Accounting Analytics Coursera Quiz Answers – Networking Funda

All Weeks Accounting Analytics Coursera Quiz Answers

Accounting Analytics Week 01 Quiz Answers

Ratio Analysis and Forecasting Quiz

Q1. Which of the following ratios use de-levered net income? (check all that apply)

  • Return on Sales
  • Return on Equity
  • Financial Leverage
  • Asset Turnover
  • Return on Assets

Q2. Which of the following companies has achieved its level of Return on Equity primarily through a high reliance on debt financing?

CompanyReturn on EquityReturn on AssetsFinancial LeverageReturn on SalesAsset Turnover
Dog Nation0.1770.0603.7400.0461.304
Dog Shoe Warehouse0.1780.1191.5010.0651.828
Hound Smart0.1770.1121.7620.0382.930
Paw Locker0.1770.1261.4300.0651.927
Pooch Mart0.1770.1111.6390.0571.938
  • Hound Smart
  • Pooch Mart
  • Dog Nation
  • Dog Shoe Warehouse
  • Paw Locker

Q3. Paw Locker has the highest Return on Assets in its comparison group. Which of the following could be a secret to its success? (check all that apply) (Hint: look carefully at the definition of ROA to find only the items that will affect the ratio)

CompanyReturn on EquityReturn on AssetsFinancial LeverageReturn on SalesAsset Turnover
Dog Nation0.1770.0603.7400.0262.338
Dog Shoe Warehouse0.1780.1191.5010.0651.828
Hound Smart0.1770.1121.7620.0382.930
Paw Locker0.1770.1261.4300.0651.927
Pooch Mart0.1770.1111.6390.0571.938
  • Uses more equity financing than Hound Smart
  • Has lower compensation expense than Pooch Mart
  • Uses less debt financing than Dog Nation
  • Has lower investment in PP&E than Dog Shoe Warehouse
  • Has lower manufacturing costs than Pooch Mart

Q4. Which of the following companies has the lowest Return on Assets?

Return on salesAsset turnover
Advanced Puppy0.0661.501
Dog Shoe Warehouse0.0651.828
Dogtail Holdings0.0661.082
Lassie Corp0.0651.742
Paw Locker0.0651.927
  • Advanced Puppy
  • Lassie Corp
  • Dogtail Holdings
  • Paw Locker
  • Dog Shoe Warehouse

Q5. Dogwell decides to pay its suppliers more quickly to take advantage of discounts and thus acquire its raw materials for a lower price. Dogwell makes no other changes (e.g., it buys the same volume of raw material). Which of the following ratios would be affected by this decision? (check all that apply)

  • SG&A-to-sales
  • Days payable
  • Days receivable
  • Gross margin
  • Effective tax rate

Q6. Which of the following companies has the highest Effective Tax Rate? You can assume they all had similar levels of interest expense and non-operating gains and losses. (Hint: do not try to calculate the effective tax rate; just focus on the profitability ratios that combine to yield Return on Sales)

CompanyReturn on SalesGross MarginSG&A Expense to SalesOperating Margin
Advanced Puppy0.0660.5300.3930.106
Dog Shoe Warehouse0.0650.3470.2120.109
Dogtail Holdings0.0660.3430.2150.117
Lassie Corp0.0650.3840.2590.101
Paw Locker0.0650.3290.2090.101
  • Lassie Corp
  • Dog Shoe Warehouse
  • Paw Locker
  • Dogtail Holdings
  • Advanced Puppy

Q7. Which of the following companies has the highest Net Trade Cycle?

CompanyAsset TurnoverDays ReceivableDays InventoryDays Payable
BowWow Center1.4457.81165.48610.494
Mutt Max1.44012.237206.2488.208
Rex Retail1.4433.385111.21848.291
Trans Pup1.4594.254221.326125.969
  • MuttMax
  • Rex Retail
  • BowWow Center
  • Dogstrom
  • Trans Pup

Q8. Which company has the strongest short-term liquidity position?

