Question 1

Even if a company has a low debt to total assets ratio, it may have difficulty paying interest on debt if it also has a low times interest earned ratio.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

When preparing a vertical analysis on an income statement, net sales are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 4

The return on common shareholders' equity is affected by both the return on assets and debt to total assets ratios.

Accepted Answer

A) True 
 B)False

Question 5

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) None of the above
F) A) and B)

Question 6

A liquidity ratio measures the

Accepted Answer

A)  profit or operating success of a company over a period of time.
B)  ability of the company to survive over a long period of time.
C)  short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
D)  ability of a company to raise capital.E) B) and C)
F) C) and D)

Question 7

Gifford Limited reported the following on its income statement:  Interest expense was $60,000.Gifford's times interest earned was

Accepted Answer

A)  11 times.
B)  10 times.
C)  7 times.
D)  3 times.E) A) and D)
F) B) and D)

Question 8

A weakness of the current ratio is

Accepted Answer

A)  the difficulty of the calculation.
B)  that it doesn't take into account the composition of the current assets.
C)  that it is rarely used by sophisticated analysts.
D)  that it can be expressed as a percentage, as a rate, or as a proportion.E) All of the above
F) B) and D)

Question 9

Consider the following information:  The dividend yield is

Accepted Answer

A)  1.5%.
B)  6.2%.
C)  8.6%.
D)  50.0%.E) A) and C)
F) C) and D)

Question 10

The discontinued operations section of the income statement refers to

Accepted Answer

A)  discontinuance of a product line.
B)  the profit or loss on products that have been completed and sold.
C)  sale of obsolete equipment and discontinued inventory items.
D)  the disposal of a major line of business or major geographical area of operations.E) B) and C)
F) A) and D)

Question 11

The return on assets ratio is affected by the

Accepted Answer

A)  profit margin and debt to total assets ratios.
B)  profit margin and asset turnover ratios.
C)  times interest earned and debt to total assets ratios.
D)  profit margin and free cash flow.E) B) and C)
F) C) and D)

Question 12

If a company has sales of $220 in 2015 and $560 in 2016, the percentage increase in sales from 2015 to 2016 is 155%.

Accepted Answer

A) True 
 B)False

Question 13

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2015 and 2016:
    
-What is the price-earnings ratio?

Accepted Answer

A)  44.4 times
B)  16.0 times
C)  8.0 times
D)  2.5 timesE) None of the above
F) B) and C)

Question 14

Understand the limitations of financial analysis.

Accepted Answer

The usefulness of financial analysis can...

Question 15

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2015 and 2016.
   
-What is the current ratio for 2016?

Accepted Answer

A)  2.0:1
B)  1.7:1
C)  1.6:1
D)  0.6:1E) A) and B)
F) A) and C)

Question 16

Horizontal analysis of comparative financial statements includes the

Accepted Answer

A)  development of vertically analyzed statements.
B)  calculation of liquidity ratios.
C)  calculation of dollar amount changes and percentage changes from the previous to the current year.
D)  evaluation of financial statement data that expresses each item in the current period's financial statement as a percentage of a base amount.E) All of the above
F) None of the above

Question 17

In vertical analysis of an income statement, the 100% figure is

Accepted Answer

A)  profit.
B)  cost of goods sold.
C)  gross profit.
D)  net sales.E) B) and D)
F) All of the above

Question 18

Many firms today are so diversified that they cannot be classified by industry.

Accepted Answer

A) True 
 B)False

Question 19

An income statement would not include

Accepted Answer

A)  assets held for sale of a discontinued operation.
B)  a loss on disposal of a component of an entity.
C)  an operating loss on discontinued operations.
D)  an unusually large bad debt expense.E) B) and D)
F) All of the above

Question 20

Comparisons of financial data made within a company are called

Accepted Answer

A)  intracompany comparisons.
B)  interior comparisons.
C)  intercompany comparisons.
D)  intramural comparisons.E) C) and D)
F) A) and B)

Exam 14: Managerial Accounting

Gifford Limited reported the following on its income statement: Interest expense was $60,000.Gifford's times interest earned was

Correct AnswerverifiedShow Answer

A weakness of the current ratio is

Correct AnswerverifiedShow Answer

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2015 and 2016. -What is the current ratio for 2016?

Correct AnswerverifiedShow Answer

If a company has sales of $220 in 2015 and $560 in 2016, the percentage increase in sales from 2015 to 2016 is 155%.

Correct AnswerverifiedShow Answer

A liquidity ratio measures the

Correct AnswerverifiedShow Answer

Even if a company has a low debt to total assets ratio, it may have difficulty paying interest on debt if it also has a low times interest earned ratio.

Correct AnswerverifiedShow Answer

When preparing a vertical analysis on an income statement, net sales are represented by 100%.

Correct AnswerverifiedShow Answer

Many firms today are so diversified that they cannot be classified by industry.

Correct AnswerverifiedShow Answer

Horizontal analysis of comparative financial statements includes the

Correct AnswerverifiedShow Answer

Consider the following information: The dividend yield is

Correct AnswerverifiedShow Answer

The discontinued operations section of the income statement refers to

Correct AnswerverifiedShow Answer

An income statement would not include

Correct AnswerverifiedShow Answer

The return on assets ratio is affected by the

Correct AnswerverifiedShow Answer

In vertical analysis of an income statement, the 100% figure is

Correct AnswerverifiedShow Answer

The return on common shareholders' equity is affected by both the return on assets and debt to total assets ratios.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2015 and 2016: -What is the price-earnings ratio?

Correct AnswerverifiedShow Answer

Horizontal analysis is a technique for evaluating financial statement data

Correct AnswerverifiedShow Answer

Comparisons of financial data made within a company are called

Correct AnswerverifiedShow Answer

Understand the limitations of financial analysis.

Correct AnswerverifiedThe usefulness of financial analysis can...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The usefulness of financial analysis can...
View Answer