Exam 16: Financial Statement Analysis

The following data have been taken from your company's financial records for the current year: Earnings per share \4 .50 Market price per share \4 6.00 Dividend per share \3 .00 Book value per share \3 1.00 The price-earnings ratio is

The _________________ uses the income statement to assess a company's ability to service its debt.

Mike's Sportswear Company, a retailer, had cost of goods sold of $420,000 last year. The beginning inventory balance was $31,000 and the ending inventory balance was $28,000. The company's average inventory turnover in days was closest to

Jackson Company, a retailer, had cost of goods sold of $140,000 last year. The beginning inventory balance was $8,000 and the ending inventory balance was $11,000. The company's inventory turnover ratio was closest to

The _________________ is a measure of liquidity that compares only the most liquid assets with current liabilities.

Horizontal analysis is also known as

In horizontal analysis, each item is expressed as a percentage of the

_________________ measure the ability of a company to meet its current obligations.

Figure 16-6 London Company provided the following income statements for its first 3 years of operation: -Refer to Figure 16-6. Prepare a horizontal analysis using Year 1 as the base year. Explain if the results are favorable or unfavorable.

What do profitability ratios measure and what is their significance?

Select the ratio that each statement below most properly satisfies. -The relationship between dividends and the market price of a company's stock

Companies in the same industry may use different accounting methods, diminishing the usefulness of some industrial averages.

In vertical analysis of the income statement, cost of goods sold is represented by 100%.

In horizontal analysis, the base year can be the immediately preceding period, or it can be a period further in the past.

Vertical analysis is a technique that expresses each item in a financial statement

If the accounts receivable turnover is 42 days, what is the account receivable turnover ratio (assuming a 365 day year)?

Opis Company has total assets of $475,000 and total liabilities of $130,000. The company's debt-to-equity ratio is closest to

Select the ratio that each statement below most properly satisfies. -A measure viewed by many investors as an important indicator of stock values. It is found by dividing the market price per share by the earnings per share

Labor markets can impact industrial statistics and standards.

The current ratio is a measure of the ability of a company to pay its short-term liabilities out of short-term assets.