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Exam 13: Analyzing and Interpreting Financial Statements

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Question 101

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The common-size percent is computed by:

A) Dividing the analysis amount by the base amount
B) Dividing the base amount by the analysis amount
C) Dividing the analysis amount by the base amount and multiplying the result by 100
D) Dividing the base amount by the analysis amount and multiplying the result by 1,000
E) Subtracting the base amount from the analysis amount and multiplying the result by 100

F) A) and C)
G) A) and D)

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Question 102

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Describe the purpose of vertical financial statement analysis and how it is applied.

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Vertical financial statement analysis is...

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Question 103

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A corporation reported cash of $14,000 and total assets of $178,300.Its common-size percent for cash equals 7.85%.

The gross margin ratio,return on total assets and basic earnings per share are all _____________ ratios.

Corona Company's balance sheet accounts follow: $\begin{array}{lrrr} \text { At December 31}&2011&2010&2009\\ \text { Assets}\\ \text { Cash } & \$ 25,868 & \$ 31,163 & \$ 31,182 \\ \text { Accounts receivable, net } & 78,034 & 53,995 & 41,152 \\ \text { Merchandise inventory } & 95,120 & 73,491 & 46,095 \\\text { Prepaid expenses } & 8,330 & 8,099 & 3,429 \\ \text { Plant assets,net } & 241,854 & 218,932 & 199,542 \\ \text { Total assets } & \$ 449,206 & \$ 385,680 & \$ 321,400 \\\text { Liabilities and Equity } & & & \\\text { Accounts payable } & \$ 108,058 & \$ 67,135 & \$ 42,849 \\\text { Long-term notes payable secured by mortgages on } & & & \\\text { plant assets } & 85,791 & 87,819 & 71,029 \\ \text { Common stock, } \$ 10 \text { par value } & 162,500 & 162,500 & 162,500 \\\text { Retained earnings } &92,857 & 68,226 & 45,022 \\\text { Total liabilities and equity } &\$449,206 & \$ 385,680 & \$ 321,400 \\\end{array}$ What is Corona Company's current ratio for 2011?

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

The dollar change for a financial statement item is calculated by:

Quick assets divided by current liabilities is equal to the:

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.