Simple Test

5 Questions | Total Attempts: 1227

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Simple Test

This quiz includes several simple questions about financial statement analysis. It should take you 5 minutes to complete this quiz.


Questions and Answers
  • 1. 
    Common size financial statements help an analyst to:
    • A. 

      Evaluate financial statements of companies within a given industry of the approximate same size.

    • B. 

      Determine which companies in a similar industry are at approximately the same stage of development.

    • C. 

      Compare the mix of assets, liabilities, capital, revenue, and expenses within a company over a period of time or between companies within a given industry without respect to size.

    • D. 

      Ascertain the relative potential of companies of similar size in different industries.

  • 2. 
    Which of the following ratios would be least useful in determining a company's ability to pay its expenses and liabilities?
    • A. 

      Current ratio

    • B. 

      Acid-test ratio

    • C. 

      Price-earnings ratio

    • D. 

      Times interest earned ratio

  • 3. 
    Most stockholders would ordinarily be least concerned with which of the following ratios:
    • A. 

      Earnings per share

    • B. 

      Dividend yield ratio

    • C. 

      Price-earnings ratio

    • D. 

      Acid-test ratio

  • 4. 
    What effect will the issuance of common stock for cash at year-end have on the following ratios?
    • A. 

      Increases Return on Total Assets and increases Debt-to-Equity Ratio

    • B. 

      Increases Return on Total Assets and decreases Debt-to-Equity Ratio

    • C. 

      Decreases Return on Total Assets and increases Debt-to-Equity Ratio

    • D. 

      Decreases Return on Total Assets and decreases Debt-to-Equity Ratio

  • 5. 
    If a company is profitable and is effectively using leverage, which             one of the following ratios is likely to be the largest?
    • A. 

      Return on total assets

    • B. 

      Return on total liabilities

    • C. 

      Return on common stockholders' equity

    • D. 

      Cannot be determined

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