Question :
2.3 LO3: Perform Financial Statement Analysis
1) In cross-sectional analysis, a : 1907271
2.3 LO3: Perform Financial Statement Analysis
1) In cross-sectional analysis, a firm's financial ratios are
A) judged against the performance of firms in the same industry.
B) compared with the firm's ratios from the most recent period.
C) compared with ratios from all firms.
D) compared with a general standard.
E) plotted over time to isolate trends.
2) The four-digit codes used by the government to classify firms into industries are known as
A) ratio standards.
B) EIC codes.
C) USIC codes.
D) financial benchmarks.
E) SIC codes.
3) When financial ratios are compared to financial ratios from previous years, a ________ is conducted.
A) cross-time
B) SIC code
C) time series
D) cross-sectional
E) None of the above
4) All of the following are problems with cross-sectional financial analysis EXCEPT that
A) an industry may be dominated by a few firms.
B) annual reports sometimes do not disclose divisional financial data.
C) many firms are conglomerates.
D) it provides no basis for comparison to other firms.
E) there may be no obvious firms to be used for comparison.
5) In common-size financial statements,
A) all balance sheet items are divided by total liabilities.
B) total sales are divided by total assets.
C) depreciation expense is divided by total sales.
D) accrued taxes are divided by total sales.
E) net income is divided by total assets.
6) Each of the following is a ratio category EXCEPT
A) productivity ratios.
B) market ratios.
C) liquidity ratios.
D) financing ratios.
E) activity ratios.
7) ________ ratios measure the efficiency with which assets are converted to sales or cash.
A) Liquidity
B) Activity
C) Profitability
D) Market
E) Financing
8) Find the return on assets if net income was $55,000, total assets are $115,000, EBIT was $100,000, and equity is $75,000.
A) 73.3%
B) 63.1%
C) 87.0%
D) 47.8%
E) 55.0%
9) What is the return on equity if net income was $55,000, total assets are $115,000, EBIT was $100,000, and equity is $75,000?
A) 47.8%
B) 63.1%
C) 73.3%
D) 87.0%
E) 55.0%
10) Sales for a firm are $500,000, cost of goods sold are $400,000, and interest expenses are $20,000. What is the gross profit margin?
A) 16.0%
B) 20.0%
C) 4.0%
D) 25.0%
E) 30.0%
