Exam 15: Financial Statement Analysis

For Garrison Corporation,the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year , reported as follows: Current assets: Cash, marketable securities, and receivables \ 80,000 \ 84,000 Inventories 120,000 66,000 Total current assets \ 200,000 \ 150,000 Current liabilities \ 100,000 60,000 Working capital \ 100,000 \ 90,000 Has the current position of Garrison Corporation improved? Explain.

When you are interpreting financial ratios,it is useful to compare a company's ratios to some form of standard.

A company reports the following: Determine the a accounts receivable turnover, and b number of days’ sales in receivables. Round your answer to one decimal place.

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

The denominator of the rate of return on total assets ratio is the average total assets.

Which of the following is not included in the computation of the quick ratio?

Assets Cash and short-term investments \ 30,000 Accounts receivable net 20,000 Inventory 15,000 Property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liablities \ 45,000 Long-term liabilities 70,000 Stockholders' equity \_Common Total liabilities and stockholders' equity Income Statement Sales Cost of goods sold Gross margin Operating expense: Interest expense Net income \ 85,000 45,000 \ 40,000 15,000 5,000 \ 20,000 Number of shares of common stock outstanding Market price of common stock Total dividends paid Cash provided by operations 6,000 \ 20 \ 9,000 \ 30,000 -What is the ratio of sales to total assets for Diane Company?

Short-term creditors are typically most interested in analyzing a company's

Why would you or why wouldn't you compare an organization like Ford Motor Company to the local car dealer "Johnson City Ford/Lincoln/Mercury" in vertical and horizontal analysis?

Corporate annual reports typically do not contain

If two companies have the same current ratio,their ability to pay short-term debt is the same.

A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability.The amount of working capital immediately after payment is

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

Horizontal analysis of comparative financial statements includes

A company reports the following: The company’s earnings per share on common stock is

A company reports the following: Determine the a inventory turnover,and b number of days' sales in inventory.Round your answer to one decimal place.

A common measure of liquidity is

Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.

When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio,the management of the company has effectively used leverage.