Exam 13: Financial Statement Analysis

Scrubber, Inc. presented the following information in a note to its financial statements for the year ending December 31, 2016: The company has a loan agreement with Mountain State Bank that states: 1) The current ratio should remain at least 2.0 to 1 at all times. 2) The debt-to-equity ratio should not exceed .7 to 1 at any time. 3) The company must maintain $75,000 cash at all times. The ratios at year-end are: current ratio, 2.3 to 1 and debt-to-equity ratio, .2 to 1. The amount of cash on the bank statement is $75,400, but the cash account after the adjustments from the bank reconciliation has a balance of $74,900. Has Scrubber violated its loan agreement?

-Which of the following is a measure of the time that it takes to convert current assets into cash?

Three measures of liquidity are: working capital, the acid-test ratio, and the debt-to-equity 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. -Return on assets ratio

Which of the following solvency ratios is the best measure to determine the degree to which a company relies on outsiders for funds?

Refer to the data for Knife Corp. REQUIRED: A Calculate the dividend yield ratio for 2016 for Knife. Explain. B What factors could have caused the change in the market value of Knife's stock from 2015 to 2016? Explain.

Indicate the type of each ratio listed below. -Return on assets ratio

What are two reasons for why a company's accounts receivable turnover may decrease?

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. -Profit margin ratio

___________________ statements recast all items on the statement as a percentage of a selected item on the statement.

Pinecrest Company Use the selected data from Pinecrest Company's financial statements to answer the following question. -Refer to the data for Pinecrest Company. The current ratio for 2016 is

The following information was obtained from the 2016 and 2015 financial statements Better Books and Tenacious Texts. Assume all sales are on credit for both companies. REQUIRED: 1. Using the information provided, compute the following for each company for 2016rounded to two decimals: a. Accounts receivable turnover ratio b. Number of days' sales in receivables c. Inventory turnover ratio d. Number of days' sales in inventory e. Cash-to-cash operating cycle 2. Comment briefly on the liquidity of each of these two companies.

To review the current market price of the stock, one should review the

Refer to the data for Knife Corp. EQUIRED: A Calculate earnings per share for 2016 for Knife. Why is this considered one of the most quoted ratios for public companies? Which investors, common or preferred or both, desire this information? B Calculate the price/earnings ratio for 2016 for Knife. Why is this ratio important to investors? Explain.

Trend analysis is analysis

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 income statement?

Select the ratio that each statement below most properly satisfies. -The relationship between net sales and total assets

Discuss the common reporting characteristics of discontinued operations and extraordinary items in the financial statements.

Carlton, Inc. presented the following information in a note to its financial statements for the year ending December 31, 2016: The company has a loan agreement with Beachside Bank that states: 1) The current ratio should remain at least 2.0 to 1 at all times. 2) The debt-to-equity ratio should not exceed .7 to 1 at any time. 3) The times-interest-earned should be 5.0 or better. 4) The inventory-turnover should be 4.0 or better. The ratios at year-end are: current ratio, 2.3 to 1; debt-to-equity ratio, .6 to 1; times-interest-earned, 7.1; and inventory-turnover, 3.7. Which of the following statements is true?

If Crab Shack Company has a current ratio of 2.5 and current assets of $195,000, the amount of working capital is: