| Question 1 | 5 / 5 points |
Tools used in a financial statement analysis should generally include common-size financial statements, key financial ratios, __________, __________, and comparison with industry competitors.
Question options:
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| market analysis; summary analysis | ||
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| trend analysis; summary analysis | ||
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| market analysis; structural analysis | ||
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| trend analysis; structural analysis | ||
| Question 2 | 5 / 5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's average collection period is:
Question options:
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| 5 days. | ||
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| 9 days. | ||
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| 13 days. | ||
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| 15 days. | ||
| Question 3 | 5 / 5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's total asset turnover ratio is:
Question options:
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| 3.98. | ||
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| 4.22. | ||
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| 5.91. | ||
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| 3.34. | ||
| Question 4 | 0 / 5 points | ||
The following categories of ratios are used in financial statement analysis:
Liquidity, Operating Efficiency (also referred to as Activity), Leverage, Profitability, and Market Measures
Classify the following ratios according to these categories.
Question options:
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| Dividend payout - market measures; fixed charge coverage - leverage | ||
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| Dividend payout - market measures; fixed charge coverage - profitability | ||
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| Dividend payout - liquidity; fixed charge coverage – leverage | ||
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| Dividend payout - operating efficiency; fixed charge coverage – profitability (Incorrect) | ||
| Question 5 | 5 / 5 points | ||
The __________ ratio is a broader measure of coverage capability than the times interest earned ratio because it includes the fixed payments associated with leasing.
Question options:
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| time coverage | ||
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| variable charge coverage | ||
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| fixed charge coverage | ||
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| comprehensive charge coverage | ||
| Question 6 | 5 / 5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's return on equity is:
Question options:
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| 20.62%. | ||
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| 25.50%. | ||
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| 29.59%. | ||
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| 28.49%. | ||
| Question 7 | 5 / 5 points | ||
An example of a discretionary expense is:
Question options:
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| depreciation expense. | ||
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| capital expenditure. | ||
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| salaries of factory workers in a manufacturing firm. | ||
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| training program for executives. | ||
| Question 8 | 5 / 5 points | ||
Which of the following items would be considered low quality of financial reporting?
Question options:
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| Maintaining research and development expenses even if the economy is in a downturn and the net earnings number will be lower as a result | ||
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| Revealing the poor financial condition of a customer that may file for bankruptcy | ||
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| Using an accelerated method of depreciation for vehicles | ||
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| Reducing advertising expenses at a beverage company so that higher earnings are reported | ||
| Question 9 | 5 / 5 points | ||
The notes to the financial statements related to pension accounting will reveal:
Question options:
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| a description of undefined benefit pension plans. | ||
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| a schedule reconciling the funded status of the plan with amounts reported in the firm's balance sheet. | ||
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| the service cost associated with the firm's defined contribution plan. | ||
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| the interest cost associated with the firm's defined contribution plan. | ||
| Question 10 | 5 / 5 points | ||
The __________ helps the analyst see how the firm's decisions and activities over the course of an accounting period interact to produce an overall return to the firm's shareholders, the return on equity.
Question options:
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| Du Pont System | ||
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| Du Shane System | ||
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| Van Pont System | ||
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| Harding System | ||
| Question 11 | 5 / 5 points | ||
Assessing the allowance for doubtful accounts should include all of the following EXCEPT:
Question options:
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| checking to see if the growth rates of sales, accounts receivable and the allowance for doubtful accounts have moved the exact same percentage and the exact same direction. | ||
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| calculating growth rates for sales. | ||
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| reading the notes and the management discussion and analysis. | ||
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| calculate accounts receivable and the allowance for doubtful accounts. | ||
| Question 12 | 5 / 5 points | ||
Which ratios measure the extent of a firm's financing with debt relative to equity and its ability to cover interest and fixed charges?
Question options:
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| Debt ratio and price-to-earnings ratio | ||
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| Cash flow adequacy and fixed charge coverage | ||
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| Days payable outstanding and gross profit margin | ||
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| Cash interest coverage and average collection period | ||
| Question 13 | 5 / 5 points | ||
The __________ shows the relationship between cash dividends and market price.
Question options:
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| market yield | ||
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| earnings yield | ||
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| share yield | ||
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| dividend yield | ||
| Question 14 | 5 / 5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's cash flow adequacy ratio is:
Question options:
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| 1.43. | ||
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| 2.15. | ||
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| 1.90. | ||
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| 0.54. | ||
| Question 15 | 5 / 5 points | ||
The following categories of ratios are used in financial statement analysis:
Liquidity, Operating efficiency (also referred to as Activity), Leverage, Profitability, and Market Measures
Classify the following ratios according to these categories.
Question options:
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| Times interest earned – market measures; net profit margin - profitability | ||
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| Times interest earned – market measures; net profit margin – operating efficiency | ||
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| Times interest earned - leverage; net profit margin - profitability | ||
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| Times interest earned - leverage; net profit margin – operating efficiency | ||
| Question 16 | 5 / 5 points | ||
What is important to understand about the label "pro forma"?
Question options:
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| Pro forma refers to GAAP-based financial statements. | ||
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| Pro forma requires firms to present two distinct net profit amounts in their Form 10-Ks. | ||
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| Pro forma relates to the amount of debt in a firm's capital structure. | ||
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| Pro forma earnings or financial statements are sometimes based on a firm's own definition which is not technically a correct definition. | ||
| Question 17 | 5 / 5 points | ||
The __________ cycle or __________ cycle is the normal operating cycle of a firm that consists of buying or manufacturing inventory, selling inventory and paying accounts payable and collecting accounts receivable.
Question options:
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| cash conversion; net trade | ||
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| cash conversion; fair market trade | ||
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| inventory conversion; net trade | ||
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| inventory conversion; fair market trade | ||
| Question 18 | 5 / 5 points | ||
Which of the following statements is FALSE?
Question options:
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| Reserve accounts are illegal accounts used to play the "cookie jar game." | ||
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| Reserve accounts have a legitimate place in the recording of transactions under the accrual basis of accounting. | ||
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| Reserve accounts can be used to smooth out earnings from year to year. | ||
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| Arthur Levitt, former SEC chairman, was concerned about the abuse of reserve accounts. | ||
| Question 19 | 5 / 5 points | ||
Which of the following assets CANNOT be impaired?
Question options:
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| Inventories | ||
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| Goodwill | ||
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| Pension liabilities | ||
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| Property, plant and equipment | ||
| Question 20 | 5 / 5 points | ||
Which group of people would be the most concerned about the operating areas that have contributed to the success of the firm and which have not?
Question options:
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| Customers |
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| Management |
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| Auditors |
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| Creditors
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