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Exam 9: Financial Statement Analysis

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Question 21

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The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

A) True
B) False

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Question 22

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The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $130,000 and interest expense is $40,000 for 2011,what are the earnings per share on common stock for 2011 (rounded to two decimal places) ?

A) $2.17
B) $2.68
C) $2.02
D) $2.32

E) A) and D)
F) All of the above

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Question 23

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The terms acid-test ratio and quick ratio refer to the same ratio--the instant debt-paying ability of a company.

A company's assets are comprised of the following: Cash,$25,000;Receivables,$5,600;Marketable Securities,$7,200;and Equipment,$65,000.The total of quick assets is $37,800.

Based on the following data for the current year,what is the number of days' sales in accounts receivable?

Which of the following is NOT included in the computation of the quick ratio?

The rate earned on total assets is one of the measures of profitability.

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

The ratio of the sum of cash,receivables,and marketable securities to current liabilities is called the

The ratio computed by dividing current assets by current liabilities is the

Statements in which all items are expressed only in relative terms (percentages of a common base) are

The relationship of 120 to 100 can be expressed as 1.2,1.2:1,or 120%.

The following items are reported on a company's balance sheet: Determine the (a)current ratio and (b)quick ratio.Round your answer to one decimal place.

If a company has issued only one class of stock,the earnings per share is determined by dividing net income by the number of shares outstanding.

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

Balance sheet and income statement data indicate the following: Based on the data presented above,what is the number of times interest charges were earned (rounded to one decimal place) ?

The relationship of each asset item as a percent of total assets is an example of horizontal analysis.

If the current credit terms are 2/10,n/30 for Jones Inc. ,an accounts receivable turnover of 3 for the current year would be considered normal.

The following data are taken from the financial statements:

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