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WGU C213 Questions and Answers
External users of financial statements use financial statement
analysis for
Ans: Investing decisions
When analyzing financial statements, prognosis is
Ans: The prediction of how a business will perform in the future
Relationships between financial statement amounts are called
Ans: Financial ratios
When analyzing financial statements, diagnosis is
Ans: The identification of where a business has problems
Which of the following is a measure of the liquid position of a
corporation
Ans: Current ratio
Which of the following is one of the purposes of financial
statement analysis?
Ans: Both diagnosis and prognosis
Which of the following transactions could increase a firm's
current ratio
Ans: Payment of accounts payable
Which of the following ratios is used to measure a firm's leverage
Ans: Debt ratio
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Which of the following ratios represents the proportion of
borrowed funds used to acquire the company's assets
Ans: Debt ratio
Which of the following ratios is calculated using numbers from
both the income statement and the balance sheet
Ans: Return on equity
Which of the following ratios is used to measure the profit earned
on each dollar of sales in a firm
Ans: Return on sales
Which of the following ratios is a comparison of a financial
statement number to a market value number
Ans: Price-earnings ratio
In a common-size income statement, each item on the statement
is expressed as a percentage of
Ans: Revenue (sales revenue)
A useful tool in financial statement analysis is the common-size
financial statement. What does this tool enable the financial
analyst to do
Ans: Compare the mix of revenue, and expenses, and determine efficient
use of resources within a company over time or between companies
within a given industry without respect to relative size.
Which of the following below generally is the most useful in
analyzing companies of different sizes
Ans: Common-sized financial statements
When using common-size statements
© 2025 All rights reserved
WGU C213 Questions and Answers
External users of financial statements use financial statement
analysis for
Ans: Investing decisions
When analyzing financial statements, prognosis is
Ans: The prediction of how a business will perform in the future
Relationships between financial statement amounts are called
Ans: Financial ratios
When analyzing financial statements, diagnosis is
Ans: The identification of where a business has problems
Which of the following is a measure of the liquid position of a
corporation
Ans: Current ratio
Which of the following is one of the purposes of financial
statement analysis?
Ans: Both diagnosis and prognosis
Which of the following transactions could increase a firm's
current ratio
Ans: Payment of accounts payable
Which of the following ratios is used to measure a firm's leverage
Ans: Debt ratio
© 2025 All rights reserved
, 2 | Page
Which of the following ratios represents the proportion of
borrowed funds used to acquire the company's assets
Ans: Debt ratio
Which of the following ratios is calculated using numbers from
both the income statement and the balance sheet
Ans: Return on equity
Which of the following ratios is used to measure the profit earned
on each dollar of sales in a firm
Ans: Return on sales
Which of the following ratios is a comparison of a financial
statement number to a market value number
Ans: Price-earnings ratio
In a common-size income statement, each item on the statement
is expressed as a percentage of
Ans: Revenue (sales revenue)
A useful tool in financial statement analysis is the common-size
financial statement. What does this tool enable the financial
analyst to do
Ans: Compare the mix of revenue, and expenses, and determine efficient
use of resources within a company over time or between companies
within a given industry without respect to relative size.
Which of the following below generally is the most useful in
analyzing companies of different sizes
Ans: Common-sized financial statements
When using common-size statements
© 2025 All rights reserved