Current RatioQuick RatioDebt-to-EquityLong Term Debt-to-Equity
Bow-Wow Stores1.69880.08213.77508.8690
Destination Kennel2.14150.21190.52560.0000
Dog Orange Group1.26490.29483.12462.6663
Ren Inc2.39440.41730.50060.0342
Spartan Dog1.06830.34761.35260.4588
  • Spartan Dog
  • Bow-Wow Stores
  • Destination Kennel
  • Ren Inc.
  • Dog Orange Group

Q9. Which of the following is needed to produce pro forma financial statements? (check all that apply)

  • Sales forecasts
  • Common size income statement
  • Common size cash flow statement
  • Twenty years of historical data
  • Common size balance sheet

Q10. McDognals has sales of $100 million this year and a gross margin of 30%. Next year, sales are forecasted to grow 10% and the gross margin is forecasted to remain at 30%. What is McDognals’ forecasted Cost of Goods Sold for next year?

  • $7 million
  • $77 million
  • $70 million
  • $33 million
  • $30 million
  • $3 million

Accounting Analytics Week 02 Quiz Answers

Quiz : Earnings Management

Q1. Which of the following are possible motives for managers to manipulate their earnings lower (I.e., make reported earnings less than unmanaged earnings)?(check all that apply)

  • The company is close to violating a debt covenant on its public bond issue because of low earnings
  • Unmanaged earnings would fall below security analysts’ forecasts of earnings
  • A potential competitor is deciding whether to introduce new products to compete with the company’s product line and will do so only if it thinks the company is making huge profits
  • Government is investigating potential monopolistic practices by the company because of its high levels of profitability
  • Congress is planning a vote on extending tax credits to company’s industry due to its poor recent performance

Q2. Which of the following actions would be examples of “accrual-based earnings management”? (check all that apply)

  • Delay the write-off of a building that has dramatically dropped in value to the next period
  • Reduce the expected percentage of this period’s sales that will result in warranty claims
  • Delay an employee training program for the next period
  • Cut spending on R&D this period
  • Reduce the expected percentage of this period’s sales that will be uncollectible

Q3. Below are two years of quarterly data for Norwegian Elkhound Ltd. What was Norwegian Elkhound’s YoY Change in Accounts Receivable for Q4 of This Year?

Fiscal QuarterRevenueAccounts Receivable
Last Year Q178.08761.053
Last Year Q239.62434.586
Last Year Q352.60243.492
Last Year Q473.89764.226
This Year Q197.45086.612
This Year Q261.91655.809
This Year Q380.60174.103
This Year Q499.65090.583
  • 4.6%
  • 34.8%
  • 41.0%
  • 48.4%
  • 22.2%

Q4. Which of the following companies is the most likely suspect for managing earnings higher in Q4 of This Year?

Fiscal QuarterYoY change in RevenueYoY change in Accounts ReceivableYoY change in Cash CollectedDays A/RTT Revenue/ Employees
ActiveLab IncLast Year Q420.4%21.0%23.4%76.65108.1
ActiveLab IncThis Year Q453.2%70.4%42.6%75.41108.6
Akita LtdLast Year Q449.7%47.1%54.1%82.87115.5
Akita LtdThis Year Q427.5%31.9%25.4%82.25139.8
HealthyDog CorpLast Year Q410.4%11.3%5.0%88.36115.9
HealthyDog CorpThis Year Q429.8%57.5%9.1%84.29139.8
Jack Russell PtyLast Year Q450.1%50.9%75.4%81.22107.2
Jack Russell PtyThis Year Q425.8%24.9%67.7%84.4183.8
Pugporium CoLast Year Q420.9%27.2%10.3%75.58150.7
Pugporium CoThis Year Q434.8%41.0%56.4%79.82135.8
  • Jack Russell Pty
  • HealthyDog Corp
  • Pugporium Co
  • ActiveLab Inc
  • Akita Ltd

Q5. Below are two years of quarterly data for Devo Whippet Corp. Calculate Devo Whippet’s Bookings for Q4 of This Year?

