Exam 13: Financial Statement Analysis

Exeter Corporation had net income of $3,000,000 in 2016. Using 2016 as the base year, net income decreased by 40% in 2017 and increased by 110% in 2018. Instructions Compute the net income reported by Exeter Corporation for 2017 and 2018.

In performing a vertical analysis, the base for sales returns and allowances is

Bill's Dollar Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $6,400,000. The accounts receivable turnover was

What does each type of ratio measure? (a) Liquidity ratios. (b) Solvency ratios. (c) Profitability ratios.

When preparing an income statement, which of the following is the proper order for income statement components?

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the accounts receivable turnover for this company?

Salamagundi, Inc. has the following Income Statement (in millions): SALAMAGUNDI, INC. Income Statement For the Year Ended December 31, 2017 Net Sales \ 160 Cost of Goods Sold 100 Gross Profit 60 Operating Expenses 40 Net Income \ 20 Using vertical analysis, what percentage is assigned to gross profit?

All of the following are reported on the income statement net of tax except

Beta Corporation had net income of $325,000 and paid dividends to common stockholders of $39,000 in 2017. The weighted average number of shares outstanding in 2017 was 50,000 shares. Beta Corporation's common stock is selling for $52 per share on the New York Stock Exchange. Beta Corporation's price-earnings ratio is

Stellar, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division's assets with a book value of $1,260,000 are sold for $900,000. Operating income from January 1 to June 30 for the division amounted to $195,000. Ignoring income taxes, what total amount should be reported on Stellar's income statement for the current year under the caption, Discontinued Operations?

The current ratio is

Match the ratios with their formulas by entering the appropriate letter in the space provided. - Net sales/Average total assets

The current ratio would be of most interest to

In ratio analysis, the ratios are never expressed as a

Return on common stockholders' equity is most closely related to

Bertram Corporation had net income of $325,000 and paid dividends to common stockholders of $39,000 in 2017. The weighted average number of shares outstanding in 2017 was 50,000 shares. Bertram Corporation's common stock is selling for $52 per share on the New York Stock Exchange. Bertram Corporation's payout ratio for 2017 is

Both profit margin and asset turnover affect a company's return on assets.

An inexperienced accountant for CJS Transport Corporation showed the following in CJS Transport's 2017 income statement: income before income taxes $420,000; and unrealized loss on available-for-sale securities (before taxes) $60,000. The unrealized loss and income before income taxes are both subject to a 30% tax rate. Instructions Prepare a corrected statement of income.

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Gross profit 40,000 Operating expenses 20,000 Net income \ 20,000 Number of shares of common stock 6,000 Market price of common stock \ 20 Dividends per share on common stock 0.90 Cash provided by operations \ 30,000 What is the current ratio for this company?