Exam 13: Financial Statement Analysis

Vertical analysis is useful in making comparisons of companies of different sizes.

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 price-earnings ratio for 2017 is

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. What is the accounts receivable turnover for this company?

The lower the _______________ to _______________ ratio, the more equity "buffer" is available to the creditors if the company becomes insolvent.

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. What is the profit margin for this company?

The following amounts were taken from the financial statements of R.Dodd Company: 2017 2016 Current liabilities \ 1,280,000 \ 1,220,000 Long-term liabilities 1,800,000 1,600,000 Interest expense 100,000 50,000 Income tax expense 50,000 30,000 Net income 300,000 170,000 Net cash provided by operating activity 325,000 270,000 The times interest earned for 2017 is

A comparison with other companies that provides insight into a company's competitive position is most commonly known as which of the following types of comparisons?

The order of presentation of items that may appear on the statement of comprehensive income is

Selected data from the Florida Fruit Company are presented below: Total assets \ 1,500,000 Average total assets 1,850,000 Net income 175,000 Net sales 1,300,000 Average common stockholders' equity 1,000,000 Net cash provided by operating activities 275,000 Instructions Assuming that no dividends were declared or paid during the period, calculate the following profitability ratios from the above information: 1. Profit margin 2. Asset turnover 3. Return on assets 4. Return on common stockholders' equity

Selected information from the comparative financial statements of Barcelona Company for the year ended December 31 appears below: Instructions Answer the following questions relating to the year ended December 31, 2017. Show computations. 1. The inventory turnover for 2017 is __________. 2. The number of times interest earned in 2017 is __________. 3. The accounts receivable turnover for 2017 is __________. 4. The return on assets for 2017 is __________.

Which of these is not a liquidity ratio?

Savory Thymes, Inc. had net credit sales of $9,000,000 and cost of goods sold of $5,250,000 for the year. The average inventory for the year amounted to $1,250,000. The average days in inventory during the year was approximately

Comparisons of financial data made within a company are called

A change in inventory methods during the year would be classified as a change in ____________________.

A current ratio of 1.2 to 1 indicates that a company's current assets exceed its current liabilities.

The financial statements of Elcamino Company appear below: Additional information: a. Cash dividends of $50,000 were declared and paid on common stock in 2017. b. Weighted-average number of shares of common stock outstanding during 2017 was 50,000 shares. c. Market price of common stock on December 31, 2017, was $16 per share. d. Net cash provided by operating activities for 2017 was $70,000. Instructions Using the financial statements and additional information, compute the following ratios for the Lewis Company for 2017. Show all computations. Computations 1. Current ratio _________. 2. Return on common stockholders' equity _________. 3. Price-earnings ratio _________. 4. Inventory turnover _________. 5. Accounts receivable turnover _________. 6. Times interest earned _________. 7. Profit margin _________. 8. Days in inventory _________. 9. Payout ratio _________. 10. Return on assets _________. a. Cash dividends of $50,000 were declared and paid on common stock in 2017. b. Weighted-average number of shares of common stock outstanding during 2017 was 50,000 shares. c. Market price of common stock on December 31, 2017, was $16 per share. d. Net cash provided by operating activities for 2017 was $70,000. Instructions Using the financial statements and additional information, compute the following ratios for the Lewis Company for 2017. Show all computations. Computations

In horizontal or trend analysis, each item is expressed as a(n)

Declining profitability and liquidity ratios are indications that a company may not survive.

Comparative information taken from the Bergeron Company financial statements is shown below: Instructions Using horizontal analysis, show the percentage change from 2016 to 2017 with 2016 as the base year.

The following information is available for Patterson Company: 2017 2016 Accounts receivable \ 360,000 \ 340,000 Inventory 280,000 320,000 Net credit sales 3,150,000 2,600,000 Cost of goods sold 1,800,000 840,000 Net income 300,000 170,000 The inventory turnover for 2017 is