Exam 3: Financial Statements and Ratio Analysis

The McCain-Feingold Act of 2002 was passed to eliminate many of the disclosure and conflict-of-interest problems of corporations.

Retained earnings represent the cumulative total of all earnings, net of dividends, that have been retained and reinvested in the firm since its inception.

GAAP is the accounting profession's rule-setting body.

Average payment period can be calculated as accounts payable divided by average purchases per day.

The liquidity of a firm is measured by its ability to satisfy its short-term obligations as they come due.

The stockholders' annual report must include ________.

Average age of inventory is viewed as the average length of time inventory is held by a firm or as the average number of days' sales in inventory.

Candy Corporation had pretax profits of $1.2 million, an average tax rate of 34 percent, and it paid preferred stock dividends of $50,000. There were 100,000 shares outstanding and no interest expense. What was Candy Corporation's earnings per share?

Benchmarking is a type of cross-sectional analysis in which a firm's ratios are compared to a key competitor firm within the same industry, primarily to identify areas for improvement.

If an inventory turnover is divided into 365, it becomes a measure of ________.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -The current ratio for Dana Dairy Products in 2013 was ________. (See Table 3.2)

Operating profit is known as ________.

Which of the following is a fixed asset?

Table 3.1 Information (2013 values) 1. Sales totaled $110,000 2. The gross profit margin was 25 percent. 3. Inventory turnover was 3.0. 4. There are 360 days in the year. 5. The average collection period was 65 days. 6. The current ratio was 2.40. 7. The total asset turnover was 1.13. 8. The debt ratio was 53.8 percent. -Notes payable for CEE in 2013 was ________. (See Table 3.1)

The price/earnings (P/E) ratio represents the degree of confidence that investors have in a firm's future performance.

The ________ ratio indicates the efficiency with which a firm uses its assets to generate sales.

Table 3.1 Information (2013 values) 1. Sales totaled $110,000 2. The gross profit margin was 25 percent. 3. Inventory turnover was 3.0. 4. There are 360 days in the year. 5. The average collection period was 65 days. 6. The current ratio was 2.40. 7. The total asset turnover was 1.13. 8. The debt ratio was 53.8 percent. -Accounts receivable for CEE in 2013 was ________. (See Table 3.1)

Other things being equal, a decrease in total asset turnover will result in ________ in the return on total assets.

Key Financial Data Income Statement, Dreamscape, Inc. For the Year Ended December 31, 2013 Prepare a common-size income statement for Dreamscape, Inc. for the year ended December 31, 2013. Evaluate the company's performance against industry average ratios and against last year's results.

The original price per share received by the firm on a single issue of common stock is equal to the sum of the common stock and paid-in capital in excess of par accounts divided by the number of shares outstanding.