WGU C213 Topic Six Study Guide
Latest Updated
Analysis of financial statement numbers can be used to diagnose what? - ANS-To
diagnose existing problems and to forecast how a company will perform in the future
financial statment analysis - ANS-the examination of RELATIONSHIPS among financial
statement numbers
- ACROSS TIME for the same company
- ACROSS COMPANIES at the same point in time
Which of the following ratios is calculated using only income statement numbers?
Current ratio
Return on equity
Return on sales
Debt ratio - ANS-Return on sales
Common-size financial statements allow... - ANS-comparison on financial statements
across years and between companies and are prepared by dividing all financial
statement numbers by sales for the year
common-size financial statements - ANS-all amounts for a given year being shown as a
percentage of that denominator for the year.
common size income statement = divide all numbers by sales for the year
common size balance sheet = divide balance sheet items by sales for the year (will give
you efficiency numbers)
common size balance sheet = divide balance sheet items by assets for the year (will
give you asset mix numbers)
When using common-size statements
- Data may be selected for the same business as of different dates, or for two or more
businesses as of the same date
- Relationships should be stated in terms of ratios
- Dollar changes are reported over a period of at least three years
, - All of these are correct - ANS-Data may be selected for the same business as of
different dates, or for two or more businesses as of the same date
In a common-size balance sheet, using the percent of sales method, each item on the
balance sheet is typically expressed as a percentage of
Sales revenue
Assets
Net income
Equity - ANS-Sales revenue
Selected information for Alastair Company is as follows:
2012
Current assets $450,000
Total assets 725,000
Cost of goods sold 700,000
Sales revenue 915,000
Net income 145,000
What is the percentage that would be given to current assets on a common-size
balance sheet using the percent of sales method (round to the nearest percent)?
20 percent.
77 percent
100 percent
49 percent - ANS-49 percent
Sales revenue: $450,000 / $915,000 = 49%
Which of the following below generally is the most useful in analyzing companies of
different sizes?
Common-sized financial statements
Comparative statements
Price-level accounting
Audit report - ANS-Common-sized financial statements
Selected information for Alastair Company is as follows:
2012
Current assets $450,000
Total assets 725,000
Cost of goods sold 700,000
Sales revenue 915,000
Net income 145,000
Latest Updated
Analysis of financial statement numbers can be used to diagnose what? - ANS-To
diagnose existing problems and to forecast how a company will perform in the future
financial statment analysis - ANS-the examination of RELATIONSHIPS among financial
statement numbers
- ACROSS TIME for the same company
- ACROSS COMPANIES at the same point in time
Which of the following ratios is calculated using only income statement numbers?
Current ratio
Return on equity
Return on sales
Debt ratio - ANS-Return on sales
Common-size financial statements allow... - ANS-comparison on financial statements
across years and between companies and are prepared by dividing all financial
statement numbers by sales for the year
common-size financial statements - ANS-all amounts for a given year being shown as a
percentage of that denominator for the year.
common size income statement = divide all numbers by sales for the year
common size balance sheet = divide balance sheet items by sales for the year (will give
you efficiency numbers)
common size balance sheet = divide balance sheet items by assets for the year (will
give you asset mix numbers)
When using common-size statements
- Data may be selected for the same business as of different dates, or for two or more
businesses as of the same date
- Relationships should be stated in terms of ratios
- Dollar changes are reported over a period of at least three years
, - All of these are correct - ANS-Data may be selected for the same business as of
different dates, or for two or more businesses as of the same date
In a common-size balance sheet, using the percent of sales method, each item on the
balance sheet is typically expressed as a percentage of
Sales revenue
Assets
Net income
Equity - ANS-Sales revenue
Selected information for Alastair Company is as follows:
2012
Current assets $450,000
Total assets 725,000
Cost of goods sold 700,000
Sales revenue 915,000
Net income 145,000
What is the percentage that would be given to current assets on a common-size
balance sheet using the percent of sales method (round to the nearest percent)?
20 percent.
77 percent
100 percent
49 percent - ANS-49 percent
Sales revenue: $450,000 / $915,000 = 49%
Which of the following below generally is the most useful in analyzing companies of
different sizes?
Common-sized financial statements
Comparative statements
Price-level accounting
Audit report - ANS-Common-sized financial statements
Selected information for Alastair Company is as follows:
2012
Current assets $450,000
Total assets 725,000
Cost of goods sold 700,000
Sales revenue 915,000
Net income 145,000
