Exam 13: Analyzing Financial Statements

Financial statement analysis is very precise and does not involve judgment.

Which of the following transactions would increase the current ratio of a company if the ratio is currently greater than 1?

Which of the following transactions decreases earnings per share?

The debt-to-equity ratio is a risk measure used by both investors and lenders.

A company that has a high level of inventory and other assets above its investment in property, plant, and equipment should calculate the total asset turnover ratio in addition to the fixed asset turnover ratio.

A company with a high amount of inventory will have a much lower fixed asset turnover ratio when compared to its total asset turnover ratio.

Lucas Company has provided the following information: • Cash flow from operating activities, $360,000 • Net income, $306,000 • Interest expense, $30,000 • Interest cash payments, $20,000 • Income tax payments, $240,000 • Income tax expense, $246,000 What was Lucas' quality of income ratio?

Agnes Company reported the following data: Quick assets \ 55,000 Current assets 150,000 Total liabilities 300,000 Average net receivables 12,600 Beginning inventory 38,000 Long-term liabilities 200,000 Net credit sales 126,000 Cost of goods sold 84,000 Ending inventory 46,000 What was the average days' supply in inventory?

Lucas Company has provided the following information: • Cash flow from operating activities, $360,000 • Net income, $306,000 • Interest expense, $30,000 • Interest cash payments, $20,000 • Income tax payments, $240,000 • Income tax expense, $246,000 What was Lucas' times interest earned ratio?

Lucas Company has provided the following information: • Cash flow from operating activities, $360,000 • Net income, $306,000 • Interest expense, $30,000 • Interest cash payments, $20,000 • Income tax payments, $240,000 • Income tax expense, $246,000 What was Lucas' cash coverage ratio?