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Exam 9: Financial Statement Analysis

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Question 31

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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 the management of inventory.

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Question 32

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A company reports the following: Determine the (a)accounts receivable turnover and (b)number of days' sales in receivables.Round your answers to one decimal place.

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Question 33

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Which of the following is NOT an analysis used in assessing solvency?

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

The number of times interest charges are earned is computed as

Statements in which all items are expressed in relative terms are called common-size statements.

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as vertical analysis.

The purpose of an audit is to

The ability of a business to earn a reasonable amount of income is referred to as the factor of

If a company has current assets totaling $56,000 and current liabilities totaling $40,500,then the company's working capital totals $15,500.

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $130,000 and interest expense is $40,000 for 2011,what is the rate earned on stockholders' equity for 2011 (rounded to one decimal place) ?

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

"Working capital" is another term for the current ratio.

Washington Corporation has the following financial data for 2011 and 2010. -What is Washington's current ratio for 2011?

Washington Corporation has the following financial data for 2011 and 2010. -What is Washington's working capital for 2011?

For most profitable companies,the rate earned on total assets will be less than

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.

Which of the following is included in the computation of the quick ratio?

What type of analysis is indicated by the following? Increase (Decrease*) 2011 2010 Amount Percent Current assets $ 380,000 $ 500,000 $(120,000*) (24%) * Fixed assets 1,680,000 1,500,000 180,000 12%