1. Which of the following describes the result of calculating a financial ratio?
a. An asset as a percent of revenue
b. The numerator expressed in terms of one unit of the denominator
c. Net income as a percent of cash flow
d. Absolute dollar amounts

2. To be useful in financial statements analysis, a ratio must meet what two conditions?
a. Robustness and fruitfulness
b. Calculated and interpreted
c. Meaningful and have a standard of comparison
d. Expressed and interpreted

3. Each of the following is a primary ratio category except:
a. Efficiency
b. Leverage
c. Liquidity
d. Precipitous

4. Each of the following is a component of the DuPont expansion of the ROE equation except:
a. Efficiency
b. Liquidity
c. Leverage
d. Profitability

5. Altman’s Z- score is used for what purpose?
a. Discern liquidity
b. Predict bankruptcy
c. Calculate profitability
d. Determine liquidity

6. Although useful in the 1970s and 1980s, due to the in-crease in computer processing capability in the 1990s and 2000s, Altman’s Z- score is no longer considered a reliable indicator.
a. True
b. False

7. It doesn’t matter if all the inputs to a ratio calculation are valid, as the forensic accountant is still capable of pinpointing areas of concern.
a. True
b. False

8. Financial ratios offer insight into how a company is achieving its performance.
a. True
b. False

9. Footnotes are not useful to the analysis of financial statements.
a. True
b. False

10. Footnotes may provide details that alert a forensic accountant to information that has been omitted from a company’s financial statements.
a. True
b. False

  • CreatedMarch 04, 2015
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