RevenueUnearned Revenue
Last Year Q1560.012572.201
Last Year Q2750.667621.333
Last Year Q31047.111774.222
Last Year Q4678.074696.148
This Year Q1617.049629.099
This Year Q2825.700683.399
This Year Q31151.800851.599
This Year Q4815.866795.733
  • 716.282
  • 871.733
  • 815.866
  • 760.000
  • 915.451

Q6. Which of the following actions would increase a company’s earnings during the period? (check all that apply)

  • Decrease the amortization period for capitalized costs
  • Capitalize a smaller percentage of cash costs
  • Capitalize a greater percentage of cash costs
  • Increase the amortization period for capitalized costs

Q7. Below are five years of data on Deferred Subscriber Acquisition Costs and Amortization of Deferred Subscriber Acquisition Costs for Finnish Lapphund Oyj. During which year did Finnish Lapphund make a big change to its amortization assumptions?

Year 1Year 2Year 3Year 4Year 5
Deferred subscriber acquisition costs54150303444578
Amortization of Deferred subscriber acquisition costs1861126159221
  • Year 2
  • None of the years
  • Year 4
  • Year 3
  • Year 5

Q8. Dalmatian Inc. had $50 of Net Income this year. It capitalized $530 in software development costs and recognized Amortization Expense for those costs of $180 during the year. Dalmatian’s tax rate is 40%. What would Dalmatian’s Net Income have been this year if it had expensed all software development costs immediately?

  • $400
  • ($300)
  • ($160)
  • $140
  • $278

Q9. Below is the Accounts Receivable line from the Balance Sheet of Corgi Feldman Inc. Estimate how much Corgi Feldman reduced its expenses in Year 2 by reducing its estimated percentage of uncollectible accounts. (Hint: See the Dogamer case for an example of this calculation)

Year 1Year 2
Accounts receivable, net of allowance of 21 and 12, respectively679788
  • 9.0
  • 12.0
  • 3.0
  • 3.4
  • 12.4

Q10. Which of the following assets are subject to write-downs under the “lower-of-cost-or-market” accounting principle? (check all that apply)

  • Inventory
  • Equipment
  • Cash
  • Accounts Receivable
  • Brand names

Accounting Analytics Week 03 Quiz Answers

Quiz : Big Data and Prediction Models

Q1. Which of the following variables are included in the Modified Jones model? (check all that apply)

  • Accruals
  • Cash dividends
  • Gross Property, Plant, and Equipment
  • Unicorns and rainbows

Q2. Below is selected data for Swedish Vallhund AB. Calculate normal accruals for Swedish Vallhund using this data.

Accruals/ Prior TAChg Cash Revenue/ Prior TAPPE/ Prior TAa (Intercept)b (ChgCashRev)c (PPE)
  • 0.550
  • 0.260
  • 0.100
  • -0.070
  • -0.160

Q3. Which of the following companies is the most likely suspect for managing earnings higher This Year?

CompanyYearNormal AccrualsDiscretionary Accruals
Spaniel Craig CoTwo Years Ago-0.0520.024
Spaniel Craig CoLast Year-0.068-0.014
Spaniel Craig CoThis Year-0.2380.139
Sean Collie IncTwo Years Ago-0.082-0.013
Sean Collie IncLast Year-0.020-0.053
Sean Collie IncThis Year0.080-0.143
Pinscher Brosnan LtdTwo Years Ago-0.0380.310
Pinscher Brosnan LtdLast Year-0.0490.188
Pinscher Brosnan LtdThis Year-0.0440.246
  • Pinscher Brosnan Ltd
  • Both Spaniel Craig Co and Pinscher Brosnan Ltd
  • Sean Collie Inc
  • None of the companies
  • Spaniel Craig Co

Q4. Which of the following actions could affect a company’s amount of discretionary expenditures? (check all that apply)

  • Spend more on advertising than budgeted in the current period
  • Increase sales growth during the current period
  • Delay a planned R&D program for the next period
  • Increase the expected percentage of sales this period that will have future warranty claims
  • Change depreciation assumptions this period

Q5. Below is selected data for Siberian Husky ZAO. Calculate discretionary R&D for Siberian Husky using this data.

