Exam 18: Financial Statement Analysis

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

Horizontal analysis evaluates a series of financial statement data over a period of time

In vertical analysis the base amount in an income statement is usually net sales.

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

Stockholders are most interested in evaluating

Which one of the following is primarily interested in the liquidity of a company?

North Company reports the following amounts for 2017: Net income 160,000 Average stockholders' equity 2,000,000 Preferred dividends 45,000 Parvalue preferred stock 250,000 The 2017 rate of return on common stockholders' equity is:

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%.

Selected data for Irma's Store appear below. 2017 2016 Net sales \ 800,000 \ 520,000 Cost of goods sold 600,000 345,000 Inventory at end of year 65,000 85,000 Accounts receivable at end of year 140,000 110,000 Instructions Compute the following for 2017: (a) Gross profit rate. (b) Inventory turnover. (c) Accounts receivable turnover.

Blitzen Corporation had net income of $200000 and paid dividends to common stockholders of $50000 in 2017. The weighted average number of shares outstanding in 2017 was 40000 shares. Blitzen Corporation's common stock is selling for $35 per share on the New York Stock Exchange. Blitzen Corporation's price-earnings ratio is

Booker Corporation had the following comparative current assets and current liabilities: Dec. 31,2017 Dec. 31, 2016 Current assets Cash \ 60,000 \ 30,000 Short-term investments 40,000 10,000 Accounts receivable 55,000 95,000 Inventory 110,000 \ 90,000 Prepaid expenses 35,000 \ 20,000 Total current assets \ 300,000 \ 245,000 Current liabilities Accounts payable \ 140,000 \ 110,000 Salaries payable 40,000 30,000 Income tax payable 20,000 15,000 Total current liabilities \2 00,000 \1 55,000 During 2017 credit sales and cost of goods sold were $750000 and $400000 respectively. Instructions Compute the following liquidity measures for 2017: 1. Current ratio. 2. Working capital. 3. Acid-test ratio. 4. Accounts receivable turnover. 5. Inventory turnover.

Inventory turnover is calculated by dividing

In common size analysis

Horizontal analysis is also called

Vertical analysis is a technique which expresses each item within a financial statement

If the average collection period is 60 days what is the accounts receivable turnover?

The following information is available for Oakland Company: 2017 2016 Accounts receivable \ 360,000 \ 400,000 Inventory 340,000 400,000 Net credit sales 2,470,000 1,400,000 Cost of goods sold 1,850,000 1,060,000 Net income 300,000 170,000 The inventory turnover ratio for 2017 is

An aircraft company would most likely have

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

A percentage change can be computed only if the base amount is zero or positive.