Exam 18: Financial Statement Analysis

Ale Corporation had net income of $240000 and paid dividends to common stockholders of $40000 in 2017. The weighted average number of shares outstanding in 2017 was 60000 shares. Ale Corporation's common stock is selling for $76 per share on the New York Stock Exchange. Ale Corporation's price-earnings ratio is

The ratios that are used to determine a company's short-term debt paying ability are

The following amounts were taken from the financial statements of Leaf Company: 2017 2016 Total assets \ 800,000 \ 880,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 126,000 117,000 Weighted average number of common shares outstanding 90,000 90,000 Market price of common stock \ 35 \ 39 The price-earnings ratio for 2017 is

Blaney Clothing Store had a balance in the Accounts Receivable account of $437500 at the beginning of the year and a balance of $500000 at the end of the year. Net credit sales during the year amounted to $3000000. The average collection period of the receivables in terms of days was

Phast Express specializes in the overnight transportation of medical equipment and laboratory specimens. The company has selected the following information from its most recent annual report to be the subject of an immediate press release. $\bullet$ The financial statements are being released. $\bullet$ Net income this year was $2.12 million. Last year's net income had been $2.0 million. $\bullet$ The current ratio has changed to 2:1 from last year's 1.4:1 $\bullet$ The debt/assets ratio has changed to 3:5 from last year's 2:5 $\bullet$ The company expanded its truck fleet substantially by purchasing ten new delivery vans. The company already had twelve delivery vans. $\bullet$ The company is now the largest medical courier in the mid-Atlantic region. Required: Prepare a brief press release incorporating the information above. Include all information. Think carefully which information (if any) is good news for the company and which (if any) is bad news.

The accounts receivable turnover is calculated by dividing _________________ by average ___________________.

Prepare a partial income statement beginning with income before income taxes using the following information for Stone Corporation for the fiscal year ended December 31 2017: Sales \ 720,000 Discontinued operation loss 80,000 Operating expenses 180,000 Cost of goods sold 400,000 Loss on sale of land 25,000 Stone Corporation is subject to a 30% income tax rate.

A horizontal analysis performed on a statement of retained earnings would not show a percentage change in

Analysis of financial statements is enhanced with the use of comparative data.

Ladle Corporation had net income of $2000000 in 2015. Using 2016 as the base year net income decreased by 70% in 2014 and increased by 180% in 2017. Instructions Compute the net income reported by Ladle Corporation for 2016 and 2017.

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

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

In 2017 Rome Corporation reported income from operations $190000 interest expense $60000 and income tax expense $40000. Rome's times interest earned was:

A company has a accounts receivable turnover of 10 times. The average accounts receivable during the period are $400000. What is the amount of net credit sales for the period?

Asset turnover measures

The following ratios have been computed for Mason Company for 2017. Profit margin 12.5\% Times interest earned 8 times Receivables turnover 4 times Acid-test ratio 2:1 Current ratio 3:1 Debt to assets ratio 20\% Mason Company's 2017 financial statements with missing information follow: Instructions Use the above ratios and information from the Mason Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.

Nord Company had $375000 of current assets and $150000 of current liabilities before borrowing $70000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of Nord Company's working capital?

Using the following operating data for Complex Corporation prepare a schedule showing a vertical analysis for 2017. 2017 2016 Net sales \ 360,000 \ 320,000 Cost of goods sold 210,000 180,000 Operating expenses 112,000 100,000 Net income 38,000 40,000

In performing a vertical analysis the base for cost of goods sold is

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?