Exam 17: Financial Statement Analysis

The current ratio is calculated as the total current assets divided by the total current liabilities.

Income from continuing operations helps investors to make predictions about past performance of the company.

The audit report is prepared by an internal auditor of a company.

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

Donald Corp. reported the following on its comparative income statement: Prepare a horizontal analysis of revenues and cost of goods sold, both in dollar amounts and in percentages, for 2016 and 2017. Round your percentage answers to two decimal places.

Baskins Corporation's accounting records include the following items, listed in no particular order, for the year ending December 31, 2015: The income tax rate for the company is 45%. The company had 15,000 shares of common stock outstanding during 2015 and no preferred stock. Prepare Baskins' income statement for the year ending December 31, 2015. Show how Baskins reports EPS data on its 2015 income statement.

"Analysts look for red flags in financial statements that may signal financial trouble." Which of the following is a "red flag" suggesting that a company may be in trouble?

The debt to equity ratio shows the proportion of total liabilities relative to total equity.

The balance sheet of Atlantis Inc. is below: Calculate the current ratio for each year.

Benchmarking is the comparison of a company's current year results with an earlier year's performance.

A corporation has 2,000 shares, 10% preferred stock of $50 par, and 6,000 shares of common stock outstanding. The net income for the year is $250,000. Calculate earnings per share.

In a vertical analysis of the income statement, each line item is shown as a percentage of net sales.

Donald Corp. reported the following revenues and net income amounts. Calculate Donald's trend analysis for revenues and cost of goods sold. Use 2013 as the base year, and round to the nearest percent.

Nobell Inc. provides the following data: Calculate accounts receivable turnover ratio for the year 2015.

The ratio of the market price of a share of stock to the dividends paid per share is called the earnings per share.

The price/earnings ratio shows the market price of $1 of earnings.

The asset turnover rate is a way to evaluate how well a company can pay its short-term liabilities.

Prepare a comparative common-size income statement for Nobell Inc. using the 2015 and 2014 data. Round off the percentages to one decimal place.

Prepare the vertical analysis report of the balance sheet data given below: Round off the percentages to two decimal places

Olivera Inc. provides the following data for the year 2015: On vertical analysis report, gross profit as a percentage of net sales will be: