Exam 13: Financial Statement Analysis

In horizontal analysis, the base year is the most current year being examined.

If a company has a discontinued operation gain of $30,000 and a 32% tax rate, what is the effect on net income?

A successful discount retail store such as Kmart would probably have

Comprehensive income includes all changes in stockholders' equity during a period except those resulting from investments by stockholders and distributions to stockholders.

Which measure(s) is(are) an evaluation of a company's ability to pay current liabilities? 1. Current ratio. 2) Free cash flow

The balance sheet for Appalachian Corporation at the end of the current year includes the following: Bonds payable, 6% $5,000,000 6% Preferred stock, $100 par 1,000,000 Common stock, $10 par 2,000,000 Net income was $565,000 and income tax expense for the current year amounted to $285,000. Cash dividends paid on common stock were $200,000, and the common stock was selling for $28 per share at the end of the year. There were no ownership changes during the year. Instructions Determine each of the following: (a) Number of times that bond interest was earned. (b) Earnings per share for common stock. (c) Price-earnings ratio.

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 price earnings ratio for this company?

Liquidity ratios measure the ability of the company to survive over a long period of time.

Because pro forma earnings are based on specific rules, these amounts are highly reliable.

Return on assets is most closely related to

The disposal of a significant component of a business is called

Using the following selected items from the comparative balance sheet of Kato Company, illustrate horizontal and vertical analysis.

Armada Company has these comparative balance sheet data: Additional information for 2017: 1. Net income was $25,000. 2. Sales on account were $450,000. Sales returns and allowances amounted to $25,000. 3. Cost of goods sold was $275,000. 4. Net cash provided by operating activities was $49,000. 5. Capital expenditures were $23,000, and cash dividends were $18,000. Instructions Compute the following ratios at December 31, 2017. (a) Current. (e) Days in inventory (b) Accounts receivable turnover. (f) Free cash flow. (c) Average collection period. (d) Inventory turnover.

A high accounts receivable turnover indicates

Which one of the following is not a tool in financial statement analysis?

The discontinued operations section of the income statement refers to

When a horizontal analysis is performed and a zero or negative amount is reported in the base year, then

Comprehensive income includes all revenues, expenses, gains, losses, and dividends.

All revenue and expense items are considered ordinary in nature under

Cochran Corporation, Inc. has the following income statement (in millions): COCHRAN CORPORATION, INC. Income Statement For the Year Ended December 31, 2017 Net Sales \ 240 Cost of Goods Sold 150 Gross Profit 90 Operating Expenses \ 65 Net Income \ 25 Using vertical analysis, what percentage is assigned to cost of goods sold?