Exam 22: Analyzing Financial Statements

Profitability ratios:

If the return on common stockholders' equity is more than the industry standard, it means the company is using debt financing successfully.

Meranda Flower Corporation needs to develop a trend analysis for its sales and gross profit for the past three years to make decisions for the future. Compute the trend percentages with the information below and place your answers in the spaces provided.

The acid test ratio is the best test to determine the ability to pay short-term debt.

Alliance Plus has total liabilities of $181,000, current liabilities $46,000, and stockholders' equity $310,000. What is the debt to total stockholders' equity ratio? (Round your answer to two decimal places, X.XX%.)

From the following, complete the common-size income statement for Isaiah's Sporting Goods using net sales as the base. (Round to nearest tenth of a percent.)

Interest expense was $20,000, income tax expense $26,000, and net income after taxes is $44,000. The number of times interest was earned is: (Round your answer two decimal places.)

The inventory turnover ratio calculates:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. -

Topiary's Unlimited has a cost of goods sold of $1,440,000. The beginning merchandise inventory was $203,000 and its ending merchandise inventory is $212,000. Topiary's inventory turnover ratio is: (Round your answer two decimal places.)

An accountant is completing a trend analysis for a company by comparing sales for years 2013 through 2023. The base year for the calculations is 2023.

When doing a vertical analysis, which of the following is a typical comparison item set at 100%?

What was the percentage of decrease in the Accounts Receivable account if the receivables were $87,000 in Year 1, and $67,000 in Year 2? (Round your answer two decimal places, X.XX%.)

Complete the following horizontal analysis comparative income statements of Webster Corporation. Round to one decimal place.

Noble Company's accounts receivable turnover was 24.6 in Year 1 and 18.2 in Year 2. This change in accounts receivable turnover indicates:

In a comparative balance sheet, the Accounts Payable balance for 2019 was $189,330 and total liabilities and equity was $459,265. What is the vertical analysis for Accounts Payable? (Round your answer to two decimal places, X.XX%.)

The ratios that measure a company's ability to pay off short-term debt are known as:

The higher the times interest earned ratio, the more likely it is that interest payments will be made.

The current ratio and quick ratio are example of this type of ratio.

When net income before taxes and interest is $86,000 and total assets equal $234,000, the rate of return on total assets is 36.8%.