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When no value is in the base period,no percent change is computable.

A) True
B) False

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Describe the purpose of horizontal financial statement analysis and how it is applied.

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Horizontal analysis is a tool to evaluat...

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If a company is comparing its financial condition or performance to a base amount,it is using vertical analysis.

A) True
B) False

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A corporation reports the following year-end balance sheet data. A corporation reports the following year-end balance sheet data. -The company's current ratio equals: A) 0.58 B) 1.27 C) 2.07 D) 0.37 E) 0.63 -The company's current ratio equals:


A) 0.58
B) 1.27
C) 2.07
D) 0.37
E) 0.63

F) A) and E)
G) A) and D)

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Which of the following items is typically not included as a separate item after normal revenues and expenses?


A) Write down of inventories.
B) Condemnation of property by the city government.
C) Loss of use of property due to a new and unexpected environmental regulation.
D) Loss due to an unusual and infrequent calamity.
E) Expropriation of property by a foreign government.

F) A) and E)
G) A) and B)

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Identify and explain the four building blocks of financial statement analysis.

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The four usual building blocks of financ...

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Current assets divided by current liabilities is the:


A) Current ratio.
B) Quick ratio.
C) Debt ratio.
D) Liquidity ratio.
E) Solvency ratio.

F) D) and E)
G) C) and E)

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All of the following statements regarding a business segment are true except:


A) A business segment is a part of a company's operations that serves a particular product line.
B) A segment has assets,liabilities,and financial results of operations that can be distinguished from those of other parts of the company.
C) A company's gain or loss from selling or closing down a segment is reported separately.
D) The income tax effects of a discontinued segment are combined with income tax from continuing operations.
E) A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately.

F) None of the above
G) C) and D)

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Refer to the following selected financial information from Troy Manufacturing. Refer to the following selected financial information from Troy Manufacturing. -Compute the company's working capital. A) $536,650. B) $230,200. C) $568,200. D) $198,650. E) $231,450. -Compute the company's working capital.


A) $536,650.
B) $230,200.
C) $568,200.
D) $198,650.
E) $231,450.

F) A) and E)
G) C) and D)

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Trend percentage is calculated by dividing ________ by ________ and multiplying the result by 100.

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analysis period amou...

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All of the following are true of a financial statement analysis report,except:


A) Accounting standards determine which ratios are relevant and useful for the analysis.
B) The executive summary provides a brief analysis of results.
C) The analysis overview includes background on the company,its industry,and the economy.
D) Evidential matter includes ratios,trends,comparisons and all analytical measures.
E) Background on the company,its industry,and the economy is part of the analysis overview.

F) C) and E)
G) B) and E)

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A corporation reports the following year-end balance sheet data. A corporation reports the following year-end balance sheet data. -The company's working capital equals: A) $80,000 B) $155,000 C) $75,000 D) $300,000 E) $190,000 -The company's working capital equals:


A) $80,000
B) $155,000
C) $75,000
D) $300,000
E) $190,000

F) C) and D)
G) B) and D)

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Ron Landscaping's income statement reports net income of $75,300,which includes deductions for interest expense of $11,500 and income taxes of $34,900.Its times interest earned is:


A) 10.6 times
B) 7.5 times
C) 4.0 times
D) 6.5 times
E) 0.15 times

F) A) and D)
G) A) and C)

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Use the balance sheets of Glover shown below to calculate the following ratios for Year 2 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio. Use the balance sheets of Glover shown below to calculate the following ratios for Year 2 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.

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The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios? The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios?

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#1
blured image
Brittania has higher current ratios ...

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General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of stockholders' equity (or statement of retained earnings),(4)statement of cash flows,and (5)notes to these statements.

A) True
B) False

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Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:


A) 141%.
B) 71%.
C) ($56,000) .
D) $56,000.
E) 41%.

F) B) and C)
G) A) and B)

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A brief focus on important analysis results and conclusions is usually included in which of the following sections of a financial statement analysis report:


A) Executive summary.
B) Analysis overview.
C) Evidential conclusions.
D) Factor analysis.
E) Inferences.

F) All of the above
G) A) and E)

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Financial information for Sigma Company is presented below.Calculate the following ratios for Year 2: (a)Inventory turnover. (b)Accounts receivable turnover. (c)Return on total assets. (d)Times interest earned. (e)Total asset turnover. Financial information for Sigma Company is presented below.Calculate the following ratios for Year 2: (a)Inventory turnover. (b)Accounts receivable turnover. (c)Return on total assets. (d)Times interest earned. (e)Total asset turnover.

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(a)Inventory turnover:
$123,000/[($61,00...

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Standards for comparison when interpreting financial statements include competitor and industry performance data.

A) True
B) False

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