Question 1

Assume the following sales data for a company: Current year $1,025,000
Preceding year 820,000
What is the percentage increase in sales from the preceding year to the current year?

Accepted Answer

The percentage increase in sales is calculated as [(Current Year Sales - Preceding Year Sales) / Preceding Year Sales] * 100. So, [(1,025,000 - 820,000) / 820,000] * 100 = 25%.

Question 2

The relationship of $325,000 to $125,000, expressed as a ratio, is

Accepted Answer

The answer of The relationship of $325,000 to $125,000, expressed...

Question 3

A balance sheet that displays only component percentages is a

Accepted Answer

A common-sized balance sheet displays all items as a percentage of a single base amount, typically total assets. This helps to compare the relative proportions of different components of the balance sheet over time or across companies.

Question 4

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

Horizontal analysis is used to analyze the changes in financial statement data over a period of time. It involves comparing financial data from multiple periods to identify trends, patterns, and areas of growth or decline.

Question 5

-Based on the above data, what is the amount of quick assets?

Accepted Answer

The answer of 
-Based on the above data, what is...

Question 6

-Based on the above data, what is the amount of working capital?

Accepted Answer

The answer of 
-Based on the above data, what is...

Question 7

The percent of fixed assets to total assets is an example of

Accepted Answer

The percent of fixed assets to total assets is an example of vertical analysis, which compares different items on a financial statement to a single base figure to understand the relative significance of each component.

Question 8

The ability of a business to pay its debts as they come due and to earn a reasonable net income is

Accepted Answer

Solvency refers to a company's ability to meet both its short-term and long-term obligations. Profitability refers to a company's ability to generate profits or earnings over a period of time. Therefore, the ability of a business to pay its debts and earn a reasonable net income falls under both solvency and profitability. Liquidity refers to a company's ability to meet its short-term obligations without incurring significant losses, while equity refers to the ownership interest of shareholders in a company.

Question 9

In a common-sized income statement, 100% is the

Accepted Answer

In a common-sized income statement, each item is shown as a percentage of sales. Therefore, 100% represents the total sales revenue generated by the company.

Question 10

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

Accepted Answer

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are useful analytical measures as they provide insights into the financial health of the company. However, they should be used in conjunction with sound judgment and industry information for a comprehensive analysis. They are not a substitute for sound judgment, and relying solely on these measures can be misleading.

Question 11

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

Accepted Answer

The analysis in which all components of an income statement (revenue, expenses, net income) are expressed as a percentage of sales is called a vertical analysis. It helps investors and stakeholders to understand how each item in the income statement contributes to the overall sales and profitability of a company. Horizontal analysis involves comparing financial data over multiple periods, liquidity analysis examines a company's ability to meet short-term financial obligations, and solvency analysis evaluates a company's long-term financial health.

Question 12

In a vertical analysis, the base for cost of goods sold is

Accepted Answer

In a vertical analysis, the base for cost of goods sold is typically sales. This allows for a comparison of the cost of goods sold to the total sales revenue, providing insight into the company's production and sales efficiency.

Question 13

Horizontal analysis of comparative financial statements includes

Accepted Answer

Horizontal analysis of comparative financial statements involves calculating dollar amount changes and percentage changes between the previous and current year, commonly known as trend analysis. This helps to identify the financial performance of a company over time and determine areas of improvement or concern. Developing common-sized statements, calculating liquidity ratios, and evaluating each component in a financial statement to a total are all part of vertical analysis, which compares each line item to a common base, usually total assets or sales.

Question 14

Income statement information for Sadie Company is below: Sales
$175,000
Cost of goods sold
115,000
Gross profit
$ 60,000
Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.

Accepted Answer

To calculate the gross profit margin, divide the gross profit by the sales and multiply by 100 to get the percentage. 
Gross profit margin = (Gross profit / Sales) x 100% 
= ($60,000 / $175,000) x 100% 
= 34.29% 
Rounded to the nearest percent, the gross profit margin is 34%. Therefore, the best choice is C.

Question 15

-Based on the above data, what is the quick ratio, rounded to one decimal point?

Accepted Answer

The answer of 
-Based on the above data, what is...

Question 16

Assume the following sales data for a company: Current year $325,000
Preceding year 250,000
What is the percentage increase in sales from the preceding year to the current year?

Accepted Answer

The answer of Assume the following sales data for a...

Question 17

What type of analysis is indicated by the following?

Accepted Answer

The answer of What type of analysis is indicated by...

Question 18

On a common-sized balance sheet, 100% is

Accepted Answer

On a common-sized balance sheet, each item is expressed as a percentage of total assets. Therefore, 100% represents the total assets of the company. Options A, B, and C only represent certain categories of assets or liabilities and do not reflect the full picture of the company's financial position.

Question 19

In horizontal analysis, each item is expressed as a percentage of the

Accepted Answer

In horizontal analysis, each item is expressed as a percentage of the base year figure, which allows for comparison and analysis of changes over time.

Question 20

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

Accepted Answer

A common-sized statement converts all financial data into percentages, making it easier to compare companies of different sizes in the same industry. It provides a standardized format for analysis, which makes it easy to identify trends and differences between companies. This makes it easier for the user to make a better comparison of two companies of different sizes in the same industry.

Quiz 15: Financial Statement Analysis

Assume the following sales data for a company: Current year $1,025,000 Preceding year 820,000 What is the percentage increase in sales from the preceding year to the current year?

The relationship of $325,000 to $125,000, expressed as a ratio, is

A balance sheet that displays only component percentages is a

Horizontal analysis is a technique for evaluating financial statement data

-Based on the above data, what is the amount of quick assets?

-Based on the above data, what is the amount of working capital?

The percent of fixed assets to total assets is an example of

The ability of a business to pay its debts as they come due and to earn a reasonable net income is

In a common-sized income statement, 100% is the

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

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

In a vertical analysis, the base for cost of goods sold is

Horizontal analysis of comparative financial statements includes

Income statement information for Sadie Company is below: Sales $175,000 Cost of goods sold 115,000 Gross profit $ 60,000 Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.

-Based on the above data, what is the quick ratio, rounded to one decimal point?

Assume the following sales data for a company: Current year $325,000 Preceding year 250,000 What is the percentage increase in sales from the preceding year to the current year?

What type of analysis is indicated by the following?

On a common-sized balance sheet, 100% is

In horizontal analysis, each item is expressed as a percentage of the

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to