Question 1

Match each ratio that follows to its use (items a-h) . Items may be used more than once.
-ratio of liabilities to stockholders' equity

Accepted Answer

A)  assess the profitability of the assets
B)  assess how effectively assets are used
C)  indicate the ability to pay current liabilities
D)  indicate how much of the company is financed by debt and equity
E)  indicate instant debt-paying abilityF) assess the profitability of the investment by common stockholdersG) indicate future earnings prospectsH) indicate the extent to which earnings are being distributed to common stockholdersI) None of the above
J) C) and D)

Question 2

A loss on disposal of a segment would be reported in the income statement as a(n)

Accepted Answer

A)  administrative expense
B)  other expense
C)  deduction from income from continuing operations
D)  selling expenseE) B) and C)
F) A) and D)

Question 3

Match each definition that follows with the term (a-h)  it defines.
-a company's ability to make interest payments and repay debt at maturity

Accepted Answer

A)  solvency
B)  leverage
C)  times interest earned
D)  horizontal analysis
E)  vertical analysisF) common-sized financial statementsG) current position analysisH) profitability analysisI) A) and H)
J) A) and E)

Question 4

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.

Accepted Answer

A) True 
 B)False

Question 5

Cash and accounts receivable for Ashfall Co. are provided below:  Based on this information, what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis? Round percentages to one decimal place.

Accepted Answer

Cash
$4,400 increase ($62,400 ...

Question 6

Current position analysis is used by short-term creditors to assess how quickly they will be repaid.

Accepted Answer

A) True 
 B)False

Question 7

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

(a)Accounts receivable turnover = Sales/...

Question 9

Match each ratio that follows to its use (items a-h) . Items may be used more than once.
-quick ratio

Accepted Answer

A)  assess the profitability of the assets
B)  assess how effectively assets are used
C)  indicate the ability to pay current liabilities
D)  indicate how much of the company is financed by debt and equity
E)  indicate instant debt-paying abilityF) assess the profitability of the investment by common stockholdersG) indicate future earnings prospectsH) indicate the extent to which earnings are being distributed to common stockholdersI) A) and D)
J) G) and H)

Question 10

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

Accepted Answer

A)  inventory
B)  marketable securities
C)  accounts receivable
D)  cashE) A) and B)
F) A) and C)

Question 11

Define solvency and profitability. How are they alike?

Accepted Answer

Solvency is the ability of a company to ...

Question 12

For the current year, Lynx Company's comprehensive income was $245,000 and its net income was $198,000. What is Lynx Company's other comprehensive income?

Accepted Answer

Lynx Company's other comprehensive incom...

Question 13

An increase in the accounts receivable turnover may be due to a change in how credit is granted and/or in collection practices.

Accepted Answer

A) True 
 B)False

Question 14

Match each definition that follows with the term (a-h)  it defines.
-use debt to increase the return on an investment

Accepted Answer

A)  solvency
B)  leverage
C)  times interest earned
D)  horizontal analysis
E)  vertical analysisF) common-sized financial statementsG) current position analysisH) profitability analysisI) All of the above
J) A) and F)

Question 15

Zeus Company reports the following for the current year:  *Net of any tax effect
(a)Prepare a partial income statement for Zeus Company beginning with income from continuing operations before income tax.(b)Calculate the earnings per common share for Zeus.

Accepted Answer

The answer of Zeus Company reports the following for the...

Question 16

In a common-sized income statement, 100% is the

Accepted Answer

A)  net cost of goods sold
B)  net income
C)  gross profit
D)  salesE) None of the above
F) All of the above

Question 17

A company can compare its financial data to the data of other companies and industry averages to evaluate its position.

Accepted Answer

A) True 
 B)False

Question 18

An advantage of the current ratio is that it considers the makeup of the current assets.

Accepted Answer

A) True 
 B)False

Question 19

Hsu Company reported the following on its income statement:  Interest expense was $80,000. Hsu Company's times interest earned ratio is

Accepted Answer

A)  8 times
B)  6.25 times
C)  5.25 times
D)  5 timesE) A) and D)
F) B) and C)

Question 20

The relationship of $325,000 to $125,000, expressed as a ratio, is

Accepted Answer

A)  2.0
B)  2.6
C)  2.5
D)  0.45E) C) and D)
F) All of the above

Exam 14: Financial Statement Analysis

An advantage of the current ratio is that it considers the makeup of the current assets.

Correct AnswerverifiedShow Answer

Cash and accounts receivable for Ashfall Co. are provided below: Based on this information, what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis? Round percentages to one decimal place.

Correct AnswerverifiedCash$4,400 increase ($62,400 ...View AnswerShow Answer

Zeus Company reports the following for the current year: *Net of any tax effect (a)Prepare a partial income statement for Zeus Company beginning with income from continuing operations before income tax.(b)Calculate the earnings per common share for Zeus.

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Match each ratio that follows to its use (items a-h) . Items may be used more than once. -ratio of liabilities to stockholders' equity

Correct AnswerverifiedShow Answer

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.

Correct AnswerverifiedShow Answer

An increase in the accounts receivable turnover may be due to a change in how credit is granted and/or in collection practices.

Correct AnswerverifiedShow Answer

A loss on disposal of a segment would be reported in the income statement as a(n)

Correct AnswerverifiedShow Answer

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

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The relationship of $325,000 to $125,000, expressed as a ratio, is

Correct AnswerverifiedShow Answer

A company can compare its financial data to the data of other companies and industry averages to evaluate its position.

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In a common-sized income statement, 100% is the

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Current position analysis is used by short-term creditors to assess how quickly they will be repaid.

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For the current year, Lynx Company's comprehensive income was $245,000 and its net income was $198,000. What is Lynx Company's other comprehensive income?

Correct AnswerverifiedLynx Company's other comprehensive incom...View AnswerShow Answer

Hsu Company reported the following on its income statement: Interest expense was $80,000. Hsu Company's times interest earned ratio is

Correct AnswerverifiedShow Answer

Define solvency and profitability. How are they alike?

Correct AnswerverifiedSolvency is the ability of a company to ...View AnswerShow Answer

Match each definition that follows with the term (a-h) it defines. -a company's ability to make interest payments and repay debt at maturity

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Match each definition that follows with the term (a-h) it defines. -use debt to increase the return on an investment

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

Correct Answerverified(a)Accounts receivable turnover = Sales/...View AnswerShow Answer

Match each ratio that follows to its use (items a-h) . Items may be used more than once. -quick ratio

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The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

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Cash
$4,400 increase ($62,400 ...
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Lynx Company's other comprehensive incom...
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Solvency is the ability of a company to ...
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(a)Accounts receivable turnover = Sales/...
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