CFI FMVA || 100% Valid Solutions.
Which of the following items are not included when determining income from operations?
correct answers Taxes
Which ratio would you use to determine the profitability of the goods sold by a company?
correct answers Gross profit margin
When performing a vertical analysis which income statement item do you use to determine the
cost contribution for each expense category? (What is the denominator?) correct answers Sales
Horizontal analysis allows us to analyze performance over: correct answers Time
When calculating the quick ratio or "acid test" which current asset or liability is omitted? correct
answers Inventory
For which organization would you expect to see the highest inventory turnover ratio? correct
answers Grocery retailer
What actions could a company take to reduce its working capital funding gap? correct answers
Tighten customer credit terms
The debt to equity ratio indicates: correct answers The proportion of the company financed by
lenders versus owners
Which of the following items are not included in working capital? correct answers Short term
investments
When calculating turnover of property plant & equipment and receivables, which item from the
income statement do we use? correct answers Sales
,If a company wanted to finance the purchase of equipment without diluting shareholders equity,
which of the following operation could it consider? correct answers Obtaining a loan from a
bank
Working capital movement is included in which section of the cash flow statement? correct
answers Operating activities
The debt to tangible net worth ratio is calculated as follows: correct answers Interest Bearing
Liabilities / (Equity - Intangible Assets)
If the total assets to equity ratio of a company is increasing, it is possible that: correct answers
The company is increasing the use of debt and getting higher financial leverage
Which ratio is not one of the three ratios that multiply together to produce the return on equity
ratio? correct answers Operating profit margin
Which financial leverage ratio is used with two other ratios to mathematically produce the return
on equity ratio? correct answers Total Assets / Equity
Which of the following is a tertiary ratio that drives profitability? correct answers SG&A
Expense / Sales
Which ratios indicate how efficiently the company generates sales from its assets? correct
answers Working capital turnover
The net profit margin ratio can mathematically be broken down as "Tax impact x Capital
structure impact x..." correct answers EBIT / Sales
, Based on the following information from ABC Company's financial analysis, which one of the
following statements is NOT true? correct answers The company's ability to cover its short-term
obligations is getting higher over the five years.
Which of the following best describes accounting principles in general? correct answers They
outline the fundamental rules and concepts and establish the framework on which detailed
accounting standards are based.
A sound accounting framework allows for all of the following benefits except: correct answers
Identical items being reported on the financial statements of different companies
Conservatism Principle correct answers It provides guidance on how to record transactions when
there is uncertainty.
Historical Cost Principle correct answers It states that assets and liabilities are recorded on the
financial statements at the cost at which they were acquired or assumed.
Objectivity Principle correct answers It states that financial statements must be free from bias
and based on verifiable evidence.
Economic Entity Principle correct answers It states that transactions carried out by a business are
separated from those conducted by its owner.
Matching Principle correct answers It states that the expenses of a business should be recorded in
the periods in which the corresponding revenues are earned.
On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid $960 for the entire
program upfront. The program includes a total of 12 sessions and two sessions are delivered each
month. How much revenue from Mr. Smithe should Fit Co. recognize at the end of March?
correct answers $160
Which of the following items are not included when determining income from operations?
correct answers Taxes
Which ratio would you use to determine the profitability of the goods sold by a company?
correct answers Gross profit margin
When performing a vertical analysis which income statement item do you use to determine the
cost contribution for each expense category? (What is the denominator?) correct answers Sales
Horizontal analysis allows us to analyze performance over: correct answers Time
When calculating the quick ratio or "acid test" which current asset or liability is omitted? correct
answers Inventory
For which organization would you expect to see the highest inventory turnover ratio? correct
answers Grocery retailer
What actions could a company take to reduce its working capital funding gap? correct answers
Tighten customer credit terms
The debt to equity ratio indicates: correct answers The proportion of the company financed by
lenders versus owners
Which of the following items are not included in working capital? correct answers Short term
investments
When calculating turnover of property plant & equipment and receivables, which item from the
income statement do we use? correct answers Sales
,If a company wanted to finance the purchase of equipment without diluting shareholders equity,
which of the following operation could it consider? correct answers Obtaining a loan from a
bank
Working capital movement is included in which section of the cash flow statement? correct
answers Operating activities
The debt to tangible net worth ratio is calculated as follows: correct answers Interest Bearing
Liabilities / (Equity - Intangible Assets)
If the total assets to equity ratio of a company is increasing, it is possible that: correct answers
The company is increasing the use of debt and getting higher financial leverage
Which ratio is not one of the three ratios that multiply together to produce the return on equity
ratio? correct answers Operating profit margin
Which financial leverage ratio is used with two other ratios to mathematically produce the return
on equity ratio? correct answers Total Assets / Equity
Which of the following is a tertiary ratio that drives profitability? correct answers SG&A
Expense / Sales
Which ratios indicate how efficiently the company generates sales from its assets? correct
answers Working capital turnover
The net profit margin ratio can mathematically be broken down as "Tax impact x Capital
structure impact x..." correct answers EBIT / Sales
, Based on the following information from ABC Company's financial analysis, which one of the
following statements is NOT true? correct answers The company's ability to cover its short-term
obligations is getting higher over the five years.
Which of the following best describes accounting principles in general? correct answers They
outline the fundamental rules and concepts and establish the framework on which detailed
accounting standards are based.
A sound accounting framework allows for all of the following benefits except: correct answers
Identical items being reported on the financial statements of different companies
Conservatism Principle correct answers It provides guidance on how to record transactions when
there is uncertainty.
Historical Cost Principle correct answers It states that assets and liabilities are recorded on the
financial statements at the cost at which they were acquired or assumed.
Objectivity Principle correct answers It states that financial statements must be free from bias
and based on verifiable evidence.
Economic Entity Principle correct answers It states that transactions carried out by a business are
separated from those conducted by its owner.
Matching Principle correct answers It states that the expenses of a business should be recorded in
the periods in which the corresponding revenues are earned.
On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid $960 for the entire
program upfront. The program includes a total of 12 sessions and two sessions are delivered each
month. How much revenue from Mr. Smithe should Fit Co. recognize at the end of March?
correct answers $160
