Acc411 Finacial Statement Analysis - Test Bank - Ch 5
CHAPTER 5—BASICS OF ANALYSIS
MULTIPLE CHOICE
1. Statements in which all items are expressed only in relative terms (percentages of a base) are termed:
a. Vertical Statements
b. Horizontal Statements
c. Funds Statements
d. Common-Size Statements
e. none of the answers are correct
ANS: D PTS: 1
2. In financial statement analysis, ratios are:
a. the only type of analysis where industry data are available
b. absolute numbers converted to a common base
c. fractions usually expressed in percent or times
d. the only indication of the financial position of the firm
e. none of the answers are correct
ANS: C PTS: 1
3. Denver Dynamics has net income of $2,000,000. Oakland Enterprises has net income of $2,500,000. Which of the following best compares the profitability of Denver and Oakland?
a. Oakland Enterprises is 25% more profitable than Denver Dynamics.
b. Oakland Enterprises is more profitable than Denver Dynamics, but the comparison can't be quantified.
c. Oakland Enterprises is only more profitable if it is smaller than Denver Dynamics.
d. Further information is needed for a reasonable comparison.
e. Oakland Enterprises is more profitable if it is a larger firm than Denver Dynamics.
ANS: D PTS: 1
4. Which of the following can offer a type of comparison in financial statement analysis?
a. past ratios and figures
b. industry averages
c. statistics of competitors
d. all of the answers are correct
e. none of the answers are correct
ANS: D PTS: 1
5. Which of the following is not a source of industry statistics?
a. Annual Statement Studies
b. Mergent Dividend Record
c. Value Line
d. Standard and Poor's Industry Surveys
e. The FTC Quarterly Report
ANS: B PTS: 1
6. Annual Statement Studies reported the following figures for manufacturers of screw machine products for the ratio of current assets to current debt. The following figures are for a particular industry's current ratio: 1.6; 1.3; 1.2. Which best describes these three numbers?
a. One third of
MULTIPLE CHOICE
1. Statements in which all items are expressed only in relative terms (percentages of a base) are termed:
a. Vertical Statements
b. Horizontal Statements
c. Funds Statements
d. Common-Size Statements
e. none of the answers are correct
ANS: D PTS: 1
2. In financial statement analysis, ratios are:
a. the only type of analysis where industry data are available
b. absolute numbers converted to a common base
c. fractions usually expressed in percent or times
d. the only indication of the financial position of the firm
e. none of the answers are correct
ANS: C PTS: 1
3. Denver Dynamics has net income of $2,000,000. Oakland Enterprises has net income of $2,500,000. Which of the following best compares the profitability of Denver and Oakland?
a. Oakland Enterprises is 25% more profitable than Denver Dynamics.
b. Oakland Enterprises is more profitable than Denver Dynamics, but the comparison can't be quantified.
c. Oakland Enterprises is only more profitable if it is smaller than Denver Dynamics.
d. Further information is needed for a reasonable comparison.
e. Oakland Enterprises is more profitable if it is a larger firm than Denver Dynamics.
ANS: D PTS: 1
4. Which of the following can offer a type of comparison in financial statement analysis?
a. past ratios and figures
b. industry averages
c. statistics of competitors
d. all of the answers are correct
e. none of the answers are correct
ANS: D PTS: 1
5. Which of the following is not a source of industry statistics?
a. Annual Statement Studies
b. Mergent Dividend Record
c. Value Line
d. Standard and Poor's Industry Surveys
e. The FTC Quarterly Report
ANS: B PTS: 1
6. Annual Statement Studies reported the following figures for manufacturers of screw machine products for the ratio of current assets to current debt. The following figures are for a particular industry's current ratio: 1.6; 1.3; 1.2. Which best describes these three numbers?
a. One third of