Exam 15: Financial Statement Analysis

Comparative information taken from the Friction Company's financial statements is shown below: a Notes receivable b Accounts receivable c Retained earnings d Sales e Operating expenses f Income taxes payable Year 2 Year 1 \ 10,000 \0 106,200 90,000 30,000 40,00 654,000 600,000 160,000 200,000 28,000 20,000 Using horizontal analysis,show the percentage change and direction increase or decrease from Year 1 to Year 2 with Year 1 as the base year.

The numerator of the rate earned on common stockholders' equity ratio is

In a company's annual report,the section called management discussion and analysis provides critical information in interpreting the financial statements and assessing the future of the company.

A company reports the following: Determine the ratio of sales to assets.Round your answer to one decimal place.

An advantage of the current ratio is that it considers the makeup of the current assets.

Current position analysis measures a company's ability to pay its current liabilities.

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

Assume the following sales data for a company: Current year \3 25,000 Preceding year 250,000 What is the percentage increase in sales from the preceding year to the current year?

If a firm has a current ratio of 2,the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

The following data are available for Martin Solutions,Inc. Year 2 Year 1 Sales \ 1,139,600 \ 1,192,320 Beginning inventory 80,000 64,000 Cost of goods sold 500,800 606,000 Ending inventory 72,000 80,000 1- Determine for each year: a. The inventory turnover b. The number of days’ sales in inventory Round intermediate calculation to the nearest whole number and your final answer to one decimal place. 2- What conclusions can be drawn from these data concerning the inventories?

Accounts payable \ 30,000 Accounts receivable 35,000 Accrued liabilities 7,000 Cash 25,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Marketable securities 75,000 Notes payable short-term 36,000 Property, plant, and equipment 20,000 Prepaid expenses 400,000 2,000 -Based on the above data,what is the quick ratio,rounded to one decimal point?

Zeus Company reports the following for the current year: Income from continuing operations before income tax \ 500,000 Extraordinary property loss from hurricane \ 60,00 Loss from discontinued operations \ 90,00 Weighted average number of common shares outstanding 40,000 Applicable tax rate 40\% *Net of any tax effect a Prepare a partial income statement for Zeus Company beginning with income from continuing operations before income tax. b Calculate the earnings per common share for Zeus,including per-share amount for unusual items.

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

Based on the following data for the current year,what is the number of days' sales in inventory?

The following data are taken from the balance sheet at the end of the current year. Cash \ 154,000 Accounts receivable 210,000 Inventory 240,000 Prepaid expenses 15,000 Temporary investments 350,000 Property, plant, and equipment 375,000 Accounts payable 245,000 Accrued liablities 4,000 Income tax payable 10,000 Notes payable, short-term 85,000 Determine the a working capital,b current ratio,and c quick ratio.Round ratios to the nearest tenth.

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is

The excess of current assets over current liabilities is referred to as working capital.

The relationship of $325,000 to $125,000,expressed as a ratio,is

Define solvency and profitability.How are they alike?

All of the following are typically included in the management's discussion and analysis in annual reports except