Exam 18: Financial Analysis: the Big Picture

Winter Corporation has issued common stock only. The company has been successful and has a gross profit rate of 20%. The information shown below was taken from the company's financial statements. Instructions Compute the following: (a) Receivables turnover and the average collection period. (b) Inventory turnover and the days in inventory. (c) Return on common stockholders' equity.

Short-term creditors are usually most interested in evaluating

The ______________ ratio measures the percentage of earnings distributed in the form of cash dividends.

The following financial statement information is available for Howard Corporation: The return on common stockholders' equity for 2010 is

Each of the following is a factor affecting quality of earnings except

Assume the following cost of goods sold data for a company: 2011 $1,500,000 2010 1,200,000 2009 1,000,000 If 2009 is the base year, what is the percentage increase in cost of goods sold from 2009 to 2011?

Inventory turnover is calculated by dividing

The following financial statement information is available for Jackson Corporation: The profit margin ratio for 2010 is

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

The acid-test (quick) ratio

Trading on the equity (leverage) refers to the

Horizontal analysis evaluates financial statement data

Operating data for Manning Corporation are presented below. Instructions Prepare a schedule showing a vertical analysis for 2010.

Selected financial statement data for Morton Company are presented below. During 2011, net sales were $900,000, and cost of goods sold was $705,000. Instructions Compute the following ratios at December 31, 2011: (a) Current. (b) Acid-test. (c) Receivables turnover. (d) Inventory turnover.

Breaktown Company had net income of $175,000 and net sales of $625,000 in 2010. The company's total assets for 2009/2010 averaged $4,000,000. Its common stockholders' equity for the period averaged $2,340,000. Calculate (a) profit margin, (b) return on assets, and (c) return on common stockholders' equity.

Gomez Company reports the following amounts for 2010: The 2010 rate of return on common stockholders' equity is:

The income statement for Dibble Company for the year ended December 31, 2010 appears below. *Includes $20,000 of interest expense and $22,000 of income tax expense. Additional information: 1. Common stock outstanding on January 1, 2010 was 50,000 shares. On July 1, 2010, 10,000 more shares were issued. 2. The market price of Dibble's stock was $12 at the end of 2010. 3. Cash dividends of $30,000 were paid, $6,000 of which were paid to preferred stockholders. Instructions Compute the following ratios for 2010: (a) earnings per share. (b) price-earnings. (c) times interest earned.

Analysis of financial statements is enhanced with the use of comparative data.

Dooley Corporation had net income of $200,000 and paid dividends to common stockholders of $40,000 in 2010. The weighted average number of shares outstanding in 2010 was 50,000 shares. Dooley Corporation's common stock is selling for $50 per share on the New York Stock Exchange. Dooley Corporation's payout ratio for 2010 is

In performing a vertical analysis, the base for sales returns and allowances is