ACC201C Chapter 17 Quiz Score 95%

Question-1

Financial statement analysis lessens the need for expert judgment.

True

False

 

Question-2

The comparison of a company's financial condition and performance to a base amount is known as:

Horizontal ratios.

Investment analysis.

Financial reporting.

Risk analysis.

Vertical analysis.

 

Question-3

How long a company holds inventory before selling it can be measured by dividing cost of goods sold by the average inventory balance to determine the:

Price earnings ratio.

Accounts receivable turnover.

Inventory turnover.

Current ratio.

Days' sales uncollected.

 

Question-4

The building blocks of financial statement analysis include (1) liquidity, (2) salability, (3) solvency, and (4) profitability.

True

False

 

Question-5

The market price of Horokhiv Corporation's common stock at the start of 2014 was $47.50 and it declared and paid cash dividends of $3.28 per share. The Dividend yield ratio is:

14.5%.

7.4%.

6.5%.

144.8%.

6.9%.

 

Question-6

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

True

False

 

Question-7

The percent change of a comparative financial statement item is computed by subtracting the analysis period amount from the base period amount, dividing the result by the base period amount and multiplying that result by 100.

True

False

 

Question-8

Selected current year company information follows:

Net income $15,953

Net sales 712,855

Total liabilities, beginning-year 83,932

Total liabilities, end-of-year 103,201

Total stockholders' equity, beginning-year 198,935

Total stockholders' equity, end-of-year 121,851

 

The total asset turnover is:

6.28 times

3.64 times

2.81 times

2.24 times

4.67 times

 

Question-9

Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:

Average accounts receivable ratio.

Accounts receivable turnover ratio.

Current ratio.

Days' sales uncollected.

Profit margin.

 

Question-10

Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio.

Cash $42,250

Short-term investments 60,000

Accounts receivable, net 79,500

Merchandise inventory 115,000

Prepaid expenses 9,700

Accounts payable 111,400

2.75.

1.63.

0.92.

2.66.

1.12.

 

Question-11

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

True

False

 

Question-12

Net income divided by average total assets is:

Total asset turnover.

Profit margin.

Return on total assets.

Days' income in assets.

Current ratio.

 

Question-13

The return on total assets ratio is a profitability measure.

True

False

 

Question-14

A high level of expected risk suggests a low price-earnings (PE) ratio.

True

False

 

Question-15

The base amount for a common-size balance sheet is usually total assets.

True

False

 

Question-16

The ability to meet short-term obligations and to efficiently generate revenues is called:

Creditworthiness.

Liquidity and efficiency.

Profitability.

Solvency.

Market prospects.

 

Question-17

Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as:

Serial statements.

Successive statements.

Controlling statements.

Period-to-period statements.

Comparative statements.

 

Question-18

Rajan Company's most recent balance sheet reported total assets of $1.9 million, total liabilities of $0.8 million, and total equity of $1.1 million. Its Debt to equity ratio is:

0.58

1.00

0.73

0.42

1.38

 

Question-19

The measurement of key relations among financial statement items is known as:

Ratio analysis.

Financial reporting.

Horizontal analysis.

Investment analysis.

Risk analysis.

 

Question-20

The return on total assets can be calculated as profit margin times total asset turnover.

True

False