YearTotal AssetsR&DNormal R&D
Last Year10000900-0.006
This Year1500010000.060
  • 0.007
  • -0.050
  • -0.053
  • 0.070
  • 99.940

Q6. Which of the following companies is the most likely suspect for managing earnings lower This Year for “big bath” motives?

CompanyYearDiscretionary R&DDistance (R&D)YoYR&D Q1YoYR&D Q2YoYR&D Q3YoYR&D Q4
Chihuahua Eccleston CoLast Year0.0520.02761.1%68.8%10.3%30.5%
Chihuahua Eccleston CoThis Year-0.0300.36731.1%30.2%14.8%6.8%
Tom Boxer IncLast Year0.0010.75613.0%2.0%1.1%11.1%
Tom Boxer IncThis Year0.0820.93540.3%46.1%58.4%73.8%
David Terrier LtdLast Year-0.1900.29418.4%38.4%44.5%31.7%
David Terrier LtdThis Year0.180-0.63416.3%33.9%52.8%35.7%
Mutt Smith CorpLast Year-0.019-0.0330.7%3.5%13.1%12.7%
Mutt Smith CorpThis Year-0.054-0.00711.8%8.3%2.4%1.4%
  • Tom Boxer Inc
  • Everyone except Mutt Smith Corp
  • David Terrier Ltd
  • Mutt Smith Corp
  • Chihuahua Eccleston Co

Q7. For which of the following ratios would an increase in the value of the ratio lead to an increase in the Beneish M-score? (check all that apply)

  • Leverage Index (LVGI)
  • SG&A Index (SGAI)
  • Total Accruals to Total Assets (TATA)
  • Asset Quality Index (AQI)
  • Sales Growth Index (SGI)

Q8. Which of the following companies are potential manipulators according to the Beneish M-Score? (check all that apply)

Arcanine Inc-0.51
Growlithe Ltd-2.63
Houndoom Co-1.42
Lillipup Corp-3.19
Smeargle Pty-1.98
  • Lillipup Corp
  • Smeargle Pty
  • Growlithe Ltd
  • Arcanine Inc
  • Houndoom Co

Q9. Who first discovered Benford’s Law?

  • Zahn Bozanic
  • Dan Amiram
  • Simon Newcomb
  • Ethan Rouen
  • Frank Benford

Q10. Below is data from five companies’ financial statements. Which of the following companies are potential manipulators according to Benford’s Law? (check all that apply) (Hint: get a calculator so you can do square roots!)

CompanyNumber of Leading DigitsKolmogorov-Smirnov statistic
Briard Childress Ltd2309.9%
Bulldog Grant Corp1456.2%
Dachshund Green Inc9113.2%
Lhasa Apso Frazier Co12413.2%
Mi-Ki Tice Cie14536.2%
  • Briard Childress Ltd
  • Dachshund Green Inc
  • Bulldog Grant Corp
  • Mi-Ki Tice Cie
  • Lhasa Apso Frazier Co

Accounting Analytics Week 04 Quiz Answers

Quiz : Linking Non-financial Metrics to Financial Performance

Q1. How can predictive analytics improve performance measurement?

  • By increasing the organization’s understanding of the key performance drivers that should be measured.
  • All answers are correct
  • By enhancing the setting of performance targets.
  • By assisting in weighing different performance measures based on their relative importance.

Q2. Which of the following is a key attribute of a causal business model?

A) It includes employee, customer, operational, and innovation measures.

B) It is linked to the organization’s strategy.

C) It articulates the hypothesized drivers of financial performance.

