Exam 14: Analyzing Financial Statements

Agnes Company reported the following data: Quick assets \ 55,000 Current assets 150,000 Total liabilities 300,000 Average net receivables 12,600 Beginning inventory 38,000 Long-term liabilities 200,000 Net credit sales 126,000 Cost of goods sold 84,000 Ending inventory 46,000 What was the average days' supply in inventory?

The records of Marshall Company include the following: Average total assets \ 3,500,000 Average total liabilities 1,220,000 Total revenue 4,580,000 Total expense (including income tax) 4,100,000 Interest expense (included in total expenses) 90,000 Income tax rate 40\% The return on assets is (round to the nearest tenth of a percent)

MNF Corporation gathered the following data at the end of the accounting period,December 31,2009: Net income \ 60,000 Net sales revenue 1,200,000 Interest expense 25,000 Total liabilities 200,000 Average stockholders' equity (50,000 shares 300,000 outstanding) Dividends declared and paid during 2009 22,500 Market price per share of stock at year end 9 Average income tax rate 40\% Requirements Part 1: Calculate each of the following ratios: A.Profit margin B.Return on equity C.Earnings per share D.Dividend yield ratio E.Price/earnings ratio F.Return on assets G.Financial leverage percentage Part 2: Interpret the financial leverage percentage.

The inventory turnover ratio is significantly affected by the choice of inventory accounting method.

The fixed asset turnover ratio increases when net income increases.

The debt to equity ratio is a risk measure used by both investors and lenders.

Longhorn Company reported the following data at year-end: Total stockholders' equity \ 200,000 Current liabilities 75,000 Total assets 350,000 Current assets 80,000 Common stock (par \ 10) 125,000 Calculate each of the following ratios: A.Debt to equity B.Current ratio

Which of the following ratios is not considered to be a test of profitability?

Which of the following transactions decreases the quality of income ratio?

A primary objective of financial statements is to provide information to current and potential investors and creditors.

Lucas Company has provided the following information: Cash flow from operating activities,$360,000; Net income,$306,000; Interest expense,$30,000; Interest cash payments,$20,000; Income tax payments,$240,000; Income tax expense,$246,000. What was Lucas' cash coverage ratio?

The cash payment of a previously declared dividend increases which of the following ratios?

Which of the following is false?

Earnings per share (EPS)is affected by treasury stock transactions.

Purchasing treasury stock increases the return on equity ratio.

A higher current ratio is preferable for companies with variable cash flows.

Which of the following statements is incorrect?

Polk Corporation reported the following information related to its common stock (par $10)outstanding and net income: Total stockholders' equity (no preferred stock) \ 125,000 Current market price per share of common stock 40 Dividends declared and paid during 2011 10,000 Balance in the common stock account 40,000 Net income 35,000 Calculate each of the following ratios: A.Price/earnings ratio B.Dividend yield

Time series analysis is where we compare information for a specific company over a period of time to determine changes in operations.

Agnes Company reported the following data: Quick assets \ 55,000 Current assets 150,000 Total liabilities 300,000 Average net receivables 12,600 Beginning inventory 38,000 Long-term liabilities 200,000 Net credit sales 126,000 Cost of goods sold 84,000 Ending inventory 46,000 What was the inventory turnover ratio?