Exam 12: Financial Statement Analysis

What makes the analysis of a service company different than analysis of a manufacturing company?

Selected data from the financial statements are presented below: -Refer to Rapid Sign Corporation. What is the total payout ratio for 2015?

Which of the following debt management ratios is the most inclusive for measuring the degree to which a company relies on outsiders for financing?

Match the term with its correct definition. a.Form 8-K d.Forms S1 and S2 b.Form 10-K e.MD&A c.Form 10-Q -Form that companies must file with the SEC to announce major events that are important to investors and creditors.

A company sold inventory on credit. Its gross profit percentage is 23%. The effect of this transaction is that the

Use the following selected financial information to answer the questions that follow.

A financial analyst is comparing two companies using a top-down approach. Which of the following would cause problems in the evaluation process?

Refer to Rhodes Bakery. Calculate the following stockholder ratios for 2015 and 2014: Earnings per Share, Return on Common Equity, Dividend Yield, Dividend Payout, Total Payout, and Stock Repurchase Payout Ratios. Round your answers to two decimal places, then comment on the company's stockholder performance.Additional information is available below: The company had no preferred stock throughout the period 2013 through 2015. At December 31, 2013, total stockholders' equity was $287,500.

Which of the following ratios is least useful in evaluating a company's ability to pay its current obligations when they come due?

The auditor's opinions regarding effectiveness of a public company's internal controls and appropriateness of its financial statements are found within the Form 10-K on

Refer to Recovery Solutions, Inc. Evaluate the company's profitability ratios for 2015 and 2014, including the gross profit percentage, operating margin percentage, net profit margin percentage, return on assets, and return on equity. Assume that total assets and total stockholders' equity at June 30, 2013 were $1,250,000 and 969,000, respectively. Also assume that the tax rate is 30% for all periods presented.

The analysis of common size financial statements may be included in a horizontal or vertical analysis.

Which of the following will decrease the quick ratio?

Would a banker be more interested in the liquidity or profitability of a company? Explain.

Which of the following ratios is most useful in indicating a company's profitability?

Match the term with its correct definition. a.Form 8-K d.Forms S1 and S2 b.Form 10-K e.MD&A c.Form 10-Q -Form that represents the company's annual report by providing a comprehensive overview of the corporation's business and financial condition, including audited financial statements.

Match these terms to their correct definition. a.Common size statements e.Ratio analysis b.Cross-sectional analysis f.Short-term liquidity ratios c.Dupont analysis g.Time series analysis d.Horizontal analysis h.Vertical analysis -express each financial statement line item in percentage terms in order to highlight differences. Typically, this conversion from dollar amounts to percentages is done with horizontal or vertical analysis.

A company that is considering selling goods or providing services to another company wants to know whether its customer will provide: competitive salary and benefits; experiences that will prepare employees to assume increased responsibility; and a secure job for the foreseeable future.

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Inventory turnover ratio

Many companies assist the users of the financial statements by providing information about the company's accounting policy choices in the first note to the financial statements.