  • Both A and C
  • Both B and C
  • A, B, and C are all correct

Q3. Which of the following choices are important when designing statistical tests of a hypothesized causal business model? (check all that apply)

  • The expected time lag between changes in nonfinancial performance and resulting changes in financial performance (e.g., daily, monthly, yearly, etc.).
  • The unit of analysis (e.g., customers, employees, projects, product lines, locations, divisions, etc.).
  • The desired economic outcomes (e.g., profits, revenue growth, contract renewal, retention, etc.).
  • The department responsible for conducting the analyses (e.g., finance, marketing, etc.).

Q4. Assume that measure A is expected to lead to improvements in measure B. If no statistically significant relationship is found between the two performance measures, what could explain the insignificant relationship?

  • A) Organizational barriers are preventing improvements in measure A from translating into improvements in measure B.
  • B) Contrary to the company’s hypothesis, improvements in the performance dimension captured by measure A do not lead to improvements in measure B.
  • C) Even though the performance dimension captured by measure A is actually a driver of measure B, the method used to calculate measure A is bad (e.g., it uses too few scale points, the questions are misleading, or it asks about performance dimensions that do not drive customers’ purchase behavior).
  • D) Either b or c could explain the insignificant relationship.
  • E) Either a, b, or c could explain the insignificant relationship.

Q5. Why is the identification of non-linearities important for setting performance targets?

  • It is never appropriate to maximize scores on non-financial metrics such as employee or customer satisfaction.
  • Non-linear relationships between measures cannot be accommodated in statistical models.
  • Managers do not understand the concepts of increasing or diminishing returns to improvements in non-financial performance.
  • If improvements in a non-financial performance metric are characterized by diminishing returns to scale (i.e., greater improvements yield increasing smaller or nonexistent financial returns), setting non-financial performance targets that are too high can actually lead to lower profitability.

Q6. How can statistical analysis of the linkages between non-financial metrics and financial performance be used to make better investment decisions?

  • The statistical analyses can ensure that the chosen investments in non-financial performance will improve financial results
  • The information can be used to forecast future cash flows from investments in non-financial performance dimensions.
  • The statistical analyses can replace the use of financial justification methods such as net present value and payback period.
  • Managers can selectively use the information to financially justify any investment they want

Q7. Assume that three non-financial performance measures (denoted X, Y, and Z and all measured on ten-point scales) are hypothesized to be drivers of future revenues. Statistical analysis reveals that a one-unit increase in X has the largest impact on future revenues. If the company’s objective is increasing overall profits, should it focus more effort on improving measure X than on improving measures Y and Z?

  • A) Yes.
  • B) Maybe, but only after considering the difficulty of improving performance on X relative to the difficulty of improving proving performance on Y or Z.
  • C) Maybe, but only after considering the cost to improve performance on X relative to the cost to improve Y or Z.
  • D) Both B and C

Q8. Which of the following is a common technical issue that makes it difficult to use analytics to link non-financial metrics to financial performance?

  • The high cost of data storage.
  • Financial and non-financial data that reside in different databases that are incompatible (e.g., have different coding structures, capture data in different levels of granularity, measure the same dimension differently, etc.).
  • The difficulty in using statistical software packages.
  • The limited number of performance metrics that are tracked by most organizations

Q9. Which of the following is NOT a common organizational issue that makes it difficult to use analytics to link non-financial metrics to financial performance?

  • Most organizations do not care about non-financial performance.
  • Different parts of the organization do not want to share the data.
  • Lack of resources and appropriate skill sets.
  • Organizational participants do not want to know the answers, which may contradict their intuition or beliefs.

Q10. Why should organizational mechanisms be established to ensure that ongoing analyses of the linkages between non-financial metrics and financial performance are conducted?

  • Changes in competitive environments can make earlier analyses obsolete.
  • Ongoing analysis and questioning of results can help refine strategies, actions, and measures by revealing the lower-level root causes or drivers of performance.
  • All answers are correct.
  • Performance metrics that previously were key drivers of financial performance may become less important after the company has achieved its performance targets for those dimensions

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