Exam 22: Analyzing Financial Statements

The liabilities of a company at the end of the year are $500,000 and the total stockholders' equity at the end of the year is $1,000,000.The debt to stockholders' equity ratio is:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Debt to total assets

The inventory turnover ratio calculates:

Topiary's Unlimited has a cost of goods sold of $1,500,000.The beginning merchandise inventory was $125,000 and its ending merchandise inventory is $175,000.Topiary's merchandise inventory turnover ratio is:

The acid test ratio is the best test to determine the ability to pay short-term debt.

The sales of Mary's Services for Years 1,2,and 3 are $25,000,$45,000,$60,000,respectively.The trend percentage for Year 3 is:

For trend analysis to work correctly,the accountant should divide the item in one year by the:

From the following balance sheet for Bricks Corporation,compute the common-size balance sheet amounts.(Round all percentages to nearest tenth of a percent. )

If Cara's Piano sales increased from $40,000 to $60,000 and its cost of goods sold decreased from $24,000 to $12,000,then vertical analysis based on sales would show the following for cost of goods sold (rounded to the nearest percent):

For vertical analysis purposes,the base item on an income statement is:

With a beginning Accounts Receivable balance of $30,000,an ending balance of $46,000,and net credit sales of $480,000,compute accounts receivable turnover ratio.

The ratio that indicates the amount of assets that are financed by creditors is:

A common-size comparative statement shows:

If the average collection period has decreased and credit terms remain the same,the company should put a greater emphasis on collections.

If the return on sales is 11% and the total assets turnover is 1.8,the rate of return on total assets would be 19.8%.

To be meaningful,a small business should compare ratios with large companies.

What is George's gross profit rate if net sales are $100,000,operating expenses are $25,000,and cost of goods sold is $60,000?

Common-size statements are used to compare companies of the same size.

An expression of the amount of each item in a statement shown as a percentage of some designated total for purposes of comparison is called:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Accounts receivable turnover