Exam 16: Financial Statement Analysis

Presented below are selected data from the financial statements of eMonstore.com for 2014, 2013, and 2012. 2014 2013 2012 Total assets \ 650,000 \ 821,000 \ 800,000 Net credit sales \ 800,000 \ 650,000 \ 720,000 Accounts receivable \ 85,000 \ 79,000 \ 74,000

A liquidity ratio measures the

Presented below are selected data from the financial statements of Russell Corp. for 2014 and 2013. 2014 2013 Net income \ 100,000 \ 123,000 Cash dividends paid on preferred stock \ 12,000 \ 15,000 Cash dividends paid on common stock \ 42,000 \ 38,000 Weighted average number of common shares outstanding \ 105,000 \ 95,000 Earnings per share is reported on the 2014 income statement as

Boyle Corporation had the following comparative current assets and current liabilities: Dec. 31,2014 Dec. 31,2013 Current assets Cash \ 20,000 \ 30,000 Short-term investments 40,000 10,000 Accounts receivable 55,000 95,000 Inventory 110,000 90,000 Prepaid expenses 35,000 20,000 Total current assets \2 60,000 \2 45,000 Current liabilities Accounts payable \ 140,000 \ 110,000 Salaries payable 40,000 30,000 Income tax payable 20,000 15,000 Total current liabilities \2 00,000 \1 55,000 During 2014, credit sales and cost of goods sold were $600,000 and $350,000, respectively. Required: Compute the following liquidity measures for 2014:

Figure 16-3.The current asset section of the balance sheets of the Shamrock Company as of June 30, 2014 and 2013 is presented below. 2014 2013 Cash and cash equivalents \& \ 75,000 58,800 Trade accounts receivable, net 157,500 193,200 Inventory 208,200 253,400 Other current assets 18,400 15,500 Total current assets \4 59,100 \5 20,900 Total assets \2 ,650,000 \3 ,430,000 -Refer to Figure 16-3. In the spaces provided below, complete a horizontal analysis of the current asset section of Shamrock Company's balance sheet for 2013. Your answers for "% Change" should be rounded to one decimal place,e.g., 10.3%. Provide a short evaluation of this analysis. \ Change \% Change

The following information pertains to Barkley Company.: Merchandise purchased \ 1,800,000 Cost of goods sold \ 2,000,000 Inventory at the end of the year \ 400,000 The inventory turnover ratio for the year was

The dividend payout ratio is equal to common dividends divided by (Net Income - Preferred Dividends).

Which of the following is considered a liquidity analysis ratio?

Figure 16-2.Financial statements for Grange Company appear below: Dividends during 2014 totaled $127,000, of which $5,000 were preferred dividends.The market price of a share of common stock on December 31, 2014, was $100. -Smith Inc. is a wholesaler of snow skiing gear. During 2014, Smith expanded its retail business by adding over 50 shops. The following information is obtained from the comparative financial statements included in the company's 2014 annual report. Dec. 31,2014 Dec. 31,2013 Total liabilities \ 26,000,000 \ 18,000,000 Total stockholders' equity 34,000,000 38,000,000 FOR THE FISCAL YEARS ENDED Dec. 31 2014 2013 Depreciation expense \ 2,000,000 \ 6,000,000 Interest expense 3,400,000 3,200,000 Income tax expense 12,600,000 18,100,000 Net income 6,000,000 15,000,000 Net cash provided by operations 41,000,000 (400,000) Total dividends paid 2,000,000 12,000,000 Cash used to purchase plant assets 32,000,000 18,000,000 Payments on long-term debt 1,600,000 1,800,000

____________ are fractions or percentages computed by dividing one account or line-item amount by another.

Presented below are selected data from the financial statements of Harper Company for 2014, 2013, and 2012. 2014 2013 2012 Total assets \ 1,205,000 \ 952,000 \ 945,000 Cost of goods sold 360,000 420,000 440,000 Inventory 56,000 64,000 53,000 Net income 65,000 25,000 16,000

The ratios that allow investors, creditors, and managers to evaluate the extent to which invested funds are being used efficiently are called ____________.

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

Chaney Inc. wants to measure the relationship between profitability and the investment made by stockholders. Chaney should use

The ________________ is calculated by dividing total liabilities by total stockholders' equity.

Arnold Company had $650,000 in sales on account last year. The beginning accounts receivable balance was $24,000 and the ending accounts receivable balance was $36,000. The company's accounts receivable turnover ratio was closest to

Which one of the following would not be considered a liquidity ratio?

The average stockholders' equity for Holloway Co. last year was $2,000,000. Included in this figure was $200,000 par value of 8% preferred stock. If the return on common stockholders' equity was 12.5% for the year, net income was

____________________ represents the percentage of each sales dollar that is left over from net income after all expenses have been subtracted.

The quick ratio should be larger than the current ratio.