Question 1

The current ratio assumes a business could sell its merchandise inventory quickly.

Accepted Answer

A) True 
 B)False

Question 2

Gross margin can be increased by

Accepted Answer

A)   selling more merchandise.
B)   buying less merchandise.
C)   increasing unit sales prices.
D)   reducing operating expenses.E) A) and B)
F) None of the above

Question 3

A corporation's earnings per share can only be compared to its earnings per share during prior fiscal years.

Accepted Answer

A) True 
 B)False

Question 4

A company's cost of merchandise sold increased by 6.7% over the prior year. Management

Accepted Answer

A)   considers this to be an unfavorable trend.
B)   cannot evaluate this change without knowing the change in sales.
C)   should reduce the amount of merchandise purchased during the next year.
D)   should reduce operating costs to maintain a constant operating margin.E) B) and D)
F) All of the above

Question 5

The ratio that gives the best indication of how effectively a business is earning a profit from its normal business operations is the

Accepted Answer

A)   debt ratio.
B)   rate of return on sales.
C)   gross margin.
D)   operating margin.E) A) and D)
F) B) and C)

Question 6

Alpha Company's target range for its total operating expense ratio is between 32.0% and 34.0%. A decline in its operating expense ratio from thus, from 35.1% to 34.2% is a favorable trend.

Accepted Answer

A) True 
 B)False

Question 7

The dividend ratio is the most widely recognized measure of a corporation's financial performance.

Accepted Answer

A) True 
 B)False

Question 8

A business with operating expenses that exceed its target range should always begin by reducing the number of employees, the largest operating expense for most businesses.

Accepted Answer

A) True 
 B)False

Exam 17: Financial Statement Analysis

A business with operating expenses that exceed its target range should always begin by reducing the number of employees, the largest operating expense for most businesses.

Correct Answer
verified

A corporation's earnings per share can only be compared to its earnings per share during prior fiscal years.

Correct Answer
verified

The dividend ratio is the most widely recognized measure of a corporation's financial performance.

Correct Answer
verified

The current ratio assumes a business could sell its merchandise inventory quickly.

Correct Answer
verified

The ratio that gives the best indication of how effectively a business is earning a profit from its normal business operations is the

Correct Answer
verified

A company's cost of merchandise sold increased by 6.7% over the prior year. Management

Correct Answer
verified

Gross margin can be increased by

Correct Answer
verified

Alpha Company's target range for its total operating expense ratio is between 32.0% and 34.0%. A decline in its operating expense ratio from thus, from 35.1% to 34.2% is a favorable trend.

Correct Answer
verified

Exam 17: Financial Statement Analysis

A business with operating expenses that exceed its target range should always begin by reducing the number of employees, the largest operating expense for most businesses.

Correct AnswerverifiedShow Answer

A corporation's earnings per share can only be compared to its earnings per share during prior fiscal years.

Correct AnswerverifiedShow Answer

The dividend ratio is the most widely recognized measure of a corporation's financial performance.

Correct AnswerverifiedShow Answer

The current ratio assumes a business could sell its merchandise inventory quickly.

Correct AnswerverifiedShow Answer

The ratio that gives the best indication of how effectively a business is earning a profit from its normal business operations is the

Correct AnswerverifiedShow Answer

A company's cost of merchandise sold increased by 6.7% over the prior year. Management

Correct AnswerverifiedShow Answer

Gross margin can be increased by

Correct AnswerverifiedShow Answer

Alpha Company's target range for its total operating expense ratio is between 32.0% and 34.0%. A decline in its operating expense ratio from thus, from 35.1% to 34.2% is a favorable trend.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified