Exam 15: Financial Statement Analysis

Deacon Corporation has provided the following financial data from its balance sheet and income statement: -The company's equity multiplier at the end of Year 2 is closest to:

Erastic Corporation has $14,000 in cash,$8,000 in marketable securities,$34,000 in account receivable,$40,000 in inventories,and $42,000 in current liabilities.The corporation's current assets consist of cash,marketable securities,accounts receivable,and inventory.The corporation's acid-test ratio is closest to:

Neef Corporation has provided the following financial data from its balance sheet and income statement: -The company's return on equity for Year 2 is closest to:

M.K.Berry is the managing director of CE Ltd.a small,family-owned company which manufactures cutlery.His company belongs to a trade association which publishes a monthly magazine.The latest issue of the magazine contains a very brief article based on the analysis of the accounting statements published by the 40 companies which manufacture this type of product.The article contains the following table: CE Ltd's latest financial statements are as follows: The country in which the company operates has no corporate income tax.No dividends were paid during the year.All sales are on account. Required: a.Calculate each of the ratios listed in the magazine article for this year for CE,and comment briefly on CE Ltd's performance in comparison to the industrial averages. b.Explain why it could be misleading to compare CE Ltd's ratios with those taken from the article.

Financial statements for Praeger Corporation appear below: Dividends during Year 2 totaled $45 thousand.The market price of a share of common stock on December 31,Year 2 was $30. Required: Compute the following for Year 2: a.Return on total assets. b.Working capital. c.Current ratio. d.Acid-test (quick)ratio. e.Accounts receivable turnover. f.Average collection period. g.Inventory turnover. h.Average sale period. i.Times interest earned ratio. j.Debt-to-equity ratio.

If a retailer sells a product whose contribution margin equals the gross margin percentage,the gross margin percentage will be unaffected by the transaction.

The formula for the return on equity is: Return on equity = Net income ÷ Average total stockholders' equity.

Macmillan Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share. -The company's working capital at the end of Year 2 is:

Macmillan Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share. -The company's current ratio at the end of Year 2 is closest to: