Question 1

Refer to the following selected financial information from Frankle Corp. Compute the company's working capital.   Current Assets 306,450 Plant assets 338,000 Current Liabilities 107,800 Net sales 676,000 Net Income 75,000\begin{array}{|l|r|}\hline\\hline 	ext { Current Assets } & 306,450 \\hline 	ext { Plant assets } & 338,000 \\hline 	ext { Current Liabilities } & 107,800 \\hline 	ext { Net sales } & 676,000 \\hline 	ext { Net Income } & 75,000\\hline\end{array} Current Assets  Plant assets  Current Liabilities  Net sales  Net Income ​306,450338,000107,800676,00075,000​​

Accepted Answer

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

Question 2

Zhang Company reported Cost of goods sold of $835,000 and average Inventory of $41,750. The Inventory turnover ratio is:

Accepted Answer

A)  0.5 times.
B)  20 times.
C)  418 times.
D)  56 times.
E)  19 times.F) A) and E)
G) C) and E)

Question 3

Net sales divided by average total assets is the:

Accepted Answer

A)  Sales return ratio.
B)  Total asset turnover.
C)  Profit margin.
D)  Return on total assets.
E)  Current ratio.F) D) and E)
G) C) and D)

Question 4

Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2.   Year 2  Year 1  Total assets $327,800$301,000 Total liabilities 171,400169,300 Total equity 156,400131,700\begin{array}{|l|r|c|}\hline & {	ext { Year 2 }} & {	ext { Year 1 }} \\hline 	ext { Total assets } & \$ 327,800 & \$ 301,000 \\hline 	ext { Total liabilities } & 171,400 & 169,300 \\hline 	ext { Total equity } & 156,400 & 131,700 \\hline\end{array} Total assets  Total liabilities  Total equity ​ Year 2 $327,800171,400156,400​ Year 1 $301,000169,300131,700​​

Accepted Answer

A)  1.9.
B)  0.5.
C)  1.1.
D)  0.9.
E)  2.1. F) B) and D)
G) C) and D)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Net income divided by net sales is the:

Accepted Answer

A)  Return on total assets.
B)  Days' sales in inventory.
C)  Total asset turnover.
D)  Current ratio.
E)  Profit margin.F) C) and D)
G) A) and E)

Question 7

Identify and describe three common tools of financial statement analysis.

Accepted Answer

Three common tools of financial statemen...

Question 8

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Accepted Answer

A) True 
 B)False

Question 9

Intra-company analysis is based on comparisons with competitors.

Accepted Answer

A) True 
 B)False

Question 10

Profitability is the ability to generate positive market expectations.

Accepted Answer

A) True 
 B)False

Question 11

Horizontal analysis:

Accepted Answer

A)  Evaluates financial data across industries.
B)  Is the presentation of financial ratios.
C)  Is a tool used to evaluate financial statement items relative to industry statistics.
D)  Is a method used to evaluate changes in financial data across time.
E)  Is also called vertical analysis.F) A) and B)
G) A) and D)

Question 12

Net income divided by average total assets is:

Accepted Answer

A)  Days' income in assets.
B)  Profit margin.
C)  Total asset turnover.
D)  Current ratio.
E)  Return on total assets.F) A) and E)
G) A) and B)

Question 13

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Accepted Answer

A)  Inventory turnover ratio.
B)  Days' sales in inventory.
C)  Current ratio.
D)  Profit margin.
E)  Total asset turnover.F) B) and E)
G) A) and D)

Question 14

External users of financial information:

Accepted Answer

A)  Make operating decisions for a company.
B)  Are not directly involved in operating the company.
C)  Make strategic decisions for a company.
D)  Include internal auditors and consultants.
E)  Are those individuals involved in managing and operating the company.F) A) and B)
G) A) and D)

Question 15

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Accepted Answer

A) True 
 B)False

Exam 17: Analysis of Financial Statements

Horizontal analysis:

Correct Answer
verified

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Correct Answer
verified

Net income divided by net sales is the:

Correct Answer
verified

Intra-company analysis is based on comparisons with competitors.

Correct Answer
verified

Correct Answer
verified

Profitability is the ability to generate positive market expectations.

Correct Answer
verified

Net sales divided by average total assets is the:

Correct Answer
verified

External users of financial information:

Correct Answer
verified

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

Correct Answer
verified

Net income divided by average total assets is:

Correct Answer
verified

Zhang Company reported Cost of goods sold of $835,000 and average Inventory of $41,750. The Inventory turnover ratio is:

Correct Answer
verified

Identify and describe three common tools of financial statement analysis.

Correct Answer
verified
Three common tools of financial statemen...
View Answer

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Correct Answer
verified

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Correct Answer
verified

Correct Answer
verified

Exam 17: Analysis of Financial Statements

Horizontal analysis:

Correct AnswerverifiedShow Answer

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Correct AnswerverifiedShow Answer

Net income divided by net sales is the:

Correct AnswerverifiedShow Answer

Intra-company analysis is based on comparisons with competitors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Profitability is the ability to generate positive market expectations.

Correct AnswerverifiedShow Answer

Net sales divided by average total assets is the:

Correct AnswerverifiedShow Answer

External users of financial information:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Net income divided by average total assets is:

Correct AnswerverifiedShow Answer

Zhang Company reported Cost of goods sold of $835,000 and average Inventory of $41,750. The Inventory turnover ratio is:

Correct AnswerverifiedShow Answer

Identify and describe three common tools of financial statement analysis.

Correct AnswerverifiedThree common tools of financial statemen...View AnswerShow Answer

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Correct AnswerverifiedShow Answer

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Three common tools of financial statemen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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