Chapter #8
Debt-to-equity ratio is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
A
Liquidity ratios measure ________. A) a firm's ability to pay short-term obligations using current assets B) a firm's operating efficiency C) a firm's ability to pay their debts and stay in business D) a firm's ability to generate earnings relative expenses
A
Long-term debt to equity ratios are examples of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
A
The authors discuss all of the following ways in which tags can serve as an input except: A) regulators seeing if audit firms are in compliance with various regulations and laws. B) regulators seeing if companies are in compliance with various regulations and laws. C) financial analysts valuing a company. D) an auditor finding areas where an error might occur.
A
XBRL is used for ________ and ________ financial elements. A) organizing; defining B) organizing; determining C) obscuring; defining D) obscuring; determining
A
XBRL uses a ________ to help describe each key data element. A) taxonomy B) data dictionary C) schema D) terminology
A
According to the text, research finds that as the use of ________ words in the 10-k ________ the stock market reacts ________. A) negative; decreases; negatively B) negative; increases; negatively C) positive; increases; negatively D) positive; decreases; positively
B
Activity ratios measure ________. A) a firm's ability to pay short-term obligations using current assets B) a firm's operating efficiency C) a firm's ability to pay their debts and stay in business D) a firm's ability to generate earnings relative expenses
B
Profit margin is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
B
Return on assets is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
B
Return on equity is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
B
Using the table below compute ROE for Q3, 2011 for DuPont A) 12.4% B) 16.3% C) 21.3% D) 26.6%
B
Using the table below compute operating leverage for Q3, 2011 for DuPont A) 13.3% B) 17.4% C) 25.2% D) 52.8%
B
With regard to sparklines, which of the following statements is false? A) Sparklines can allow financial statement users to easily see the data visually and give meaning to the underlying financial data. B) Sparklines can be added to a digital dashboard that already has many charts and dials, without cluttering up the overall appearance of a dashboard. C) Sparklines can, generally, fit in a single cell within a spreadsheet. D) Sparklines can easily add to the data without detracting from the tabular results.
B
Solvency ratios measure ________. A) a firm's ability to pay short-term obligations using current assets B) a firm's operating efficiency C) a firm's ability to pay their debts and stay in business D) a firm's ability to generate earnings relative expenses
C
Sparklines are generally ________ and show ________ trends. A) small; similar B) large; simple C) small; simple D) large; similar
C
The acid-test ratio is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
C
The current ratio divides total current assets by total current liabilities and is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
C
The quick ratio is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
C
Which of the following is not a type of tagging with XBRL? A) years B) figures C) hieroglyphs D) text
C
XBRL stands for ________ and is a type of ________. A) eXtended Business Reporting Language; HTML B) eXtended Business Reporting Language; XML C) eXtensible Business Reporting Language; XML D) eXtensible Business Reporting Language; HTML
C
According to the authors, the use of tags allows data to be quickly ________. A) cleaned and prepared B) transformed and received C) sorted and reconfigured D) transmitted and received
D
Accounts receivable turnover ratio is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
D
Inventory turnover ratio is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
D
Profitability ratios measure ________. A) a firm's ability to pay short-term obligations using current assets B) a firm's operating efficiency C) a firm's ability to pay their debts and stay in business D) a firm's ability to generate earnings relative expenses
D
The Securities and Exchange Commission requires all public company filers to use XBRL tagging in all of the following financial statements except: A) Balance Sheet B) Statement of Comprehensive Income C) Statement of Cash Flows D) Statement of Changes in Working Capital
D
Total assets turnover ratio is an example of which type of ratio? A) solvency ratio B) profitability ratio C) liquidity ratio D) activity ratio
D
Using the table below compute ROE for 2011 year-end for DuPont A) 149.2% B) 70.8% C) 84.9% D) 142.9%
D
Using the table below compute profit margin for Q3, 2011 for DuPont (Ticker = DD). A) 22.0% B) 31.5% C) 30.9% D) 23.6%
D
Which of the following statements is false? A) Firms can make their own tags if they feel their financial data item does not fit within the existing framework. B) Sometimes very similar financial data items have unique tags, making direct comparisons between companies difficult. C) Detailed tagging of the numbers included in the footnotes is required. D) XBRL uses a taxonomy to help define and describe each key data element, but it is not capable of defining relationships between each element.
D
Information such as goodwill or long-term debt will likely change on a minute-by-minute basis in real-time financial reporting.
False
Once numbers are input into a financial system using XBRL-GL, they are already tagged and able to be transmitted on the next day of business to interested users.
False
The XBRL taxonomy helps define and describe each key data element (such as cash or employee spending).
False
The use of tags allows data to be slowly transmitted and received and it serves as an input into financial analysts valuing a company. It also contributes to an auditor finding areas where an error might occur, or regulators verifying if firms are in compliance with various regulations and laws (like SEC or IRS).
False
XBRL is a global standard for internet communication mostly among day traders.
False
XBRL stands for eXtensible Business Reporting Linguistic.
False
A major component of financial statement analysis is the use of ratio analysis.
True
Artificial intelligence, machine learning, and sentiment analysis are three methods used to analyze publicly traded companies on Nasdaq and the NYSE to gain insight and track companies' business and financial operations.
True
Data analytics can help predict a company's revenue, earnings, and cash flow.
True
Defining over 19,000 elements, the 2017 US GAAP Financial Reporting Taxonomy tags unique financial data to a component within the taxonomy.
True
Financial statement analysis is used by investors, analysts, auditors and other interested stakeholders to review and evaluate a company's financial statements and financial performance.
True
In filing its financial statements with the SEC, a company must tag five basic financial statements, which include a balance sheet, income statement, statement of comprehensive income, statement of cash flows and statement of stockholder's equity.
True
Many financial reporting systems within enterprise systems have general ledgers that are consistent with XBRL called XBRL-GL.
True
Ratio analysis is a tool used to evaluate relationships among different financial statement items to help understand a company's financial and operating performance.
True
Sometimes outside data vendors create standardized metrics to make the company reported XBRL data more comparable.
True
The Securities and Exchange Commission mandates all publicly traded companies file financial statements prepared in accordance with U.S. GAAP.
True
The XBRL tag for cash is labeled Cash and is defined as follows: Amount of currency on hand as well as demand deposits with banks or financial institutions.
True
The two types of standardized financial accounting are IFRS and U.S. GAAP.
True
There are basically four types of ratios: Liquidity, activity, solvency (or financing) and profitability ratios.
True
When reporting financial statements, detailed tagging of the numbers included in the footnotes by use of XBRL tags is also required.
True
