Exam 12: Financial Analysis: The Big Picture

Which of the following is the best definition of sustainable income?

In the vertical analysis of an income statement, each item is generally stated as a percentage of net income.

Stockholders are most interested in evaluating

The best way to study the relationship of the components within a financial statement is to prepare

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

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. Assets Cash and short-term investments \ 40,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets \ 295,000 Liabilities and Stockholders' Equity Current liabilities \ 60,000 Long-term liabilities 85,000 Stockholders' equity-common 150,000 Total Liabilities and Stockholders' Equity \ 295,000 Income Statement Sales revenue \ 85,000 Cost of goods sold 45,000 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?

BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders of $400,000 in 2017. The weighted average number of shares outstanding in 2017 was 500,000 shares. BVI Corporation's common stock is selling for $40 per share on the NASDAQ. BVI Corporation's price-earnings ratio is

A weakness of the current ratio is

All of the following may be indicators of channel stuffing except

Vertical analysis is also known as

The following information is available for Patterson Company: 2017 2016 Accounts receivable \ 360,000 \ 340,000 Inventory 280,000 320,000 Net credit sales 3,000,000 1,400,000 Cost of goods sold 1,800,000 840,000 Net income 300,000 170,000 The inventory turnover for 2017 is

Boone Trading Company reported net sales of $400,000, $440,000, and $560,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what is the trend percentage for 2018?

Vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place.

Solvency is of most interest to

Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what percentage do 2018 sales represent of the base?

In a common size income statement, the 100% figure is

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

Improper recognition of income is not one of the factors affecting the quality of earnings.

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

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?