Question 1

Declining profitability and liquidity ratios are indications that a company may not survive.

Accepted Answer

A) True 
 B)False

Question 2

Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year.The average inventory for the year amounted to $1,250,000.The inventory turnover for the year is

Accepted Answer

A)  7.4 times.
B)  10.4 times.
C)  3.0 times.
D)  1.4 times.E) None of the above
F) All of the above

Question 3

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

A)  within a period of time.
B)  over a period of time.
C)  on a certain date.
D)  as it may appear in the future.E) All of the above
F) None of the above

Question 4

From a creditor's point of view, the higher the debt to assets ratio, the lower the risk that the company may be unable to pay its obligations.

Accepted Answer

A) True 
 B)False

Question 5

The current ratio is one of the most utilized measures of profitability.

Accepted Answer

A) True 
 B)False

Question 6

In horizontal analysis, the base year is the most current year being examined.

Accepted Answer

A) True 
 B)False

Question 7

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.  What is the profit margin for this company?

Accepted Answer

A)  34.5%
B)  43.1%
C)  25.8%
D)  17.2%E) A) and D)
F) All of the above

Question 8

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

Accepted Answer

A)  that has been arranged from the highest number to the lowest number.
B)  that has been arranged from the lowest number to the highest number.
C)  to determine which items are in error.
D)  to determine the amount and/or percentage increase or decrease that has taken place.E) A) and B)
F) B) and D)

Question 9

Other comprehensive income is reported on the statement of comprehensive income immediately

Accepted Answer

A)  before income from continuing operations.
B)  after comprehensive income.
C)  before income before income taxes.
D)  after discontinued operations.E) All of the above
F) A) and D)

Question 10

The inventory turnover is calculated by dividing

Accepted Answer

A)  cost of goods sold by the ending inventory.
B)  cost of goods sold by the beginning inventory.
C)  cost of goods sold by the average inventory.
D)  average inventory by cost of goods sold.E) B) and C)
F) A) and D)

Question 11

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.  What is the inventory turnover for this company?

Accepted Answer

A)  2.6 times
B)  4.6 times
C)  5.3 times
D)  0.38 timeE) C) and D)
F) B) and C)

Question 12

The following amounts were taken from the financial statements of Ando Company:  The return on assets for 2022 is

Accepted Answer

A)  14%.
B)  12%.
C)  11%.
D)  6%.E) None of the above
F) A) and C)

Question 13

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Stockholders are most interested in evaluating

Accepted Answer

A)  liquidity.
B)  solvency.
C)  profitability.
D)  marketability.E) B) and C)
F) A) and C)

Question 15

In a common size financial statement, which of the following is given a percentage of 100 percent?

Accepted Answer

A)  Total liabilities
B)  Net income
C)  Total assets
D)  Cost of goods soldE) A) and D)
F) All of the above

Question 16

All of the following situations below might indicate a company has a low quality of earnings except

Accepted Answer

A)  A lack of disclosure about guaranteed payments that were mentioned in the MD&A of the annual report.
B)  Maintenance costs are capitalized and then depreciated.
C)  Revenue is recognized when earned.
D)  Adoption of a different inventory method for each of the last three years.E) C) and D)
F) A) and B)

Question 17

Which one of the following would be considered a long-term solvency ratio?

Accepted Answer

A)  Accounts receivable turnover
B)  Return on assets
C)  Current ratio
D)  Debt to assets ratioE) A) and C)
F) All of the above

Question 18

The following schedule is a display of what type of analysis?

Accepted Answer

A)  Horizontal analysis
B)  Differential analysis
C)  Vertical analysis
D)  Ratio analysisE) All of the above
F) A) and D)

Question 19

In a common size income statement, net sales are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 20

Other comprehensive income includes all changes in stockholder's equity during a period including those changes resulting from investments by stockholders.

Accepted Answer

A) True 
 B)False

Exam 13: Financial Analysis: The Big Picture

In horizontal analysis, the base year is the most current year being examined.

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Declining profitability and liquidity ratios are indications that a company may not survive.

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From a creditor's point of view, the higher the debt to assets ratio, the lower the risk that the company may be unable to pay its obligations.

Correct AnswerverifiedShow Answer

The following amounts were taken from the financial statements of Ando Company: The return on assets for 2022 is

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The inventory turnover is calculated by dividing

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In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

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In a common size financial statement, which of the following is given a percentage of 100 percent?

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The current ratio is one of the most utilized measures of profitability.

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Which one of the following would be considered a long-term solvency ratio?

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Stockholders are most interested in evaluating

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In a common size income statement, net sales are represented by 100%.

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The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the inventory turnover for this company?

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All of the following situations below might indicate a company has a low quality of earnings except

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Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

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The following schedule is a display of what type of analysis?

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The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the profit margin for this company?

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Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year.The average inventory for the year amounted to $1,250,000.The inventory turnover for the year is

Correct AnswerverifiedShow Answer

Horizontal analysis is a technique for evaluating financial statement data

Correct AnswerverifiedShow Answer

Other comprehensive income is reported on the statement of comprehensive income immediately

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Other comprehensive income includes all changes in stockholder's equity during a period including those changes resulting from investments by stockholders.

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