Exam 15: Financial Statement Analysis

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

Which of the following is the most useful in analyzing companies of different sizes?

Abigail Company reports the following: Net income \ 295,000 Preferred dividends 30,000 Average stockholders' equity 1,000,000 Average common stockholders' equity 700,000 Determine the a rate earned on stockholders' equity,and b rate earned on common stockholders' equity.Round your answer to one decimal place.

The following items are reported on a company's balance sheet: Cash \ 230,000 Marketable securities 50,000 Accounts receivable 200,000 Inventory 240,000 Accounts payable 300,000 Determine the a current ratio,and b quick ratio.Round your answer to one decimal place.

Ratios and various other analytical measures are not a substitute for sound judgment,nor do they provide definitive guides for action.

On a common-sized income statement,all items are stated as a percent of total assets or equities at year-end.

Which of the following items should be classified as an extraordinary item on an income statement?

Leverage implies that a company

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 amount of working capital?

Which of the following items appear on the corporate income statement before income from continuing operations?

The percent of fixed assets to total assets is an example of

A company reports the following: Net income \ 350,000 Preferred dividends 50,000 Average stockholders' equity 1,000,000 Average common stockholders' equity 800,000 Determine the a rate earned on stockholders' equity,and b rate earned on common stockholders' equity . Round to one decimal place.

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $250,000 and interest expense is $30,000 for Year 2,what are the earnings per share on common stock for Year 2?

The following information is available for Jase Company: Market price per share of common stock \2 5.00 Earnings per share on common stock \1 .25 Which of the following statements is correct?

In computing the rate earned on total assets,interest expense is subtracted from net income before dividing by average total assets.

A balance sheet shows cash,$75,000; marketable securities,$115,000; receivables,$150,000; and inventories,$222,500.Current liabilities are $225,000.The current ratio is 2.5.

An extraordinary item can result from

What information is generally included in the Management Discussion and Analysis MD&A section of a corporate annual report?

From the following data for Norton Company for the year ended December 31,prepare a multiple-step income statement.Show earnings per share for the following: income from continuing operations,loss on discontinued operations less applicable income tax,income before extraordinary item,extraordinary item less applicable income tax,and net income.