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Ch 14 quiz study

A technique for evaluating financial statements that expresses
therelationship among selected items of financial statement data is Ratio
Analysis
In analyzing the financial statements of a company, a single item on the
financial statements is more meaningful if compared to other
financial information
...


In performing a vertical analysis, the base for prepaid expenses is a total
asset
...
Net credit sales during the year amounted to
$6,640,000
...

Flake Company reported the following on its income statement:
Income before income
$600,000
taxes
Income tax expense
150,000
Net income
$450,000
An analysis of the income statement revealed that interest expense was
$50,000
...

The acid-test ratio is a quick calculation of an approximation of the
current ratio
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True
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False
Vertical analysis is useful in making comparisons of companies of
different sizes
...
False
Intracompany comparisons of the same financial statement items can
often detect changes in financial relationships and significant trends
...
The weighted average number
of shares outstanding in 2012 was 50,000 shares
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Stout Corporation's price-earnings ratio is 18
...
The average
receivables during the period are $500,000
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A percentage change can be computed only if the base amount is zero or
positive
...
Net credit sales during the year amounted to
$6,640,000
...
6 days
Comparisons can be made on each of the following bases except each of
these is a basis for comparison
Net income does not appear in the numerator of the Payout Ratio
Horizontal analysis is a technique for evaluating a financial statement
item in the current year with other items in the current year
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In vertical analysis, the base amount for each income statement item is
net sales
Flake Company reported the following on its income statement:
Income before income
$600,000
taxes
Income tax expense
150,000
Net income
$450,000
An analysis of the income statement revealed that interest expense was
$50,000
...
7%
The acid-test (quick) ratio relates cash, short-term investments, and
net receivables to current liabilities
Inventory turnover is calculated by dividing cost of goods sold by the
average inventory
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The days in inventory is computed by multiplying inventory turnover by
365
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F
Comparisons can be made on each of the following bases except Each of
these is a basis for comparison




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