Exam 14: Financial Statement Analysis

The acid test ratio is a tighter measure of a company's ability to pay current liabilities than the current ratio.

All of the following measure a company's profitability except

Which of the following is the formula to compute times-interest-earned?

Benchmarking is a valid analysis measure of performance.

The Hummel Corporation reported the following income statement and balance sheet amounts and additional information for the end of the current year. Inventory and prepaid expenses account for $28,000 of the current year's current assets. Average inventory for the current year is $12,000. Average net accounts receivable for the current year is $32,000. There are 30,000 shares of common stock outstanding. Total dividends paid during the current year were $60,000. The market price per share of common stock is $35. What is the company's book value per share of common stock on the last day of the current year?

Trend analysis is the same thing as a vertical analysis.

The Ranger Corporation data for the current year and prior year is as follows: What would a horizontal analysis report with respect to current liabilities show?

In a horizontal analysis, the earlier period is the base period.

An example of ________ would include an analysis of a table that includes a balance sheet with dollars and percentages of each item for a company and for the industry.

The managerial accountant at Megaton Company reported no preferred dividends paid in 2013 and 2014; and, there were 20,000 shares of outstanding stock at the end of 2013 and 2014. The managerial accountant reported that net income in 2014 was $95,000 and the value of common stock at the end of the year was $28.85 per share. The managerial accountant reported that net income in 2013 was $65,000 and the value of common stock at the end of the year was $12.95 per share. Compute the earnings per share (EPS)at Megaton Company in 2013 and in 2014. Did the EPS increase or decrease in 2014? Should a managerial accountant strive to achieve an increase in EPS or a decrease in EPS? What can a decrease in EPS indicate?

In performing a vertical analysis of an income statement, which of the following is generally used as the base amount?

Which type of analysis includes the computation of the percentage change in total assets between two balance sheet dates?

Horizontal analysis allows the comparison of companies with different amounts of net sales and net assets.

Which of the following is the formula for computing the price-earnings ratio?

The Bristol Corporation data for the current year and prior year is as follows: With respect to current liabilities, what would a horizontal analysis report?

Common-size statements allow the comparison of companies with different amounts of net sales and net assets.

Presented are the income statements of Big Toy Factory and Small Toy Factory for the current year: Which company has the better relationship between net income and net sales revenue?

Use the following information to do a horizontal analysis of Boyce Corporation's income statement for the current year and prior year:

A common size statement reports only percentages.

Vertical analysis is the analysis of a financial statement that reveals the relationship of each statement item to a specified base.