Exam 17: Financial Statement Analysis

Management's discussion and analysis section of the annual report is the company's attempt to explain its financial statements and to discuss its performance.

Atlantis Inc. reported the following data: The horizontal report shows that the amount of total liabilities has:

The times-interest-earned ratio measures the number of times that operating income can pay interest expense.

The net income of a company for the year ended was $500,000. The company has no preferred stock. Common stockholders' equity was $1,000,000 at the beginning of the year and $2,000,000 at the end of the year. Calculate the return on common stockholders' equity.

Working capital measures the ability to meet long-term obligations with current assets.

Peartree Inc. provides the following data: Additional information: Calculate the return on total assets for the year 2015.

If an analyst wants to see how gross profit of a company has changed from one year to the next, vertical analysis would be used.

Peartree Inc. provides the following income statement for the year 2015: Calculate the times-interest-earned ratio.

A corporation's income statement includes some unique items that do not often apply to smaller businesses.

Data for Atlantis Inc. is given below: Prepare a horizontal analysis of the comparative balance sheet of Atlantis Inc. Round percentage changes to one decimal place.

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

Shelcal Inc. provides the following data for the year 2015: On vertical analysis report, cost of goods sold as a percentage of net sales will amount to:

Which of the following is the base amount when performing vertical analysis of an income statement?

Data for Nobell Inc. follow: Prepare a horizontal analysis of the comparative income statement of Nobell Inc. Round percentage changes to one decimal place. Please use a multiple step income statement.

The merchandise inventory turnover ratio measures how profitably a company sells its average level of merchandise inventory during a year.

The current ratio is a key indicator of a company's ability to pay current liabilities.

The study of percentage changes in comparative financial statements is called horizontal analysis.

Benchmarking is the practice of comparing a company with other leading companies.

The following is summary of information presented on the financial statements of a company on December 31, 2015. What would a horizontal analysis report show with respect to net sales revenue?

Acid-test ratio helps to measure a company's ability to pay all its current liabilities if they came due immediately.