Exam 14: Financial Statement Analysis

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 10%; therefore, the cost of goods sold as a percentage of sales must be 90%.

Wrapp Company has income before taxes of $350,000 and an extraordinary loss of $70,000. If the income tax rate is 30% on all items, the income statement should show income before irregular items and an extraordinary loss, respectively, of:

A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is

Measures of a company's liquidity are concerned with the frequency and amounts of dividend payments.

In performing a vertical analysis, the base for prepaid expenses is

Meaningful analysis of financial statements will include either horizontal or vertical analysis, but not both.

Net sales are $8,000,000, beginning total assets are $2,500,000, and the asset turnover is 4.0 times. What is the ending total asset balance?

Kreig Corporation has income before taxes of $900,000 and an extraordinary gain of $300,000. If the income tax rate is 35% on all items, the income statement should show income before irregular items and extraordinary items, respectively, of

Asset turnover measures

Carter Corporation reported net sales of $250,000, $400,000, and $600,000 in the years 2013, 2014, and 2015 respectively. If 2013 is the base year, what is the trend percentage for 2015?

North Company reports the following amounts for 2015: The 2015 rate of return on common stockholders' equity is:

If a company has sales of $110 in 2013 and $154 in 2014, the percentage increase in sales from 2013 to 2014 is 140%.

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

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

Short-term creditors are usually most interested in evaluating

The current ratio is

Pro forma income usually excludes items that the company thinks are unusual or nonrecurring.

In 2015 Rome Corporation reported net income $190,000, interest expense $60,000, and income tax expense $40,000. Rome's times interest earned ratio was:

Horizontal analysis is also called

Ratios that measure the short-term ability of the company to pay its maturing obligations are