Exam 15: Financial Statement Analysis

Which of the following is the definition of benchmarking?

The following data on Alpha Products, Inc. is available. Alpha Products, Inc Comparative Balance Sheet December 31, 2013 and December 31, 2014 2014 2013 Assets: Cash \ 45,100 \ 48,500 Accounts receivable, net 59,800 101,500 Merchandise inventory 150,900 171,600 Property, plant and equipment, net 710,500 808,800 Total assets \ 966,300 \ 1,130,400 Liabilities and stockholders' equity Accounts payable \ 108,200 \ 151,600 Notes payable (current) 70,000 70,00 Bonds payable 154,000 280,000 Common stock, \ 10 par 420,000 420,000 Retained earnings 214,100 208,800 Total liabilities and stockholders' equity \ 966,300 \ 1,130,400 What was the percent increase or decrease in net property, plant and equipment from 2013 to 2014?

The dividend payout ratio indicates the amount of the dividend as a proportion of a share's market price.

Zebra, Inc. has Cost of goods sold for the year of $1,900,000. The average inventory for the year is $129,000. The inventory turnover for the year is:

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

What kind of information does the rate of return on common stockholders' equity provide?

Olivera Company provides the following data for the year 2013: Sales revenue \ 400,000 Sales returns and allowances \ 1,200 Sales discounts \ 800 Cost of goods sold \ 255,000 On a vertical analysis, what percentage would be shown for gross profit?

Which of the following items is a measure of a company's ability to collect receivables?

Partridge Company provides the following information for the year 2014: Net income: \ 31,200 Market price of common stock: \ 12.00/ share Dividends paid: \ 0.80/ share Common stock outstanding at January 1,2014: 110,000 shares Common stock outstanding at December 31,2014: 150,000 shares (No preferred stock issued) - How much was the dividend payout for one share of common stock?

The rate of return on common stockholders' equity is used for which kind of evaluation?

The dividend yield is used for which kind of evaluation?

The Arlington Company prepared a common-size income statement to compare its results with its key competitor, Bardo Company. Please refer to the following data: Arlington Co. Bardo Co. Revenues 100.0\% 100.0\% Cost of goods sold 42.1\% 47.8\% Gross Profit 57.9\% 52.2\% Operating expenses: Sales and marketing expense 26.3\% 8.6\% General and administrative expense 12.0\% 10.8\% Research and development expense 4.1\% 10.2\% Total operating expenses 42.4\% 29.6\% Income before income tax 15.5\% 22.6\% Income tax expense 3.3\% 5.8\% Net income(loss) 12.3\% 16.8\% - Based on this data, an analyst could conclude that Arlington's total gross profit is higher than Bardo's.

Perform a horizontal analysis of the following company's income statement. Include both the amount and the percentage of change for each account. Account Change Amount Change Percent Net sales revenue \ 557,000 \ 500,000 Cost of goods sold 400,000 395,000 Gross profit 157,000 105,000 Selling and general expenses 70,000 50,000 Net income before income tax 87,000 55,000 Income tax expense 24,000 16,500 Net income \ 63,000 \ 38,500

The following is a summary of information presented on the financial statements of The Cake Company on December 31, 2014. Account 2014 2013 Current assets \ 65,000 \ 50,000 Accounts receivable 80,000 75,000 Merchandise inventory 50,000 40,000 Current liabilities 75,000 50,000 Long-term liabilities 30,000 50,000 Common stock 50,000 40,000 Retained earnings 40,000 25,000 Net sales revenue \ 525,000 \ 500,000 Cost of goods sold 400,000 395,000 Gross profit \ 125,000 \ 105,000 Selling and general expenses 45,000 50,000 Net income before income tax expense \ 80,000 \ 55,000 Income tax expense \ 24,000 16,500 Net income \ 56,000 \ 38,500 - What would horizontal analysis report with respect to net income before income tax expense and net income?

Olivera Company provides the following data for the year 2013: Net sales revenue \ 398,000 Cost of goods sold \ 255,000 Operating expenses \ 95,000 Income tax expense \ 9,000 - On a vertical analysis, what percentage would be shown for operating expenses?

Merchandise inventory is NOT counted when computing the acid-test ratio.

Which of the following factors might suggest that a company is having difficulty selling its inventory?

Investors and creditors generally evaluate a company by using one year's data.

La Paz Company reported the following data: $\begin{array}{|l|r|r|r|r|}\hline&&&\text {Amount of}\\&&&\text {Increase}\\ \text { (Dollar cmounts in millions) } & 2014 & 2013 & \text { (Decrease) } & \text { Percentage } \\\hline \text { Revenues } & \$ 6,35 & \$ 4,92 & \$ 1,435 & 29.2 \% \\\hline \text { Cost of revenues } & 3,370 & 2,20 & 1,170 & 53.2 \% \\\hline \text { Gross profit } & 2,98 & 2,72 & 265 & 9.7 \% \\\hline \text { Operating expenses: } & & & & \\\hline \text { Sales and marketing expense } & 675 & 580 & 95 & 16.4 \% \\\hline \text { General and administrative expense } & 410 & 429 & (15) & -3.5 \% \\\hline \text { Research and development expense } & 470 & 390 & 80 & 20.5 \% \\\hline \text { Other expense } & 400 & 695 & (295) & -42.4 \% \\\hline \text { Total operating expenses } & \$ 1,95 & \$ 2,090 & \$(135) & -6.5 \% \\\hline\\\hline \text { Income before income tax } & \$ 1,030 & \$ 630 & \$ 400 & 63.5 \% \\\hline \text { Income tax expense } & 230 & 210 & 20 & 9.5 \% \\\hline \text { Net income(loss) } & \$ 800 & \$ 420 & \$ 380 & 90.5 \% \\\hline \end{array}$ Which of the following statements is an accurate conclusion about the 2014 results, based on the above data?

Peartree Company provides the following data: BALANCE SHEET Dec 31,2014 Dec 31,2013 Cash \ 21,000 \ 18,000 Accounts receivable, net 31,000 35,000 Inventory 53,000 25,000 PP\&E, net 120,000 90,000 Total assets \ 225,000 \ 168,000 Additional information: • Net sales (all on account): $240,000 • Cost of goods sold: $110,000 - How much is the days in inventory ratio for 2014?