Question 1

The three aspects of return on equity (ROE)recognized by DuPont analysis are the net profit margin percentage, the ____________________ ratio, and leverage.

Accepted Answer

The answer of The three aspects of return on equity...

Question 2

____________________ refers to the likelihood that a company will be able to pay its current obligations as they come due.

Accepted Answer

The answer of ____________________ refers to the likelihood that a...

Question 3

In ____________________ analysis, each financial statement line item is expressed as a percent of the largest amount on the statement, which is net sales for the income statement and total assets for balance sheet.

Accepted Answer

The answer of In ____________________ analysis, each financial statement line...

Question 4

Public companies file their annual reports on Form ____________________.

Accepted Answer

The answer of Public companies file their annual reports on...

Question 5

As a general rule, all users of financial statements seek answers to the same questions.

Accepted Answer

Different users of financial statements have varied interests and seek answers to different questions based on their specific needs. For example, investors might focus on profitability and return on investment, creditors may be more concerned with liquidity and solvency, and management might look for information on operational efficiency and market position.

Question 6

____________________ analysis compares a single corporation across time.

Accepted Answer

The answer of ____________________ analysis compares a single corporation across...

Question 7

____________________ analysis compares one corporation to another corporation and to industry averages.

Accepted Answer

The answer of ____________________ analysis compares one corporation to another...

Question 8

A company with a capital structure that shifts more toward debt financing will appear to be in a stronger position to pay interest and any principal amount that may be maturing by using its cash flows generated by operating activities.

Accepted Answer

Shifting more toward debt financing increases a company's financial leverage, which can increase the risk of default on interest and principal payments if cash flows from operating activities are not sufficient to cover these obligations.

Question 9

Many companies assist the users of the financial statements by providing information about the company's accounting policy choices in the first note to the financial statements.

Accepted Answer

This statement is true. The first note to the financial statements, also known as the summary of significant accounting policies, provides information about the company's accounting methods and policy choices, which can assist users in understanding the financial statements.

Question 10

Public companies file their quarterly reports on Form ____________________.

Accepted Answer

The answer of Public companies file their quarterly reports on...

Question 11

When trying to predict future profits, analysts often take a top-down approach which starts with gathering economic and industry data to supplement what they are able to find out about the specific corporations they follow.

Accepted Answer

This statement is true, as the top-down approach involves analyzing the broader economic and industry factors before narrowing down to specific companies.

Question 12

Liquidity refers to a company's ability to pay its current obligations when they come due.

Accepted Answer

Liquidity refers to a company's ability to meet its short-term obligations and pay its bills and debts when they become due.

Question 13

Trend analysis is another name for ____________________ analysis.

Accepted Answer

The answer of Trend analysis is another name for ____________________...

Question 14

Investors who buy stock in a corporation expect to earn returns on their investment from dividends and an increase in the value of the stock (a capital gain).

Accepted Answer

This statement is true. Investors hope to receive dividends (which are regular payments from the corporation to shareholders) and see the value of their stock increase over time so they can sell it for a profit.

Question 15

Form 8-K is the "current report^" companies must file with the SEC to announce major events that are important to investors and creditors.

Accepted Answer

Form 8-K is a current report that must be filed with the SEC to announce major events that are important to investors and creditors.

Question 16

Riverdale Drugs has an inventory turnover ratio of 15 times while RJ's Drugs has an inventory turnover of 14 times. RJ's is less efficient in managing its inventory.

Accepted Answer

A higher inventory turnover ratio indicates more efficiency in managing inventory, as it shows that a company is selling and restocking its goods more frequently. Therefore, with Riverdale Drugs having a higher turnover ratio than RJ's Drugs, RJ's is less efficient in managing its inventory.

Question 17

A company that is considering selling goods or providing services to another company wants to know whether its customer will provide: competitive salary and benefits; experiences that will prepare employees to assume increased responsibility; and a secure job for the foreseeable future.

Accepted Answer

The company that is considering selling goods or providing services to another company is the seller and they would not be concerned about the salary, benefits, job security, or career advancement of the buyer's employees. The seller's concerns would likely be related to the buyer's financial stability, ability to make timely payments, and whether the buyer's needs align with the seller's capabilities.

Question 18

The best source of information about a particular company is Standard & Poor's industry guide.

Accepted Answer

While Standard & Poor's industry guide may provide some information about a company, it is not necessarily the best or sole source of information. Other sources of information could include financial statements, news articles, the company's own website, and other industry reports.

Question 19

In ____________________ analysis, each financial statement line item is expressed as a percent of a base year, which is typically the earliest year shown.

Accepted Answer