Exam 13: Analysis of Financial Statements

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________.

Refer to the following selected financial information from McCormik, LLC. Compute the company's days' sales uncollected for Year 2. (Use 365 days a year.) Year 2 Year 1 Cash \ 37,500 36,850 Short-term investments 90,000 90,000 Accounts receivable, net 85,500 86,250 Merchandise inventory 121,000 117,000 Prepaid expenses 12,100 13,500 Plant assets 388,000 392,000 Accounts payable 113,400 111.750 Net sales 711,000 706,00 Cost of goods sold 390,000 385,500

Annual cash dividends per share divided by market price per share is the:

What is the purpose of a good financial statement analysis report? What are the key components?

The market price of Horokhiv Corporation's common stock at the start of 2016 was $47.50 and it declared and paid cash dividends of $3.28 per share. The Dividend yield ratio is:

Express the following income statement information in common-size percentages and in trend percentages using 2016 as the base year.

Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The working capital is:

Refer to the following selected financial information from McCormik, LLC. Compute the company's acid-test ratio for Year 2. Year 2 Year 1 Cash \ 37,500 36,850 Short-term investments 90,000 90,000 Accounts receivable, net 85,500 86,250 Merchandise inventory 121,000 117,000 Prepaid expenses 12,100 13,500 Plant assets 388,000 392,000 Accounts payable 113,400 111.750 Net sales 711,000 706,00 Cost of goods sold 390,000 385,500

Refer to the following selected financial information from Shakley's Incorporated. Compute the company's debt-to-equity ratio for Year 2. Year 2 Year 1 Net sales \ 478,500 \ 426,250 Cost of goods sold 276,300 250,120 Interest expense 9,700 10,700 Net income before tax 67,250 52,680 Net income after tax 46,050 39,900 Total assets 317,100 288,000 Total liabilities 181,400 167,300 Total equity 135,700 120,700

The comparative income statements for Silverlight Company are shown below. Calculate the following ratios for 2018: (a) profit margin (b) gross margin (c) times interest earned. Silverlight Company Income Statements For Years Ended December 31, 2018 2017 Net sales \ 720,000 \ 607,500 Cost of goods sold 450,000 382,700 Gross profit \ 270,000 \ 224,800 Operating expense 168,500 134,900 Income from operations \ 101,500 \ 89,900 Interest expense 22,300 11,200 Income before taxes \ 79,200 \ 78,700 Income taxes 28,000 27,000 Net income \ 51,200 \ 51,700

One of several ratios that reflects solvency includes the:

A brief focus on important analysis results and conclusions is usually included in which of the following sections of a financial statement analysis report:

The ability to generate future revenues and meet long-term obligations is referred to as:

Ratios must refer to economically important relationships, such as a sale price compared to its cost.

Trend percentage is calculated by dividing ________ by ________ and multiplying the result by 100.

The building blocks of financial statement analysis include (1) liquidity, (2) solvency, (3) profitability, and (4) market prospects.

________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio. Cash \ 42,250 Short-term investments 60,000 Accounts receivable, net 79,500 Merchandise inventory 115,000 Prepaid expenses 9,700 Accounts payable 111,400

The measurement of key relationships between financial statement items is known as ________.

Use the following information from the current year financial statements of a company to calculate the ratios below: (a) Current ratio. (b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.) (c) Days' sales uncollected. (d) Inventory turnover. (Assume the prior year's inventory was $50,200.) (e) Times interest earned ratio. (f) Return on common stockholders' equity. (Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.) (g) Earnings per share (assuming the corporation has a simple capital structure, with only common stock outstanding). (h) Price earnings ratio. (Assume the company's stock is selling for $26 per share.) (i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.) Income statement data: Sales (all on credit) \ 1,075,000 Cost of goods sold 575,000 \ Gross profit on sales 500,000 Operating expenses 305,000 Operating income \ 195,000 Interest expense 20,400 Income before taxes \ Income taxes 74,000 Net income \ 174,600 Balance sheet data: 100,600 Cash \ 38,400 Accounts receivable 120,000 Inventory 56,700 Prepaid Expenses 24,000 Total current assets \ 239,100 Total plant assets 708,900 Total assets \ 948,000 Accounts payable \ 91,200 Interest payable 4,800 Long-term liabilities 204,000 Total liabilities \ 300,000 Common stock, \1 0 par 480,000 Retained earnings 168,000 Total liabilities and equity \ 948,000