Exam 13: Financial Statement Analysis

As of December 31,Year 1,Gant Corporation had a current ratio of 1.29,quick ratio of 1.05,and working capital of $18,000.The company uses a perpetual inventory system and sells merchandise for more than it cost.On January 1,Year 2,Gant issued common stock at par value for $10,000 cash.Which of the following statement is correct?

The following balance sheet information was provided by O'Connor Company: Assets Cash Accounts receivable Inventory 2014 \ 4,000 15,000 \ 35,000 2013 \ 2,000 12,000 \ 38,000 Assuming that net credit sales for Year 2 totaled $270,000,what is the company's most recent accounts receivable turnover?

Jenkins Company's current ratio is higher than the average for its industry,while its quick ratio is below the industry average.One possible interpretation for these results is that Jenkins carries less inventory than most companies in its industry.

A limitation of financial statement analysis stems from the discretion of management to choose accounting procedures that cast the best light on the firm's performance.

A company has an obligation to provide highly detailed information on its financial statements.

The Miller Company reported gross sales of $850,000,sales returns and allowances of $15,000 and sales discounts of $5,000.The company has average total assets of $500,000,of which $250,000 is property,plant,and equipment.What is the company's asset turnover ratio?

Indicate whether each of the following statements about financial statement analysis is

The following balance sheet information is provided for Apex Company for Year 2: Cash quad5,400 Accounts receivable 15,500 Inventory 18,000 Prepaid expenses 1,600 Pant and equipment, net of depreciation 20,200 Land Total assets Liabilities and Stockholders' Equity Accounts payable \ 4,500 Salaries payable 11,500 Bonds payable (Due in 2020) 19,000 Common stock, no par 30,000 Retained earnings Total liabilities and stockholder' equity What is the company's working capital?

For Year 2,Weston Corporation reported after-tax net income of $1,200,000.During the year,the number of outstanding shares of 6% $100 par preferred stock remained constant at 5,000,and 500,000 shares of common stock were outstanding all year.The company's total stockholders' equity at December 31,Year 2,was $12,500,000.Weston's common stock was selling at $38 per share at the end of the year.All dividends for the year were paid,including a dividend of $2.50 per share to common stockholders. Required: Compute the following: (a)Earnings per share (Round your answer to the nearest cent. ) (b)Book value per share of common stock (c)Price-earnings ratio (Round your answer to one decimal place. ) (d)Dividend yield (Round your answer to one decimal place. )

What is a primary drawback with examining and comparing absolute amounts from two businesses' financial statements?

Indicate whether each of the following statements about financial statement analysis is

Which of the following is not included in the computation of the quick ratio?

Maynard Company's balance sheet and income statement are provided below: Maynard Company Balance Sheet As of December 31 , Assets Cash 83,500 \ 92,000 Accounts receivable 94,000 90,000 Inventory 62,500 60,000 Plant and equipment, net 500,000 525,000 Land Total assets Liabilities and Stockholders' Equity Accounts payable \ 73,000 \ 62,000 Notes payable 115,000 160,000 Capital stock, no par 440,000 400,000 Retained earnings Total liabilities and stockholders' equity

A careless accountant splattered spaghetti sauce on Kitchen Company's balance sheet.The balance sheet with its missing amounts is provided below: Assets Current Assets: Cash \ 32,200 Accounts receivable (A) Inventory 85,100 Prepaid expenses Total current assets (B) Long Term Assets: Building (C) Less: Accumulated depreciation 59,800 Total Long-term assets Total assets (D) Eonities Liabilities Current liabilities: Accounts payable \ 16,100 Notes payable () Income tax payable Total current liabilities \ 57,500 Mortgage payable Total Liabilities () Stockholders' Equity: Common Stock 161,000 Retained Earnings Total Stockholders' Equity Total Liabilities + Equity Kitchen Company's working capital is $138,000. Required: Compute the missing amounts.Record your answers in the following table: A. B. C. D. E. F. G. H. I.

Benson Company received cash of $5,000,000 by issuing 20-year bonds payable.As a result of the this transaction,the company's current ratio will:

The following balance sheet information is provided for Santana Company for Year 2: Assets Cash \ 5,400 Accounts receivable 15,500 Inventory 18,000 Prepaid expenses 1,600 Plant and equipment, net of depreciation 20,200 Land Total assets Liabilities and Stockholders' Equity Accounts payable \ 4,500 Salaries payable 11,500 Bonds payable (Due in 2020) 19,000 Common stock, no par 30,000 Retained earnings Total liabilities and stockholder' equity What is the company's debt to equity ratio (rounded to nearest whole percent)?

Common methods of financial statement analysis include all of the following except:

The Phibbs Company paid total cash dividends of $200,000 on 25,000 outstanding common shares.On the most recent trading day,the common shares sold at $80.What is this company's dividend yield?

Solvency ratios are used to assess a company's:

The Poole Company reported the following income for Year 2: Sales \ 30,000 Cost of goods sold Gross margin \ 22,000 Selling and administrative expense Operating income \ 12,000 Interest expense Income before taxes \ 8,000 Income tax expense Net income What is the company's net margin (rounded to the nearest whole percent)?