Exam 15: Financial Statement Analysis

Which of the following is considered an unusual item affecting the prior period's income statement?

Unusual items affecting the prior period's income statement consist of errors and changes in accounting principles.

The following selected data were taken from the financial statements of the Winter Group for the three most recent years of operations: Dec. 31, Dec. 31, Dec. 31, Year 3 Year 2 Year 1 Total assets \ 3,000,000 \ 2,700,000 \ 2,400,000 Notes payable 10\% interest 1,000,000 1,000,000 1,000,000 Common stock 400,000 400,000 400,000 Preferred \ 6 stock, \ 100 par 200,000 200,000 200,000 Retained earnings 1,126,000 896,000 600,000 The Year 3 net income was $242,000 and the Year 2 net income was $308,000.No dividends on common stock were declared during the 3 years. a. Determine the rate earned on assets,the rate earned on stockholders' equity,and the rate earned on common stockholders' equity for Years 2 and 3.Round to one decimal place. b. What conclusion can be drawn from these data as to the company's profitability?

The purpose of an audit is to

-Based on the above data,what is the amount of quick assets?

The particular analytical measures chosen to analyze a company may be influenced by all of the following except

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $150,000 and interest expense is $20,000 for Year 2,what is the rate earned on stockholders' equity for Year 2?

A clean audit opinion is the same as a qualified audit opinion.

Cash and accounts receivable for Ashfall Co.are provided below: Cash \ 62,400 \ 58,000 Accounts receivable net 42,000 50,000 Based on this information,what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis?

Cash and accounts receivable for Adams Company are provided below: Cash \ 70,000 \ 50,000 Accounts receivable net 70,400 80,000 What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?

Selected data from the Carmen Company at year end are presented below: Total assets \ 2,000,000 Average total assets 2,200,000 Net income 250,000 Sales 1,300,000 Average common stockholders' equity 1,000,000 Net cash provided by operating activities 275,000 Shares of common stock outstanding 10,000 Calculate: a ratio of sales to assets; b rate earned on total assets; c rate earned on common stockholders' equity and d earnings per share on common stock.Assume the company had no preferred stock or interest expense.Round percentage values to one decimal place and dollar values to zero decimal place.

In a common-sized income statement,100% is the

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

If a company has issued only one class of stock,the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

Horizontal analysis is a technique for evaluating financial statement data

The numerator of the rate earned on total assets ratio is

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

-Based on the above data,what is the quick ratio,rounded to one decimal point?