Exam 14: Financial Statement Analysis

The following amounts were taken from the financial statements of Leaf Company: 2020 2019 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 return on assets for 2020 is

From a creditor's point of view, the higher the total debt to total assets ratio, the lower the risk that the company may be unable to pay its obligations.

The debt to assets ratio

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

When performing vertical analysis, the base amount for administrative expense is generally

In ratio analysis, the ratios are never expressed as a

Comparisons of financial data made within a company are called

Inventory turnover is calculated by dividing

Times interest earned is also called the

In vertical analysis, the base amount for each income statement item is

Troy, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division's assets with a book value of $1,260,000 are sold for $840,000. Operating income from January 1 to June 30 for the division amounted to $130,000. Ignoring income taxes, what total amount should be reported on Troy's income statement for the current year under the caption, Discontinued Operations?

The following information is available for Oakland Company: 2020 2019 Accounts receivable \ 430,000 \ 460,000 Inventory 280,000 320,000 Net credit sales 2,670,000 1,600,000 Cost of goods sold 1,860,000 1,060,000 Net income 300,000 170,000 The accounts receivable turnover ratio for 2020 is

A weakness of the current ratio is

In 2020 Rome Corporation reported net income $190,000, interest expense $60,000, and income tax expense $40,000. Rome's times interest earned was:

Trading on the equity (leverage) refers to the

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) 30,000 Inventory 40,000 Property, plant and equipment 310,000 Total Assets \ 425,000 Liabilities and Stockholders' Equity Current liabilities \ 55,000 Long-term liabilities 110,000 Stockholders' equity?Common 260,000 Total Liabilities and Stockholders' Equity Income Statement Sales \ 120,000 Cost of goods sold 65,000 Gross profit 55,000 Operating expenses 29,500 Net income 25,500 Number of shares of common stock 6,000 Market price of common stock \ 20 Dividends per share .50 What is the return on assets for Ortiz?

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

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

Variations among companies in the application of generally accepted accounting principles may reduce quality of earnings.

Pan Inc. has an investment in available-for-sale securities of $70,000. This investment experienced an unrealized loss of $6,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be