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Exam 13: Measuring and Evaluating Financial Performance

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Question 21

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Analysts typically use a running four-week average for the shares price in the P/E ratio. BT: Knowledge

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Question 22

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How competitors calculate amortization is most likely to affect comparisons between competitors if property,plant,and equipment:

A) makes up a large percent of assets and average useful lives are fairly different.
B) makes up a small percent of assets and assets are financed in a different way.
C) makes up a small percent of assets and average useful lives are fairly similar.
D) is primarily leased in the industry,not purchased.

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Question 23

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Company X has a P/E ratio of 16 in year 2009 and 16.5 in 2010.In 2011 its P/E ratio is 24.The best way to interpret these data is to conclude that:

The P/E ratio for the last 12 months for the company below is most likely to be calculated as which of the following?

Nonrecurring items on the income statement are:

Calculate the company's days to collect ratio for the current year?

If a company extends its payment period for customers,its quality of income ratio is likely to rise. BT: Comprehension

The debt-to-assets ratio is the:

A company's comparative balance sheets show total assets for 2012 and 2011 as $990,000 and $900,000,respectively.What is the percentage change to be reported in the horizontal analysis?

If an analyst wanted to examine a company's long-run ability to survive,which of the following would best be considered?

If an analyst wants to examine a company's current ability to generate income,which of the following would best be considered?

Match the letter for the following ratio measures to the category of performance that the ratio is used to measure. P - Profitability L - Liquidity S - Solvency ___ Debt-to-assets ratio ___ Receivables turnover ratio ___ Fixed asset turnover ratio ___ Current ratio ___ Return on equity ___ Capital acquisitions ratio ___ Times interest earned ratio ___ Quality of income ratio ___ Inventory turnover ratio ___ Earnings per share

If net income is rising,but both sales and the gross profit percentage remain the same,then:

Which of the following measures would assist in assessing the profitability of a company?

Match the term and the definition.Not all definitions will be used. _____ Ratio analysis _____ Reliability _____ Liquidity _____ Historical cost principle _____ Going-concern problem _____ Profitability _____ Consistency _____ Solvency _____ Trend analysis _____ Revenue recognition principle A.The ability of a company to meet its short-run financial obligations. B.The difficulties a company faces in acquiring financing when first starting up. C.The principle that companies need to adjust their accounts for inflation. D.Also known as time-series analysis. E.The characteristic of financial reporting that requires a company to use the same principles over time to measure financial data. F.The principle that companies should record transactions at the cash-equivalent cost on the date of the transaction. G.The principle that revenues should be recognized immediately upon payment. H.The characteristic that financial results should be able to be independently verified. I.A measure of current earnings performance. J.An analysis that compares a company's results to other companies in the industry. K.A measure of long-run survivability. L.The principle that revenue should be recorded when earned,provided payment is reasonably expected. M.Measures that relate one financial variable to another from the same financial statement. N.The constraint that financial data needs to be similar to other firms in the industry. O.The characteristic that financial information needs to be valuable to decision makers. P.When a company's near-term financial survival is questionable.

Purrfect Pets,Inc.,had 1,588,000,1,662,000 and 1,558,000 shares of outstanding common shares at the end of 2006,2007,and 2008,respectively.Use this information and that set below to calculate the: A.Year-over-year growth rate for the company's sales revenue. B.Year-over-year growth rate for the company's net income. C.Earnings per share for 2007 and 2008. D.Times interest earned ratio for 2007 and 2008.

Trend data can be measured in dollar amounts or percentages. BT: Knowledge

Calculate the quality of income ratio for the current year.

If you wish to examine the relationships among various items reported in one or more of the financial statements,you are most likely to use:

A decrease in accounts receivable turnover ratio is indicative of: