Exam 18: Financial Statement Analysis

Vertical and horizontal analyses are concerned with the format used to prepare financial statements.

Calculating financial ratios is a financial reporting requirement under generally accepted accounting principles.

If a company has sales of $110 in 2016 and $154 in 2017 the percentage increase in sales from 2016 to 2017 is 140%.

The following items were taken from the financial statements of Henager Inc. over a three-year period: \ Net Sales \3 55,000 \3 40,000 \3 00,000 Cost of Goods Sold Gross Profit Instructions Compute the following for each of the above time periods. a. The amount and percentage change from 2015 to 2016. b. The amount and percentage change from 2016 to 2017.

Greene Corporation had the information listed below available in preparing an income statement for the year ended December 31 2017. All amounts are before income taxes. Assume a 30% income tax rate for all items. $\begin{array}{llr} \text { Sales } &\$800,000\\ \text {Income from operation of discontinued cement division } &\$100,000\\ \text { Loss from disposal of cement division} &\$(90,000)\\ \text {Operating expenses } &\$175,000\\ \text {Gain on sale of equipment } &\$60,000\\ \text { Cost of goods sold } &\$420,000\\\end{array}$ Instructions Prepare a multiple-step income statement in good form which takes into account intraperiod income tax allocation. Ignore EPS computations.

Net income does not appear in the numerator of the

Each of the following is included in computing the acid-test ratio except

The following information pertains to Ortiz 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 \ 4,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 310,000 Total Assets \ 400,000 Liabilities and Stockholders' Equity Current liabilities \ 50,000 Long-term liabilities 90,000 Stockholders' equity—common 260,000 Total Liabilities and Stockholders' Equity \ 400,000 Income Statement Sales \ 300,000 Cost of goods sold 66,000 Gross profit 234,000 Operating expenses Net income \2 07,000 Number of shares of common stock 6,000 Market price of common stock \ 20 Dividends per share .50 What is the profit margin for Ortiz?

In analyzing financial statements horizontal analysis is a

Comparisons of financial data made within a company are called

Quasar Corporation had net income of $300000 and paid dividends to common stockholders of $40000 in 2017. The weighted average number of shares outstanding in 2017 was 60000 shares. Quasar Corporation's common stock is selling for $35 per share on the New York Stock Exchange. Quasar Corporation's price-earnings ratio is

The following data are taken from the financial statements of Dands Company: 2017 2016 Monthly average accounts receivable \ 565,000 \ 700,000 Net sales on account \ 6,200,000 \ 7,000,000 Terms for all sales are 2/10/30 Instructions (a) Compute the accounts receivable turnover and the average collection period for both years. (b) What conclusion can an analyst draw about the management of the accounts receivable?

Swiss Clothing Store had a balance in the Accounts Receivable account of $820000 at the beginning of the year and a balance of $780000 at the end of the year. Net credit sales during the year amounted to $7200000. The accounts receivable turnover ratio was

Which of the following would be considered an Other Comprehensive Income item?

The disposal of a significant component of a business is called

The debt to assets ratio measures

Using these data from the comparative balance sheet of Banner Company perform vertical analysis. December 31, 2017 December 31, 2016 Accounts receivable \ 480,000 \ 336,000 Inventory 720,000 504,000 Total assets 4,000,000 3,000,000

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

Match the ratios with the appropriate ratio computation by entering the appropriate letter in the space provided.