Exam 13: Financial Statement Analysis

The following analysis is based on information obtained from 2016 financial statements of Lake Company, River Corporation, and Ocean Company. A Compute the cash to cash operating cycle for each company for 2016. B What does this ratio measure? Which company has the better cash to cash operating cycle?

The acid-test ratio differs from the current ratio in that it

Given below is information for Xu Corporation and Yang Computers, Inc. at the end of 2016. 1 Using the information provided above, compute the following for each company at December 31, 2016: A. Current ratio B. Acid-test ratio 2 Comment briefly on the liquidity of each of these two companies. Which appears to be more liquid? 3 What other ratios would help you to more fully assess the liquidity of these companies?

Various organizations publish summaries of selected ratios organized by industry for a sample of U.S. companies.

In a vertical analysis of the income statement, the 100% amount is

The Starch Company experiences a 20% increase in sales over the previous year. However, gross profit actually decreased by 10% from the previous year. What are some of the possible causes for an increase in sales but a decline in gross profit?

Santana Company issued additional shares of common stock. The effect of the transaction is

Assume that the current ratio is 2:1 for the company in question. Show the effect of each of the transactions below on total assets and the current ratio by using one of the following symbols in each box to complete the table. If the numerator and denominator of a ratio both increase or both decrease by the same amount, the effect of the event on the ratio is "insufficient data."

Pinecrest Company Use the selected data from Pinecrest Company's financial statements to answer the following question. -Refer to the data for Pinecrest Company. Competitors in Pinecrest Company's industry have an average accounts receivable turnover of 10.8 times. Pinecrest reported accounts receivable at December 31, 2016 of $42,000 and has normal credit terms requiring payment within 30 days. Pinecrest's accounts receivable turnover for 2016 is:

Sunshine Farm Supply Following are selected data from the financial statements of Sunshine Farm Supply: -Refer to the data for Sunshine Farm Supply. Which of the following results would be found through a vertical analysis of the balance sheet or the income statement of Sunshine Farm Supply?

-Refer to the data for Computech Industries. Based on this information, what is Computech's inventory turnover ratio for the current period?

Sunshine Farm Supply Following are selected data from the financial statements of Sunshine Farm Supply: -Refer to the data for Sunshine Farm Supply. Which of the following would result from a horizontal analysis of its balance sheet?

The calculations for some profitability ratios are the same as the calculations for common-size analysis of the income statement. Which of the following profitability ratios would also be determined through a common-size analysis of the income statement?

Which of the following is true regarding the relationship of the current ratio to the quick ratio?

The denominator of a return ratio will be some measure of the company's income for the period.

The following selected data are taken from the financial statements of Ulysses Company: REQUIRED: 1. Compute the following ratios for Ulysses Company: a. Return on sales b. Asset turnover Assume that total assets at the beginning of the year were $1,600,000. Round final answers to 3 decimals. c. Return on assets d. Return on common stockholders' equity Assume that the only changes in stockholders' equity during the year were from the net income for the year and dividends on the preferred stock. 2. Comment on Ulysses' use of leverage. Has it successfully employed leverage? Explain.

Ware Company has a return on assets of 15% and a return on common stockholders' equity of 10%. John Ware, the president of the company, has asked you to explain the reason for this difference. What causes the difference? How is the concept of financial leverage involved?

Refer to the financial information for St. Petersburg Corporation. REQUIRED: Calculate the earnings per share for St. Petersburg for 2016 and 2015 assuming an average of 100,000 common shares were outstanding during 2016 and an average of 80,000 common shares were outstanding during 2015. Explain the change as it probably relates to the market value of the stock.

Pinecrest Company Use the selected data from Pinecrest Company's financial statements to answer the following question. -Refer to the data for Pinecrest Company. Which of the following statements is true?

Lockhart Corp.'s December 31, 2014, balance sheet reported current assets of $120,000 and current liabilities of $100,000. The current ratio increased by 25% one year later, on December 31, 2015. Current liabilities on this date were $140,000. Determine current assets on December 31, 2015.