C)

Question 14

In horizontal analysis, the base year is the most current year being examined.

Accepted Answer

A) True 
 B)False

Question 15

The following information is available for Patterson Company:  The inventory turnover for 2014 is

Accepted Answer

A)   5.4 times.
B)   5.0 times.
C)   2.5 times.
D)   3.0 times.E) B) and C)
F) A) and D)

Question 16

The use of alternative accounting methods

Accepted Answer

A)   is not a problem in ratio analysis because the footnotes disclose the method used.
B)   may be a problem in ratio analysis even if disclosed.
C)   is not a problem in ratio analysis since eventually all methods will lead to the same end.
D)   is only a problem in ratio analysis with respect to inventory.E) A) and C)
F) A) and D)

Question 17

Assume the following cost of goods sold data for a company:  If 2013 is the base year, what is the percentage increase in cost of goods sold from 2013 to 2015?

Accepted Answer

A)   130%
B)   30%
C)   70%
D)   20%E) B) and C)
F) A) and D)

Question 18

Which of the following ratios may be used to measure a company's quality of earnings?

Accepted Answer

A)   Price-earnings ratio
B)   Return on assets ratio
C)   Current ratio
D)   Times interest earned ratioE) A) and D)
F) All of the above

Question 19

Exeter Corporation had net income of $3,000,000 in 2013. Using 2013 as the base year, net income decreased by 40% in 2014 and increased by 110% in 2015.
Instructions
Compute the net income reported by Exeter Corporation for 2014 and 2015.

Accepted Answer

2014: ÷ $3,000,000 = 40%
= $3,000,000 × ...

Question 20

The current ratio is

Accepted Answer

A)   calculated by dividing current liabilities by current assets.
B)   used to evaluate a company's liquidity and short-term debt paying ability.
C)   used to evaluate a company's solvency and long-term debt paying ability.
D)   calculated by subtracting current liabilities from current assets.E) B) and D)
F) A) and C)

Exam 13: Financial Analysis: The Big Picture

The following items were taken from the financial statements of Mint, Inc., over a three-year period: Instructions Compute the following for each of the above time periods. a. The amount and percentage change from 2013 to 2014. b. The amount and percentage change from 2014 to 2015.

Correct AnswerverifiedShow Answer

When preparing an income statement, which of the following is the proper order for income statement components?

Correct AnswerverifiedShow Answer

The current ratio is a measure of all the ratios calculated for the current year.

Correct AnswerverifiedShow Answer

A solvency ratio measures the income or operating success of an enterprise for a given period of time.

Correct AnswerverifiedShow Answer

Which of the following would not be considered an example of a discontinued operation?

Correct AnswerverifiedShow Answer

The use of alternative accounting methods

Correct AnswerverifiedShow Answer

Horizontal analysis is also known as

Correct AnswerverifiedShow Answer

Assume the following cost of goods sold data for a company: If 2013 is the base year, what is the percentage increase in cost of goods sold from 2013 to 2015?

Correct AnswerverifiedShow Answer

In performing a vertical analysis, the base for sales revenues on the income statement is

Correct AnswerverifiedShow Answer

Comprehensive income includes all revenues, expenses, gains, losses, and dividends.

Correct AnswerverifiedShow Answer

A common measure of liquidity is

Correct AnswerverifiedShow Answer

Exeter Corporation had net income of $3,000,000 in 2013. Using 2013 as the base year, net income decreased by 40% in 2014 and increased by 110% in 2015. Instructions Compute the net income reported by Exeter Corporation for 2014 and 2015.

Correct Answerverified2014: ÷ $3,000,000 = 40%= $3,000,000 × ...View AnswerShow Answer

In horizontal analysis, the base year is the most current year being examined.

Correct AnswerverifiedShow Answer

The current ratio is

Correct AnswerverifiedShow Answer

Vertical analysis is a technique that expresses each item in a financial statement

Correct AnswerverifiedShow Answer

The following information is available for Patterson Company: The inventory turnover for 2014 is

Correct AnswerverifiedShow Answer

Which of the following ratios may be used to measure a company's quality of earnings?

Correct AnswerverifiedShow Answer

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Correct AnswerverifiedShow Answer

The accounts receivable turnover and inventory turnover are used to analyze

Correct AnswerverifiedShow Answer

Liquidity ratios measure the ability of the enterprise to survive over a long period of time.

Correct AnswerverifiedShow Answer

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2014: ÷ $3,000,000 = 40%
= $3,000,000 × ...
View Answer

Correct Answer
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