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Drucker Inc. has the following information available for 2007 and

 

 

11. Drucker Inc. has the following information available for 2007 and 2008:
 

 

   2007 

   2008  

Current assets

$500,000

$700,000

 

 

 


Performing a horizontal analysis on current assets shows that they have: 
A. Increased 40 percent.
B. Increased 28.6 percent.
C. Increased 2.5 percent.
D. Increased 3.5 percent.

 

12. Hansen Inc. has the following information available for 2007 and 2008:
 

 

   2007  

   2008  

Net income

$600,000

$500,000

 

 

 


Which of the following statements is true regarding horizontal analysis with respect to Hansen? 
A. It would show net income has decreased by 20 percent.
B. It would show net income has decreased by 16.7 percent.
C. There is not enough information available to perform horizontal analysis.
D. Horizontal analysis can not be performed using net income.

 

13. Michaud Ltd. has the following information available for 2007 and 2008:
 

 

      2007  

     2008   

Total Assets

$2,600,000

$4,000,000

 

 

 


Which of the following statements is true regarding horizontal analysis with respect to Michaud? 
A. It would show total assets has increased by 30 percent.
B. It would show total assets has increased by 53.8 percent.
C. There is not enough information available to perform horizontal analysis.
D. Horizontal analysis can not be performed using total assets.

 

14. Comparing financial statements of different companies and financial statements of the same company across time after controlling for differences in size is called: 
A. liquidity analysis.
B. vertical analysis.
C. price-earnings analysis.
D. horizontal analysis.

 

15. To perform vertical analysis: 
A. items on the balance sheet need to be restated to their fair market values.
B. items on the balance sheet need to be indexed for inflation.
C. common-size financial statements need to be prepared.
D. horizontal analysis needs to have already been done.

 

16. On a common-size balance sheet, current assets should be stated as a percentage of: 
A. net income.
B. current assets.
C. cash.
D. total assets.

 

17. On a common-size balance sheet, current liabilities should be stated as a percentage of: 
A. net income.
B. current liabilities.
C. total liabilities.
D. total liabilities and stockholders’ equity.

 

18. On a common-size income statement, net income should be stated as a percentage of: 
A. net income.
B. sales.
C. gross profit.
D. total assets.

 

19. On a common-size income statement, operating income should be stated as a percentage of: 
A. net income.
B. sales.
C. operating income.
D. total assets.

 

20. On a common-size income statement, operating expenses should be stated as a percentage of: 
A. sales.
B. net income.
C. operating income.
D. total assets.

Jan 11 2020 View more View Less

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