Questions from Managerial Accounting

Q: Distinguish between horizontal and vertical analysis of financial statement data.

Distinguish between horizontal and vertical analysis of financial statement data.

Q: What is the basic purpose for examining trends in a company’s financial

What is the basic purpose for examining trends in a company’s financial ratios and other data? What other kinds of comparisons might an analyst make?

Q: Assume that two companies in the same industry have equal earnings.

Assume that two companies in the same industry have equal earnings. Why might these companies have different price-earnings ratios? If a company has a price-earnings ratio of 20 and reports earnings p...

Q: Would you expect a company in a rapidly growing technological industry to

Would you expect a company in a rapidly growing technological industry to have a high or low dividend payout ratio?

Q: What is meant by the term financial leverage?

What is meant by the term financial leverage?

Q: The president of a plastics company was quoted in a business journal

The president of a plastics company was quoted in a business journal as stating, “We haven’t had a dollar of interest-paying debt in over 10 years. Not many companies can say that.” As a stockholder i...

Q: Sharkey’s Fun Center contains a number of electronic games as well as

Sharkey’s Fun Center contains a number of electronic games as well as a miniature golf course and various rides located outside the building. Paul Sharkey, the owner, would like to construct a water s...

Q: If a stock’s market value exceeds its book value, then the

If a stock’s market value exceeds its book value, then the stock is overpriced. Do you agree? Explain.

Q: A company seeking a line of credit at a bank was turned

A company seeking a line of credit at a bank was turned down. Among other things, the bank stated that the company’s 2 to 1 current ratio was not adequate. Give reasons why a 2 to 1 current ratio migh...

Q: A comparative income statement is given below for McKenzie Sales, Ltd

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: Members of the company’s board of directors are surprised to see that net income increased by on...