Exam 14: Financial Statement Analysis

Match each ratio that follows to its use (items a-h). Items may be used more than once. -dividends per share A)assess the profitability of the assets B)assess how effectively assets are used C)indicate the ability to pay current liabilities D)indicate how much of the company is financed by debt and equity E)indicate instant debt-paying ability F)assess the profitability of the investment by common stockholders G)indicate future earnings prospects H)indicate the extent to which earnings are being distributed to common stockholders

The price-earnings ratio on common stock is calculated as

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

-Based on the data for Harding Company, what is the quick ratio, rounded to one decimal point?

An unusual item is often related to current operations and occurs infrequently.

Horizontal analysis of comparative financial statements includes

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.Assets Liabilities and Stockholders' Equity Income Statement -What is the dividend yield for Diane Company?

The following information has been condensed from the December 31 balance sheets of Gabriel Co.: (a)Determine the ratio of fixed assets to long-term liabilities for each year.(b)Determine the ratio of liabilities to stockholders' equity for each year.(c)Comment on the year-to-year changes for both ratios.Round your answers to two decimal places.

The return on total assets measures the profitability of total assets, without considering how the assets are financed.

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000. It had 50,000 shares of common stock outstanding during the entire year. Richards Corporation's common stock is selling for $35 per share. The price-earnings ratio is

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

In horizontal analysis, each item is expressed as a percentage of the

Rho, Sigma, and Tau Companies have the following data for the current year: Which company would be expected to have the best potential for future common stock price appreciation?

The following information is available for Jase Company: Which of the following statements is correct?

The following information is available for Meyer Company: Which of the following statements is correct?

Which of the following is the most useful in analyzing companies of different sizes?

Vertical analysis refers to comparing the financial statements of a single company over several years.

The current ratio is

The following data are taken from the financial statements: Determine for the current year the (a) return on total assets, (b) return on stockholders' equity, (c) return on common stockholders' equity, (d) earnings per share on common stock, (e) price-earnings ratio on common stock, and (f) dividend yield. The current market price per share of common stock is $25.Round dollar values to two decimal places and other final answers to one decimal place.