Financial Statements Analysis Quiz

If net income is $50,000 and the number of shares outstanding is 10,000, what is the earnings per share (EPS)?

• $3

• $4

• $5

• $6

Which of the following is an example of an accrual accounting transaction?

• Recording cash sales

• Recognizing revenues earned but not yet received

• Paying salaries in cash

• Collecting accounts receivable

Accrual accounting records revenues when they are earned, not when cash is received.

• True

• False

Calculate the return on assets (ROA) if net income is $40,000 and total assets are $200,000.

• 15%

• 18%

• 20%

• 25%

Depreciation expense reduces the value of an asset on the balance sheet.

• True

• False

What percentage ownership is typically required for the equity method?

• Less than 10%

• Between 20% and 50%

• More than 50%

• Exactly 50%

A company has $120,000 in current assets and $80,000 in current liabilities. What is the current ratio?

• 1.2

• 1.5

• 1.8

• 2.0

Which of the following would be classified as a long-term liability?

• Accounts payable

• Mortgage payable

• Accrued wages

• Inventory

If a company has total assets of $200,000 and total liabilities of $150,000, what is the shareholders' equity?

• $25,000

• $50,000

• $75,000

• $100,000

The primary purpose of financial statement analysis is to help predict future performance.

• True

• False