Exam 13: Financial Statement Analysis

Starlight Cruises reported net income of $2,880 million for the year ended December 31, 2016. Total stockholders' equity for the year ended December 31, 2016 was $20,100 million and on December 31, 2015, it was $20,900 million. No preferred stock was outstanding in either year. REQUIRED: 1. Compute Starlight's return on common stockholders' equity for the year ended December 31, 2016. 2. What other ratio would you want to compute to decide whether Starlight is successfully employing leverage? Explain your answer.

The three types of analysis that involve ratios are , , and ____________________.

Which of the following formulas gives the inventory turnover ratio?

Given below are several ratios. Select the accounts or amounts that would be used in order to calculate the ratio. You will have more than one response to each ratio. Some accounts or amounts may not be used at all. Select all that apply. -Debt-to-equity ratio

Presented below are selected data from the financial statements of Carnival Corp. for 2016 and 2015.

Refer to the financial statements from Culinary Delights Company. REQUIRED: A Calculate the company's current and acid-test ratios for 2016. Would you lend this company $4,000,000 at 10% over a one-year period? Explain. Note: The statements provided are in "thousands." B Suppose the company has credit terms of 20 days and all sales are on credit. During 2016, what credit management problems does this company have, if any? Explain

Genenco, Inc., a supplier, is thinking of extending credit to a Fab Company but decides not to because the Fab's current ratio is only 0.60. Do you agree with the supplier's decision? What other factors need to be considered in drawing any conclusions about a company's liquidity?

Turnover ratios differ from the current and quick ratios in that they

Solvency and liquidity differ in a company's ability

Which of the following is an example of liquidity analysis?

What numerators are used in the computation of the following ratios?

What are two difficulties that are encountered when two companies are compared?

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. -Number of days' sales in receivables

The following information is available from the balance sheets at the end of 2016 and 2015 for Kitchen Equipment Company. Net income for 2016 and 2015 was $120,000 and $460,000, respectively. No stock was issued during either year. Answer the following: A How many shares of stock are outstanding at the end of 2016? B If a company has preferred stock, why are preferred dividends subtracted when computing earnings per share? C What is the amount of earnings per share for the year ended December 31, 2016? D Explain what information is provided with earnings per share.

The concept of leverage refers to the practice of using borrowed funds and amounts received from preferred stockholders in an attempt to earn an overall return that is higher than the cost of these funds.

Which of the following statements is true?

A banker is analyzing a company which operates in the petroleum industry. Which of the following might be a major consideration in determining whether the company should receive a loan?

For each of the following sentences, select the phrase or group of words that best completes the statement. -A company's bottom line stated on a per-share basis.

The profit margin ratio reflects the amount of income for each dollar of sales.

Because discontinued segments of a business will not be part of the company's future operations, discontinued operations are disclosed separately on the income statement.