Exam 13: Financial Analysis: The Big Picture

Horizontal analysis is also known as

Solvency is of most interest to

Belcanto Corporation experienced a fire on December 31, 2014, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. Cash \ 40,000 \ 15,000 Accounts receivable (net) 84,000 126,000 Inventory 200,000 180,000 Accounts payable 50,000 10,000 Notes payable 30,000 20,000 Common stock, \ 100 par 400,000 400,000 Retained earnings 170,000 101,000 Additional information: 1. The inventory turnover is 4.2 times 2. The return on common stockholders' equity is 14%. The company had no additional paid-in-capital. 3. The accounts receivable turnover is 10.2 times. 4. The return on assets is 12.5%. 5. Total assets, Dec. 31, 2013 = 604,750. Instructions Compute the following values for 2014. (a) Cost of goods sold. (b) Net credit sales. (c) Net income. (d) Total assets.

An extraordinary item must meet which of the following two criteria?

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 sales securities have on comprehensive income?

A liquidity ratio measures the

Accounts receivable turnover is useful in assessing the profitability of receivables.

Bertram Corporation had net income of $325,000 and paid dividends to common stockholders of $50,000 in 2014. The weighted average number of shares outstanding in 2014 was 50,000 shares. Bertram Corporation's common stock is selling for $45.50 per share on the New York Stock Exchange. Bertram Corporation's payout ratio for 2014 is

Return on assets is most closely related to

The following information is available for Patterson Company: 2014 2013 Accounts receivable \ 360,000 \ 340,000 Inventory 280,000 320,000 Net credit sales 3,000,000 2,600,000 Cost of goods sold 1,500,000 840,000 Net income 300,000 170,000 The accounts receivable turnover for 2014 is

Match the ratios with their formulas by entering the appropriate letter in the space provided. - $\frac{\text { Income before income taxes and interest expens}}{\text { Interest expense}}$

The following information was taken from the financial statements of Bjorg Company: Gross profit on sales \6 00,000 \6 80,000 Income before income taxes 230,000 221,000 Net income 180,000 153,000 Net income as a percentage of net sales 10\% 9\% Instructions (a) Compute the net sales for each year. (b) Compute the cost of goods sold in dollars and as a percentage of net sales for each year. (c) Compute operating expenses in dollars and as a percentage of net sales for each year. (Income taxes are not operating expenses).

Under which of the following cases may a percentage change be computed?

Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $500,000 in 2014. The weighted average number of shares outstanding in 2014 was 500,000 shares. Tito Corporation's common stock is selling for $50 per share on the NASDAQ. Tito Corporation's payout ratio for 2014 is

The following information pertains to Unique 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 \ 40,000 Accounts receivable (net) 30,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets \ 300,000 Liabilities and Stockholders' Equity Current liabilities \ 60,000 Long-term liabilities 90,000 Stockholders' equity-common 150,000 Total Liabilities and Stockholders' Equity \ 300,000 Income Statement Sales revenue \ 90,000 Cost of goods sold 45,000 Gross margin 45,000 Operating expenses 20,000 Net income \ 25,000 Number of shares of common stock 6,000 Market price of common stock \ 20 Dividends per share on common stock 0,90 Cash provided by operations \ 30,000 What is the current cash debt coverage for this company?

In the vertical analysis of an income statement, each item is generally stated as a percentage of net income.

Zip Delivery specializes in the overnight transportation of medical equipment and laboratory specimens. The company has selected the following information from its most recent annual report to be the subject of an immediate press release. -The financial statements are being released. -Net income this year was $3.1 million. Last year's net income had been $2.8 million. -The current ratio has changed to 2:1 from last year's 1.6:1. -The debt to assets ratio has changed to 4:6 from last year's 3:6. -The company expanded its truck fleet substantially by purchasing ten new delivery vans. -The company already had twelve delivery vans. The company is now the largest medical courier in the mid-Atlantic region. Required: Prepare a brief press release incorporating the above information. Include all information. Think carefully which information (if any) is good news for the company, and which (if any) is bad news.

The times interest earned is calculated by dividing ___________________ before __________________ and __________________ by interest expense.

A company has an accounts receivable turnover ratio of 10. The average net accounts receivable during the period are $700,000. What is the amount of net credit sales for the period?

Assume the following cost of goods sold data for a company: 2015 \ 1,300,000 2014 1,200,000 2013 1,000,000 If 2013 is the base year, what is the percentage increase in cost of goods sold from 2013 to 2015?