Exam 18: Financial Statement Analysis

If equal amounts are added to the numerator and the denominator of the current ratio the ratio will always

When the disposal of a significant component occurs the income statement should report both income from continuing operations and income (loss) from discontinued operations.

When the disposal of a significant component occurs the income statement should report both income from continuing operations and income (loss) from discontinued operations.

In horizontal analysis if an item has a negative amount in the base year and a positive amount in the following year no percentage change for that item can be computed.

A supplier to a company would be most interested in the company's

The following financial statement information is available for Buil Corporation: 2017 2016 Inventory \ 44,000 \ 43,000 Current assets 80,000 106,000 Total assets 432,000 358,000 Current liabilities 25,000 36,000 Total liabilities 102,000 88,000 The current ratio for 2017 is

Lake Company reported the following on its income statement: Income before income taxes \ 600,000 Income tax expense 150,000 Net income An analysis of the income statement revealed that interest expense was $60000. Lake Company's times interest earned was

Selected data from Decco Company are presented below: Total assets \ 1,600,000 Average assets 2,000,000 Net income 380,000 Net sales 1,500,000 Average common stockholders' equity 1,000,000 Instructions Calculate the profitability ratios that can be computed from the above information.

Selected financial statement data for Homer Company are presented below. Net sales \ 1,500,000 Cost of goods sold 700,000 Interest expense 10,000 Net income 205,000 Total assets (ending) \ 900,000 Total common stockholders' equity (ending) \ 600,000 Total assets at the beginning of the year were $800000; total common stockholders' equity was $500000 at the beginning of the period. Instructions Compute each of the following: (a) Asset turnover (b) Profit margin (c) Return on assets (d) Return on common stockholders' equity

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 \ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets \ 300,000 Liabilities and Stockholders' Equity Current liabilities \ 50,000 Long-term liabilities 90,000 Stockholders' equity—common 160,000 Total Liabilities and Stockholders' Equity \ 300,000 Income Statement Sales \ 100,000 Cost of goods sold 55,000 Gross profit 45,000 Operating expenses 15,000 Net income Number of shares of common stock 6,000 Market price of common stock \ 30 Dividends per share .50 What is the price-earnings ratio for Ortiz?

The current ratio is

Venti Corporation had income from continuing operations of $420000 for the year ended December 31 2017. It also had the following item (before income taxes): 1. Loss of $50000 on discontinuance of a division. All items are subject to income taxes at a 25% tax rate. Instructions Prepare a partial income statement beginning with income from continuing operations.

The formula for horizontal analysis of changes since the base period is the current year amount

Dean Corporation reported net income $58000 net sales $500000 and average assets $800000 for 2017. The 2017 profit margin was:

For each of the ratios listed below indicate by the appropriate code letter whether it is a liquidity ratio a profitability ratio or a solvency ratio.

Comparisons of company data with industry averages can provide some insight into the company's relative position in the industry.

Intracompany comparisons of the same financial statement items can often detect changes in financial relationships and significant trends.

Jack's by the Tracks. Has the following partial balance sheet: JACK'S BY THE TRACKS Balance Sheet (partial) Stockholders' Equity. Common Stock \ 6,000,000 Retained Earnings 2,000,000 Total Paid-in capital and retained earnings 8,000,000 Add: Unrealized gain on available-for-sale securities 800,000 Total Stockholders' Equity: \ 8,800,000 What effect will the unrealized gain on available-for-sale securities have on comprehensive income?

Discontinued operations refers to the disposal of a ______________ of a business.

Selected financial information for Trant Corporation is presented below. December 31,2017 December 31, 2016 Current assets \ 55,000 \ 40,000 Long-term liabilities 90,000 80,000 Retained earnings 125,000 100,000 Instructions Prepare a schedule showing a horizontal analysis for 2017 using 2016 as the base year.