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Exam 15: Financial Statement Analysis

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Question 61

Multiple Choice

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Which of the following items appear on the corporate income statement before income from continuing operations?

A) cumulative effect of a change in accounting principle
B) income tax expense
C) extraordinary gain
D) loss on discontinued operations

E) None of the above
F) All of the above

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Question 62

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The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

A) True
B) False

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Question 63

Multiple Choice

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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 Liabilities and Stockholders' Equity Income Statement What is the ratio of net sales to total assets for this company? Round your answer to two decimal points.

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

Which of the following is not included in the computation of the quick ratio?

A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors.

The following items are reported on a company's balance sheet: Required: Determine (1) the current ratio and (2) the quick ratio. Round to one decimal place.

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

The independent auditor's report does which of the following?

A company reports the following: Determine the (a) accounts receivable turnover, and (b) number of days' sales in receivables. Round your answer to decimal place.

Define solvency and profitability. How are they alike?

The dividend yield rate is equal to the dividends per share divided by the par value per share of common stock.

Which one of the following is not a characteristic generally evaluated in ratio analysis?

The numerator of the rate earned on common stockholders' equity ratio is equal to

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 is considered an unusual item affecting the prior period's income statement?

Which of the following below generally is the most useful in analyzing companies of different sizes

The following information was taken from Slater Company's balance sheet: Determine the company's (a) Ratio of fixed assets to long-term liabilities, and (b) ratio of liabilities to stockholders' equity. Round your answer to one decimal place.

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 Liabilities and Stockholders' Equity Income Statement What is the rate earned on common stockholders' equity for this company? Round your answer to one decimal point.