Exam 13: Analyzing and Interpreting Financial Statements

________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

The ability to generate positive market expectations is called:

Selected balances from a company's financial statements are shown below.Calculate the following ratios for 20X2: (a)accounts receivable turnover (b)inventory turnover (c)days' sales uncollected (d)days' sales in inventory (d)profit margin. (e)return on total assets.

Calculate the percent increases for each of the following selected balance sheet items.

Quick assets divided by current liabilities is the:

Earnings per share are calculated only on income from continuing operations.

Three of the most common tools of financial analysis are:

Refer to the following selected financial information from Shakley's Incorporated.Compute the company's debt-to-equity ratio for Year 2. Year 2 Year 1 Net sales \ 478,500 \ 426,250 Cost of goods sold 276,300 250,120 Irterest experse 9,700 10,700 Net incomebefore tax 67,250 52,680 Net income after tax 46,050 39,900 Total assets 317,100 288,000 Total liabilities 181,400 167,300 Total equity 135,700 120,700

Refer to the following selected financial information from Graphics,Inc.Compute the company's times interest earned. Irterest experse $~~~~~~~~~~~~~~~~~\$ 9,100$ Incorne tax experse $~~~~~~~~~~~~22,700$ Net incorne after tax $~~~~~~~~~~~ 56,500$

When an item has a value in the base period and zero in the analysis period,the decrease is 100 percent.

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

Carducci Corporation reported Net sales of $3.6 million and beginning total assets of $0.9 million and ending total assets of $1.3 million.The average total asset amount is:

Explain the purpose of financial statement analysis for both external and internal users.

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

________ financial statements are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

Use the financial data shown below to calculate the following ratios for the current year: (a)Current ratio. (b)Acid-test ratio. (c)Accounts receivable turnover. (d)Days' sales uncollected. (e)Inventory turnover. (f)Days' sales in inventory. Income statement data Sales (all on credit)………………………………… $650,000 Cost of goods sold………………………………….425,000 Income before taxes……………………………….. 78,000 Net income………………………………………… 54,600

Express the following income statement information in common-size percentages and in trend percentages using Year 1 as the base year.

A high level of expected risk suggests a low price-earnings (PE)ratio.

The background on a company,its industry,and its economic setting is usually included in which of the following sections of a financial statement analysis report?