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Exam 14: Financial Statement Analysis

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Question 71

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A company can use comparisons of its financial data to the data of other companies and industry averages to evaluate its position.

A) True
B) False

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Question 72

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The excess of current assets over current liabilities is referred to as working capital.

A) True
B) False

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Question 73

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On a common-sized income statement, all items are stated as a percent of total assets or equities at year-end.

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

Vertical analysis refers to comparing the financial statements of a single company over several years.

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

The relationship of $325,000 to $125,000, expressed as a ratio, is

The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned round to one decimal point?

Based on the above data, what is the quick ratio, rounded to one decimal point?

Which of the following measures a company's ability to pay its current liabilities?

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.

The following items were taken from the financial statements of Tilden, Inc., over a three-year period: Compute the following for each of the above time periods. a The amount and percentage change from Year 2 to Year 3. b The amount and percentage change from Year 1 to Year 2.Round percentages to one decimal place.

When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio, the management of the company has effectively used leverage.

Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.

Earnings per share amounts are only required to be presented for income from continuing operations and net income on the face of the statement.

What are the dividends per common share for Diane Company?

Which of the following is not included in the computation of the quick ratio?

Based on the following data for the current year, what is the inventory turnover?

The numerator in calculating the accounts receivable turnover is