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Exam 16: Financial Statement Analysis

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Question 41

Multiple Choice

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A successful grocery store would probably have

A) a low inventory turnover.
B) a high inventory turnover.
C) zero profit margin.
D) low volume.

E) All of the above
F) None of the above

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Question 42

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Horizontal analysis is also known as

A) linear analysis.
B) vertical analysis.
C) trend analysis.
D) budget analysis.

E) All of the above
F) B) and C)

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Question 43

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The _________________ uses the income statement to assess a company's ability to service its debt.

Presented below are selected data from the financial statements of DeBruce Corp.for 2012 and 2011. The dividend payout ratio for 2012 is

The following information is summarized from the balance sheets of Kress Inc.and Ross Corp.at December 31,2011.Neither company has inventory.

Short-term creditors are usually most interested in assessing

The ________________ is computed by dividing a company's total liabilities by its total assets.

Phillips Company had $300,000 in sales on account last year.The beginning accounts receivable balance was $25,000 and the ending accounts receivable balance was $18,000.The company's accounts receivable turnover ratio was closest to

The two major forms of common-size analysis are horizontal analysis and vertical analysis.What type of information or insights can be obtained by using these two techniques of financial statement analysis? Explain how the output of horizontal analysis and vertical analysis can be compared to industry averages and/or competitive companies.

______________ and ____________ are the two major sources of capital. or

ABC Company issued additional shares of stock for cash.The effect of the transaction is

If the accounts receivable turnover is 42 days,what is the account receivable turnover ratio (assuming a 365 day year) ?

The measures of the ability of a company to meets its long- and short-term obligations are known as _______________.

The accounts receivable turnover and inventory turnover ratios are used to analyze

Lisa's Dress Company,a retailer,had cost of goods sold of $180,000 last year.The beginning inventory balance was $13,000 and the ending inventory balance was $18,000.The company's average inventory turnover in days was closest to

You decide Ratios by themselves tell little about the financial well-being of a company.For meaningful analysis,the ratios should be compared with a standard.Describe the two standards commonly used.

The Gift Shoppe's inventory turned over five times during the year.Similar gift shops have an inventory turnover equal to ten times per year.What explains the Gift Shoppe's inventory management?

Which one of the following would not be considered a liquidity ratio?

Inventory turnover is a measure of liquidity that focuses on efficient use of inventory.

The quick ratio should be larger than the current ratio.