MRK516 Week 4 In-Class Quiz

Which of the following is not a reason that managers need to analyze financial reports?

• To assess control of operations

• To assess the ability of customers to pay their bills

• To assess the viability of suppliers

• To maximize annual bonuses

Which of the following is true concerning vertical analysis?

• It is a technique for evaluating a series of financial statement data over a period of time.

• It is used to determine the increase or decrease that has taken place over a period of time.

• It is expressed as a percentage of the base year amount of the same account.

• It is also called common size analysis.

Which of the following is true concerning horizontal analysis?

• It is also called common size analysis.

• It consists of analyzing changes in financial statement amounts across time.

• It consists of analyzing financial statements in terms of a base amount.

• It restates each income statement line item as a percentage of net sales.

Which type of analysis would highlight the percentage increase in sales from one year to the next?

• Horizontal analysis

• Vertical analysis

• Common size analysis

• Comprehensive analysis

What type of analysis will you perform to compare the gross margin percentage from one year to the next?

• Debt-related analysis

• Turnover analysis

• Horizontal analysis

• Vertical analysis

In which of the following will the percentage increase in sales from one year to the next be most obvious?

• Profitability analysis

• Turnover analysis

• Horizontal analysis

• Vertical analysis

Which of the following will vertical analysis allow managers to readily identify?

• Sales are increasing at a faster rate than selling expenses

• The percentage change in sales from the prior year

• Sales are growing at a faster rate than assets

• Income taxes are a larger percentage of sales in the current year compared to a previous year

Where can you find insight of why sales has increased by 32% from a prior period?

• Common size financial statements

• Management’s discussion and analysis

• The balance sheet

• Horizontal analysis

What does the current ratio measure?

• a) Long-term debt-paying ability
  

• b) Short-term debt-paying ability
  

• c) Profitability
  

• d) Inventory turnover

Which of the following is a liquidity ratio?

• a) Debt to total assets

• b) Times interest earned

• c) Inventory turnover

• d) Return on assets