Exam 13: Financial Statement Analysis

The current ratio is a

Identify and explain factors that affect quality of earnings.

All of the following situations below might indicate a company has a low quality of earnings except

Intracompany comparisons of the same financial statement items are often useful to detect changes in financial relationships and significant trends.

Using borrowed money to increase the rate of return on common stockholders' equity is called "trading on the equity."

The following amounts were taken from the financial statements of Ando Company: 2017 2016 Total assets \ 800,000 \ 1,000,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 108,000 117,000 Weighted average number of common shares outstanding 90,000 90,000 Market price of common stock \ 42 \ 39 The profit margin ratio for 2017 is

For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio. Code: L = Liquidity ratio P = Profitability ratio S = Solvency ratio ____ 1. Price-earnings ratio ____ 2. Return on assets ____ 3. Accounts receivable turnover ____ 4. Earnings per share ____ 5. Payout ratio ____ 6. Working capital ____ 7. Current ratio ____ 8. Debt to assets ratio ____ 9. Free cash flow ____ 10. Inventory turnover

BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders of $320,000 in 2017. The weighted average number of shares outstanding in 2017 was 500,000 shares. BVI Corporation's common stock is selling for $50 per share on the NASDAQ. BVI Corporation's payout ratio for 2017 is

Net sales are $3,250,000, beginning total assets are $1,400,000, and the asset turnover is 2.5 times. What is the ending total asset balance?

Reardon Inc. has an investment in trading securities of $140,000. This investment experienced an unrealized loss of $7,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be

If Year 1 equals $750, Year 2 equals $840, and Year 3 equals $900, the percentage to be assigned for Year 3 in a trend analysis, assuming that Year 1 is the base year, is

If Year 1 equals $780, Year 2 equals $819, and Year 3 equals $896, the percentage to be assigned for Year 2 in a trend analysis, assuming that Year 1 is the base year, is

______________ analysis, also called trend analysis, is a technique for evaluating a series of financial statement data over a period of time.

Under which of the following cases may a percentage change be computed?

Which measure(s) is(are) useful in evaluating the efficiency in managing inventories? 1. Inventory turnover 2) Days in inventory

Horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year.

A common measure of long-term solvency is

In performing a vertical analysis, the base for cost of goods sold is

Horizontal and vertical analyses are analytical tools frequently used to analyze financial statements. What type of information or insights can be obtained by using these two techniques? Explain how the output of horizontal analysis and vertical analysis can be compared to industry averages and/or competitive companies.

Given the following data for the King Company: Current liabilities \ 400 Long-term debt 480 Common stock 700 Retained earnings 920 Total liabilities \& stockholders' equity \ 2,500 How would common stock appear on a common size balance sheet?