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Exam 14: Financial Statement Analysis

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Question 71

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In horizontal analysis,the current year is the base year.

A) True
B) False

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Question 72

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Based on the following data for the current year,what is the number of days' sales in receivables?

A) 7.3
B) 2.5
C) 14.6
D) 25

E) B) and C)
F) B) and D)

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Question 73

Multiple Choice

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The percentage analysis of increases and decreases in individual items in comparative financial statements is called

In the vertical analysis of an income statement,each item is generally stated as a percentage of total assets.

Which of the following items should be classified as an unusual item on an income statement?

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

The balance sheet for Seuss Company at the end of the current fiscal year indicated the following: ​ ​ Income before income tax was $1,500,000 and income taxes were $200,000 for the current year.Cash dividends paid on common stock during the current year totaled $150,000.The common stock sells for $75 per share at the end of the year. ​ Determine each of the following: ​ Round to one decimal place except earnings per share and dividends per share,which should be rounded to two decimal places.

Horizontal analysis is a technique for evaluating financial statement data

Hsu Company reported the following on its income statement: ​ Interest expense was $80,000.Hsu Company's times interest earned ratio is

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

Match each ratio that follows to its use (items a-h) .Items may be used more than once. -dividends per share

In a common-sized income statement,100% is the

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

The following items are reported on a company's balance sheet: ​ Determine the (a)current ratio,and (b)quick ratio.Round your answer to one decimal place.

The following data are taken from the balance sheet at the end of the current year. ​ ​ Determine the (a)working capital,(b)current ratio,and (c)quick ratio.Round ratios to one decimal place.

The following items are reported on Denver Company's balance sheet: ​ ​ Determine (a)the current ratio and (b)the quick ratio.Round to one decimal place.

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

Leverage implies that a company

In a vertical analysis,the base for cost of goods sold is

If a firm has a current ratio of 2,the subsequent collection of a 60-day note receivable on account will cause the ratio to decrease.