Exam 18: Financial Analysis: the Big Picture

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.

Selected comparative statement data for Willingham Products Company are presented below. All balance sheet data are as of December 31. Instructions Compute the following ratios for 2011: (a) Profit margin. (b) Asset turnover. (c) Return on assets. (d) Return on common stockholders' equity.

The following information is available for Charles Company: The inventory turnover ratio for 2010 is

Comparisons can be made on each of the following bases except

The following data are taken from the financial statements of Doyle Company: Instructions (a) Compute the receivables turnover and the average collection period for both years. (b) What conclusion can an analyst draw about the management of the accounts receivable?

The balance sheet for Farley Corporation at the end of the current year indicates the following: Income before income taxes was $480,000 and income taxes expense for the current year amounted to $144,000. Cash dividends paid on common stock were $300,000, and the common stock was selling for $22 per share at the end of the year. There were no ownership changes during the year. Instructions Determine each of the following: (a) times that bond interest was earned. (b) earnings per share for common stock. (c) price-earnings ratio.

Each of the following is a liquidity ratio except the

A ratio can be expressed as a percentage, a rate, or a proportion.

Extraordinary items are reported net of applicable taxes in a separate section of the income statement.

Tate Company reported the following on its income statement: An analysis of the income statement revealed that interest expense was $100,000. Tate Company's times interest earned was

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

An event or transaction should be classified as an extraordinary item if it is unusual in nature or if it occurs infrequently.

The ratios used in evaluating a company's liquidity and short-term debt paying ability that complement each other are the ______________ ratio and the ______________ ratio.

Common size analysis expresses each item within a financial statement in terms of a percent of a base amount.

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

If an item meets one (but not both) of the criteria for an extraordinary item, it

A stockholder is interested in the ability of a firm to

A successful grocery store would probably have

Blanco, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

The days in inventory is computed by multiplying inventory turnover by 365.