Question 1

Horizontal analysis compares each item in the income statement to the net sales amount.

Accepted Answer

A) True 
 B)False

Question 2

The price/earnings ratio shows the ________.

Accepted Answer

A)  dividend yield of the company
B)  market price of $1 of earnings
C)  proportion of total assets financed by debt
D)  value that the stock market places on the dividends paid by the companyE) A) and B)
F) B) and C)

Question 3

Data for Gobell,Inc.follow:
  
Assets
Current Assets:
  
Liabilities
  
Stockholders' Equity
  
Prepare a horizontal analysis of the comparative balance sheet of Gobell,Inc.(Round to one decimal place. )

Accepted Answer

Assets
Current Ass...

Question 4

A common-size statement reports the same percentages that appear in a vertical analysis.

Accepted Answer

A) True 
 B)False

Question 5

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

Accepted Answer

A) True 
 B)False

Question 6

The auditor's report ________.

Accepted Answer

A)  attests that the financial statements are error-free
B)  is prepared by the internal auditors
C)  states whether the financial statements are presented in accordance with GAAP
D)  does not include an assessment of the effectiveness of the company's internal controlsE) B) and C)
F) C) and D)

Question 7

Investors and creditors cannot evaluate a company by examining only one year of data.

Accepted Answer

A) True 
 B)False

Question 8

The financial statements for Uptown Service Company include the following items:

Compute working capital for 2019.

Accepted Answer

A)  $135,000
B)  $95,000
C)  $151,000
D)  $31,000E) None of the above
F) A) and D)

Question 9

List the three ways to analyze financial statements.State what each of these ways provides to investors and creditors.

Accepted Answer

Horizontal analysis provides a year-to-y...

Question 10

The audit report in the annual report attests to the fairness of the presentation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Extracts from the balance sheet of Detroit,Inc.are as follows:
  
Assets
Current Assets:
  
Compute the acid-test ratio.

Accepted Answer

The answer of Extracts from the balance sheet of Detroit,Inc.are...

Question 12

The current ratio is calculated as total current assets divided by total current liabilities.

Accepted Answer

A) True 
 B)False

Question 13

A corporation has 2000 shares,10% preferred stock of $65.00 par preferred stock,and 6000 shares of common stock outstanding.The net income for the year is $290,000.Calculate earnings per share.(Round your answer to the nearest cent. )

Accepted Answer

A)  $65.00
B)  $46.17
C)  $48.33
D)  $145.00E) A) and D)
F) All of the above

Question 14

In a vertical analysis of the income statement,each line item is shown as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 15

A vertical analysis percent is computed by dividing the base amount by the specific item and then multiplying by 100.

Accepted Answer

A) True 
 B)False

Question 16

Use the balance sheet of Chicago,Inc.to calculate the current ratio for 2019 and 2018
  
Assets
  
Liabilities
  
Stockholders' Equity

Accepted Answer

Ratinal:
Current ra...

Question 17

The following is a summary of information presented on the financial statements of a company on December 31,2019.

With respect to net sales revenue,a horizontal analysis reveals ________.

Accepted Answer

A)  a 20.92% increase in net sales revenue
B)  a 240.62% decrease in net sales revenue
C)  a decrease of $44,000 in net sales revenue
D)  a $44,000 increase in net sales revenueE) None of the above
F) A) and B)

Question 18

Management's discussion and analysis of financial condition and results of operations section of the annual report is the company's attempt to explain its financial statements and discuss its performance.

Accepted Answer

A) True 
 B)False

Question 19

Vertical analysis involves comparing an amount for a line item in the financial statements with a corresponding amount for the line item of the previous year.

Accepted Answer

A) True 
 B)False

Question 20

Shelcal,Inc.provides the following data for the year 2019:

The cost of goods sold as a percentage of net sales revenue is ________.(Round your answer to two decimal places. )

Accepted Answer

A)  58.84%
B)  58.96%
C)  58.41%
D)  58.68%E) A) and B)
F) B) and C)

Exam 15: Financial Statement Analysis

Use the balance sheet of Chicago,Inc.to calculate the current ratio for 2019 and 2018 Assets Liabilities Stockholders' Equity

Correct AnswerverifiedRatinal:Current ra...View AnswerShow Answer

Data for Gobell,Inc.follow: Assets Current Assets: Liabilities Stockholders' Equity Prepare a horizontal analysis of the comparative balance sheet of Gobell,Inc.(Round to one decimal place. )

Correct Answerverified AssetsCurrent Ass...View AnswerShow Answer

In a vertical analysis of the income statement,each line item is shown as a percentage of net income.

Correct AnswerverifiedShow Answer

Vertical analysis involves comparing an amount for a line item in the financial statements with a corresponding amount for the line item of the previous year.

Correct AnswerverifiedShow Answer

List the three ways to analyze financial statements.State what each of these ways provides to investors and creditors.

Correct AnswerverifiedHorizontal analysis provides a year-to-y...View AnswerShow Answer

The financial statements for Uptown Service Company include the following items: Compute working capital for 2019.

Correct AnswerverifiedShow Answer

Extracts from the balance sheet of Detroit,Inc.are as follows: Assets Current Assets: Compute the acid-test ratio.

Correct AnswerverifiedShow Answer

Shelcal,Inc.provides the following data for the year 2019: The cost of goods sold as a percentage of net sales revenue is ________.(Round your answer to two decimal places. )

Correct AnswerverifiedShow Answer

Management's discussion and analysis of financial condition and results of operations section of the annual report is the company's attempt to explain its financial statements and discuss its performance.

Correct AnswerverifiedShow Answer

The current ratio is calculated as total current assets divided by total current liabilities.

Correct AnswerverifiedShow Answer

A corporation has 2000 shares,10% preferred stock of $65.00 par preferred stock,and 6000 shares of common stock outstanding.The net income for the year is $290,000.Calculate earnings per share.(Round your answer to the nearest cent. )

Correct AnswerverifiedShow Answer

The auditor's report ________.

Correct AnswerverifiedShow Answer

Investors and creditors cannot evaluate a company by examining only one year of data.

Correct AnswerverifiedShow Answer

The following is a summary of information presented on the financial statements of a company on December 31,2019. With respect to net sales revenue,a horizontal analysis reveals ________.

Correct AnswerverifiedShow Answer

A common-size statement reports the same percentages that appear in a vertical analysis.

Correct AnswerverifiedShow Answer

The audit report in the annual report attests to the fairness of the presentation of the financial statements.

Correct AnswerverifiedShow Answer

Horizontal analysis compares each item in the income statement to the net sales amount.

Correct AnswerverifiedShow Answer

A vertical analysis percent is computed by dividing the base amount by the specific item and then multiplying by 100.

Correct AnswerverifiedShow Answer

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

Correct AnswerverifiedShow Answer

The price/earnings ratio shows the ________.

Correct AnswerverifiedShow Answer

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Ratinal:
Current ra...
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Assets
Current Ass...
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Horizontal analysis provides a year-to-y...
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