Exam 13: Analysis of Financial Statements

The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below. (1)For both companies for Year 2,compute the: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies for Year 2,compute the: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios?

When no value is in the base period,no percent change is computable.

Refer to the following selected financial information from Troy Manufacturing. -Compute the company's working capital.

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:

General-purpose financial statements include the (1)income statement,(2)balance sheet,(3)statement of stockholders' equity (or statement of retained earnings),(4)statement of cash flows,and (5)notes to these statements.

Ron Landscaping's income statement reports net income of $75,300,which includes deductions for interest expense of $11,500 and income taxes of $34,900.Its times interest earned is:

Which of the following items is typically not included as a separate item after normal revenues and expenses?

A corporation reports the following year-end balance sheet data. -The company's working capital equals:

Current assets divided by current liabilities is the:

Describe the purpose of horizontal financial statement analysis and how it is applied.

Trend percentage is calculated by dividing ________ by ________ and multiplying the result by 100.

If a company is comparing its financial condition or performance to a base amount,it is using vertical analysis.

All of the following are true of a financial statement analysis report,except:

Use the balance sheets of Glover shown below to calculate the following ratios for Year 2 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.

Identify and explain the four building blocks of financial statement analysis.

All of the following statements regarding a business segment are true except:

A corporation reports the following year-end balance sheet data. -The company's current ratio equals:

Financial information for Sigma Company is presented below.Calculate the following ratios for Year 2: (a)Inventory turnover. (b)Accounts receivable turnover. (c)Return on total assets. (d)Times interest earned. (e)Total asset turnover.

Standards for comparison when interpreting financial statements include competitor and industry performance data.

A brief focus on important analysis results and conclusions is usually included in which of the following sections of a financial statement analysis report: