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Foundations of Accounting for Peregrine
Global Services. Exam Questions And
Answers |Latest 2025 | Guaranteed Pass
Financial statements - Answer✔provide information that is useful for making investments and
other economic decisions about business
Horizontal analysis - Answer✔Analysis of percentage increases and decreases in financial
statements across time.
The amount of each line item on the most recent statement is compared with the related item
on earlier statements, and expressed as a percentage change
Vertical analysis - Answer✔An percentage analysis that is used to show the relationship of each
component to the total within a single statement.
The balance sheet is analyzed by stating each asset item as a percent of total assets. Each
liability and stockholders equity item is stated as a percent of total liabilities and stockholders
equity.
Common side statements - Answer✔Horizontal and vertical analyses are useful in assessing
trends, in relationships and financial conditions, and operations of a business
Common size income statements - Answer✔can compare to businesses or more
Solvency and profitability - Answer✔The ability of a business to repay its debts and earn income
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, ©THESTAR 2025 ALL RIGHTS RESERVED 10:34 PM A+
Solvency analysis - Answer✔Focuses on the ability of a business to pay, or otherwise satisfy its
current and noncurrent liabilities
Current position analysis, working capital - Answer✔Using metrics to assess a business, is ability
to pay its current liabilities
Current ratio - Answer✔current assets divided by current liabilities
Quick ratio - Answer✔quick assets/current liabilities
Accounts Receivable analysis - Answer✔sales on account increase accounts receivable, whereas
collections from customers decrease accounts receivable. It is desirable to collect receivables as
promptly as possible. The cash generated by prompt collections from customers may be used
to pay or avoid current liabilities and be used in operations for purposes, such as purchasing
merchandise in large quantities at lower prices.
Accounts Receivable Turnover Ratio - Answer✔net credit sales/average net accounts receivable
number of days' sales in receivables - Answer✔Average Accounts Receivable / Average Daily
Sales
Inventory turnover ratio - Answer✔cost of goods sold/average inventory
Ratio fixed assets to long-term liabilities - Answer✔ratio of fixed assets to long-term liabilities is
a solvency measure that indicates the margin of safety for node holders and bond holders. It
also indicates the ability of a business to borrow additional funds on a long-term basis.
Ratio of liabilities to stockholders equity - Answer✔Claims against the total assets of a business
are divided into two groups, one claims of creditors and two claims of owners. The relationship
2
, ©THESTAR 2025 ALL RIGHTS RESERVED 10:34 PM A+
between the total claims of the creditors and owners is a solvency measure that indicates the
margin of safety for creditors.
Time Interest Earned - Answer✔The higher, the ratio, the lower, the risk that interest payments
will not be made, if earnings decrease. Dividing the sum of the income before taxes and interest
expense.
Profitability and market analysis - Answer✔Profitability analysis focuses, primarily on the
relationship between operating results as reported in the income, statement and resources
available to the business as reported on the balance sheet. Market analysis focuses on how well
a company is doing from the financial markets perspective.
Return on Sales - Answer✔The ratio of net income to net sales is a profitability measure that is
often called the net profit margin. The ratio shows how much of each dollar and sales flows
through the net income after all expenses are subtracted.
Return on Assets Ratio - Answer✔The return on assets is computed by adding interest, expense
to net income, and dividing the sum by the average total assets.
Return on stockholders equity - Answer✔Dividing net income by average total stockholders
equity
Leverage - Answer✔Difference in the rate of return on stockholders equity, and the rate of
return on assets.
Return on common equity ratio - Answer✔subtracting preferred dividend requirements, from
net income, and dividing this amount by average common stockholders equity
Earnings per share - Answer✔net income - preferred dividends / weighted average common
shares outstanding
3
Foundations of Accounting for Peregrine
Global Services. Exam Questions And
Answers |Latest 2025 | Guaranteed Pass
Financial statements - Answer✔provide information that is useful for making investments and
other economic decisions about business
Horizontal analysis - Answer✔Analysis of percentage increases and decreases in financial
statements across time.
The amount of each line item on the most recent statement is compared with the related item
on earlier statements, and expressed as a percentage change
Vertical analysis - Answer✔An percentage analysis that is used to show the relationship of each
component to the total within a single statement.
The balance sheet is analyzed by stating each asset item as a percent of total assets. Each
liability and stockholders equity item is stated as a percent of total liabilities and stockholders
equity.
Common side statements - Answer✔Horizontal and vertical analyses are useful in assessing
trends, in relationships and financial conditions, and operations of a business
Common size income statements - Answer✔can compare to businesses or more
Solvency and profitability - Answer✔The ability of a business to repay its debts and earn income
1
, ©THESTAR 2025 ALL RIGHTS RESERVED 10:34 PM A+
Solvency analysis - Answer✔Focuses on the ability of a business to pay, or otherwise satisfy its
current and noncurrent liabilities
Current position analysis, working capital - Answer✔Using metrics to assess a business, is ability
to pay its current liabilities
Current ratio - Answer✔current assets divided by current liabilities
Quick ratio - Answer✔quick assets/current liabilities
Accounts Receivable analysis - Answer✔sales on account increase accounts receivable, whereas
collections from customers decrease accounts receivable. It is desirable to collect receivables as
promptly as possible. The cash generated by prompt collections from customers may be used
to pay or avoid current liabilities and be used in operations for purposes, such as purchasing
merchandise in large quantities at lower prices.
Accounts Receivable Turnover Ratio - Answer✔net credit sales/average net accounts receivable
number of days' sales in receivables - Answer✔Average Accounts Receivable / Average Daily
Sales
Inventory turnover ratio - Answer✔cost of goods sold/average inventory
Ratio fixed assets to long-term liabilities - Answer✔ratio of fixed assets to long-term liabilities is
a solvency measure that indicates the margin of safety for node holders and bond holders. It
also indicates the ability of a business to borrow additional funds on a long-term basis.
Ratio of liabilities to stockholders equity - Answer✔Claims against the total assets of a business
are divided into two groups, one claims of creditors and two claims of owners. The relationship
2
, ©THESTAR 2025 ALL RIGHTS RESERVED 10:34 PM A+
between the total claims of the creditors and owners is a solvency measure that indicates the
margin of safety for creditors.
Time Interest Earned - Answer✔The higher, the ratio, the lower, the risk that interest payments
will not be made, if earnings decrease. Dividing the sum of the income before taxes and interest
expense.
Profitability and market analysis - Answer✔Profitability analysis focuses, primarily on the
relationship between operating results as reported in the income, statement and resources
available to the business as reported on the balance sheet. Market analysis focuses on how well
a company is doing from the financial markets perspective.
Return on Sales - Answer✔The ratio of net income to net sales is a profitability measure that is
often called the net profit margin. The ratio shows how much of each dollar and sales flows
through the net income after all expenses are subtracted.
Return on Assets Ratio - Answer✔The return on assets is computed by adding interest, expense
to net income, and dividing the sum by the average total assets.
Return on stockholders equity - Answer✔Dividing net income by average total stockholders
equity
Leverage - Answer✔Difference in the rate of return on stockholders equity, and the rate of
return on assets.
Return on common equity ratio - Answer✔subtracting preferred dividend requirements, from
net income, and dividing this amount by average common stockholders equity
Earnings per share - Answer✔net income - preferred dividends / weighted average common
shares outstanding
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