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Exam 15: Financial Statement Analysis

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Question 41

Multiple Choice

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Based on the above data, what is the quick ratio, rounded to one decimal point?

A) 2.7
B) 2.6
C) 1.7
D) 0.9

E) A) and D)
F) A) and B)

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Question 42

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Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.

A) True
B) False

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Question 43

Multiple Choice

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An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets What is the ratio of net sales to total assets for this company? Round your answer to two decimal points.

Under which of the following cases may a percentage change be computed?

Unusual items affecting the prior period's income statement consist of errors and change in accounting principles.

For Garrison Corporation, the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year, reported as follows: Required: Has the current position improved? Explain.

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

The numerator used to calculate accounts receivable turnover is

Revenue and expense data for Young Technologies are as follows: Required:

Ratios and various other analytical measures are not a substitute for sound judgment, nor do they provide definitive guides for action.

The following items were taken from the financial statements of Stanton, Inc., over a three-year period: Compute the following for each of the above time periods. Round percentage to one decimal place.

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as

The numerator of the rate earned on total assets ratio is equal to

In computing the rate earned on total assets, interest expense is subtracted from net income before dividing by average total assets.

Earnings per share amounts are only required to be presented for income from continuing operations and net income on the face of the statement.

Which of the following would appear as an extraordinary item on the income statement?

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.

Current position analysis indicates a company's ability to liquidate current liabilities.