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Exam 13: Financial Statement Analysis

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Question 81

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

A) True
B) False

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Question 82

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Which of the following statements is true with respect to financial statement reporting a change in accounting principle?

A) Comparability across periods is impaired
B) Only a footnote is required to report the change
C) Changes in both depreciation methods and inventory methods are reported retroactively.
D) Management must show that the new accounting principle is preferable to the old method.

E) All of the above
F) C) and D)

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Question 83

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A company has an average inventory on hand of $90,000 and its average days in inventory is 36.5 days. What is the cost of goods sold?

When the disposal of a significant segment occurs, the income statement should report both income from continuing operations and income (loss) from discontinued operations.

Inventory turnover measures the number of times on average the inventory was sold during the period.

If Hard in Parle Company had net income of $620,000 in 2017 and it experienced a 19% increase in net income over 2016, what was its 2016 net income?

The following amounts were taken from the financial statements of Ando Company: 2017 2016 Total assets $800,000 $1,000,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 108,000 117,000 Weighted average number of Common shares outstanding 90,000 90,000 Market price of common stock $42 $39 The profit margin ratio for 2017 is

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

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on assets for this company?

For analysis of the financial statements, ratios can be classified into three types: (1)_____________ ratios, (2)_____________ ratios, and (3)______________ ratios.

The times interest earned is calculated by dividing ___________________ before __________________ and __________________ by interest expense.

The return on assets will be greater than the rate of return on common stockholders' equity if the company has been successful in trading on the equity at a gain.

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

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

Common size analysis expresses each item in a financial statement as a percent of a base amount.

The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

In ratio analysis, the ratios are never expressed as a

The liquidity ratio, known as the _______________ ratio, has a disadvantage that it uses year-end balances for current assets and current liabilities.

The asset turnover measures

Intracompany comparisons of the same financial statement items are often useful to detect changes in financial relationships and significant trends.