Question 1

Which of the following does not affect quality of earnings?

Accepted Answer

A)   Accounting estimates
B)   One-time items
C)   Accounting methods
D)   Industry normsE) None of the above
F) A) and B)

Question 2

Cash flows to sales and cash flows to assets are measured in terms of

Accepted Answer

A)   times.
B)   a percentage.
C)   dollars.
D)   days.E) C) and D)
F) B) and D)

Question 3

Using the following information reported in an annual report,prepare a horizontal analysis of the consolidated balance sheets.(Round percentage answers to one decimal place.)

Accepted Answer

The answer of Using the following information reported in an...

Question 4

Liquidity ratios are an indication of a company's

Accepted Answer

A)   ability to pay bills when they are due and to meet unexpected needs for cash.
B)   overall debt position.
C)   overall debt to equity position.
D)   ability to effectively employ its resources.E) A) and B)
F) None of the above

Question 5

Use the following information to calculate the ratios requested below.Round answers to one decimal place.Show your work.

Accepted Answer

The answer of Use the following information to calculate the...

Question 6

Which of the following is not a profitability ratio?

Accepted Answer

A)   Return on equity
B)   Return on assets
C)   Asset turnover
D)   Quick ratioE) B) and D)
F) None of the above

Question 7

The comparison of financial measures or ratios of the same company over a period of times is superior to the use of rule-of-thumb measures.

Accepted Answer

A) True 
 B)False

Question 8

In a diversified company,segments may be represented by different industries,geographical markets,and major customers.

Accepted Answer

A) True 
 B)False

Question 9

Vertical analysis will result in common-size statements.

Accepted Answer

A) True 
 B)False

Question 10

In a common-size financial statement,a designation of 25 percent could not be given to

Accepted Answer

A)   net revenues.
B)   total current assets.
C)   total long-term debt.
D)   net earnings.E) C) and D)
F) A) and B)

Question 11

Investors,creditors,and customers are considered external users of financial statements.

Accepted Answer

A) True 
 B)False

Question 12

Match each definition with the correct term below.
-Diversified companies

Accepted Answer

A)  The time that it takes to purchase inventory,sell it,and collect cash for it.
B)  The relationship of the more liquid current assets (cash,marketable securities or short-term investments,and receivables) to current liabilities.
C)  A technique for analyzing financial statements that uses percentages to show the relationship of the different parts to the total in a single statement.
D)  The substance of earnings and their sustainability into future accounting periods.
E)  All the techniques used to show important relationships in financial statements and to relate them to important financial objectives.F) A technique for analyzing financial statements that involves the computation of dollar amount changes and percentage changes from the previous to the current year.G) Large companies that have multiple segments and operate in more than one industry.H) Segments that are no longer a part of a company's operations.I) A technique for analyzing financial statements in which meaningful relationships between components of the financial statements are shown.J) The measure of investors' confidence in a company.K) A) and E)
L) C) and D)

Question 13

Match each definition with the correct term below.
-Price/earnings (P/E) ratio

Accepted Answer

A)  The time that it takes to purchase inventory,sell it,and collect cash for it.
B)  The relationship of the more liquid current assets (cash,marketable securities or short-term investments,and receivables) to current liabilities.
C)  A technique for analyzing financial statements that uses percentages to show the relationship of the different parts to the total in a single statement.
D)  The substance of earnings and their sustainability into future accounting periods.
E)  All the techniques used to show important relationships in financial statements and to relate them to important financial objectives.F) A technique for analyzing financial statements that involves the computation of dollar amount changes and percentage changes from the previous to the current year.G) Large companies that have multiple segments and operate in more than one industry.H) Segments that are no longer a part of a company's operations.I) A technique for analyzing financial statements in which meaningful relationships between components of the financial statements are shown.J) The measure of investors' confidence in a company.K) B) and E)
L) E) and H)

Question 14

Most companies issue interim financial statements to the public on a monthly basis.

Accepted Answer

A) True 
 B)False

Question 15

In general,the greater the investment risk taken,the lower the return required as compensation.

Accepted Answer

A) True 
 B)False

Question 16

An example of an accounting method that could affect operating income is

Accepted Answer

A)   inventory valuation method.
B)   revenue recognition method.
C)   depreciation method.
D)   all of these could affect operating income.E) B) and D)
F) C) and D)

Question 17

The sale of plant assets and the payment of dividends will reduce free cash flow.

Accepted Answer

A) True 
 B)False

Question 18

Does the existence of conglomerates make financial performance evaluation easier or more difficult? Why?

Accepted Answer

Conglomerates,or diversified companies,o...

Question 19

Following are the financial statements for Starman Corporation for the year ended December 31,2013.Assume that all balance sheet amounts represent both average and ending figures.   What is the current ratio for this corporation?

Accepted Answer

A)   1.70 times
B)   1.54 times
C)   1.00 times
D)   2.00 timesE) B) and C)
F) A) and D)

Question 20

A common measure of capital structure and leverage is the

Accepted Answer

A)   asset turnover.
B)   debt to equity ratio.
C)   current ratio.
D)   receivable turnover.E) All of the above
F) C) and D)

Exam 14: Financial Performance Measurement

The sale of plant assets and the payment of dividends will reduce free cash flow.

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Liquidity ratios are an indication of a company's

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An example of an accounting method that could affect operating income is

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Does the existence of conglomerates make financial performance evaluation easier or more difficult? Why?

Correct AnswerverifiedConglomerates,or diversified companies,o...View AnswerShow Answer

In general,the greater the investment risk taken,the lower the return required as compensation.

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Which of the following is not a profitability ratio?

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Using the following information reported in an annual report,prepare a horizontal analysis of the consolidated balance sheets.(Round percentage answers to one decimal place.)

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In a common-size financial statement,a designation of 25 percent could not be given to

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Which of the following does not affect quality of earnings?

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Match each definition with the correct term below. -Price/earnings (P/E) ratio

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Use the following information to calculate the ratios requested below.Round answers to one decimal place.Show your work.

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A common measure of capital structure and leverage is the

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Cash flows to sales and cash flows to assets are measured in terms of

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In a diversified company,segments may be represented by different industries,geographical markets,and major customers.

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Investors,creditors,and customers are considered external users of financial statements.

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The comparison of financial measures or ratios of the same company over a period of times is superior to the use of rule-of-thumb measures.

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Most companies issue interim financial statements to the public on a monthly basis.

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Match each definition with the correct term below. -Diversified companies

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Following are the financial statements for Starman Corporation for the year ended December 31,2013.Assume that all balance sheet amounts represent both average and ending figures. What is the current ratio for this corporation?

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Vertical analysis will result in common-size statements.

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Conglomerates,or diversified companies,o...
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