Exam 13: Financial Analysis: The Big Picture

The use of alternative accounting methods

The lower the _______________ to _______________ ratio, the more equity "buffer" is available to the creditors if the company becomes insolvent.

The current ratio is

All of the following statements regarding changes in accounting principles are true except which of the following?

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 onerations \ 30,000 What is the profit margin for this company?

The following amounts were taken from the financial statements of Ando Company: 2014 2013 Total assets \ 800,000 \ 1,000,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 144,000 11,000 Weighted average number of common shares outstanding 90,000 90,000 Market price of common stock \ 35 \ 39 The profit margin ratio for 2014 is

Selected data from the Florida Fruit Company are presented below: Total assets \ 1,500,000 Average total assets 1,850,000 Net income 175,000 Net sales 1,300,000 Average common stockholders' equity 1,000,000 Net cash provided by operating activities 275,000 Instructions Assuming that no dividends were declared or paid during the period, calculate the following profitability ratios from the above information: 1. Profit margin 2. Asset turnover 3. Return on assets 4. Return on common stockholders' equity

If a company has sales of $130 in 2014 and $182 in 2013, the percentage decrease in sales from 2013 to 2014 is 40%.

A change in depreciation methods during the year would be classified as a change in ____________________.

Match the ratios with their formulas by entering the appropriate letter in the space provided. - $\frac{\text {Current assets }}{\text {Current liabilities }}$

Under IFRS, the components of other comprehensive income can be reported in each of the following ways except

Rama Company reported the following on its income statement: Income before income taxes \ 500,000 Income tax expense 150,000 Net income \ 350,000 An analysis of the income statement revealed that interest expense was $60,000. Rama Company's times interest earned was

Comparative information taken from the Bergeron Company financial statements is shown below: $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ 2014 $\quad$$\quad$$\quad$$\quad$ 2013 (a) Accounts receivable $\quad$ $175,000 $\quad$$\quad$ $140,000 (b) Retained earrings $\quad$$\quad$ 30,000 $\quad$$\quad$$\quad$ (14,000) (c) Sales revenue $\quad$$\quad$$\quad$ 855,000 $\quad$$\quad$$\quad$ 750,000 (d) Operating expenses $\quad$ 170,000 $\quad$$\quad$$\quad$ 200,000 (e) Income taxes pavable $\quad$ 11,000 $\quad$$\quad$$\quad$ 10,000 Instructions Using horizontal analysis, show the percentage change from 2013 to 2014 with 2013 as the base year.

In vertical analysis

Analysts are interested in sustainable income, which is equal to the past year's net income.