Exam 13: Analysis of Financial Statements

A corporation reported cash of $27,000 and total assets of $461,000 on its balance sheet.Its common-size percent for cash equals:

Match the financial analysis building block most appropriately associated with each ratio. Each building block may be used more than once. -Return on Total Assets

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

Comparative statements for Warmer Corporation are shown below: Warmer Corporation Comparative Income Statements For the years ended December 31 2018 2017 2016 Sales \ 14,800 \ 13,229 \ 13,994 Cost of goods sold 8,22 8,661 8,37 Gross profit 6,57 4,568 5,619 Operating expenses 3,664 3,576 3,487 Operating income \ 2,911 \ 992 \ 2,132 Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2016 as the base year.Comment on the results.

A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1)________, (2)________,and (3)________.

The comparison of a company's financial condition and performance to a base amount is known as ________.

What is the purpose of a good financial statement analysis report? What are the key components?

The comparison of a company's financial condition and performance across time is known as ________.

Selected current year company information follows: Net income \ 15,953 Net sales 712,855 Total liabilities, beginning-year 83,932 Total liabilities, end-of-year 103,201 Total stockholders' equity, beginning-year.... 198,935 Total stockholders' equity, end-of-year 121,851 - The total asset turnover is:

Year 2 Year 1 Cash \ 37,500 36,850 Short-term investments 90,000 90,000 Accounts receivable, net 85,500 86,250 Merchandise inventory 121,000 117,000 Prepaid expenses 12,100 13,500 Plant assets 388,000 392,000 Accounts payable 113,400 111.750 Net sales 711,000 706,000 Cost of goods sold 390,000 385,500 -Refer to the following selected financial information from McCormik,LLC.Compute the company's current ratio for Year 2.

Describe ratio analysis including its purpose,application,and interpretation.

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

Trend analysis of financial statement items can include comparisons of relations between items on different financial statements.

Use the following information from the current year financial statements of a company to calculate the ratios below: (a)Current ratio. (b)Accounts receivable turnover.(Assume the prior year's accounts receivable balance was $100,000.) (c)Days' sales uncollected. (d)Inventory turnover.(Assume the prior year's inventory was $50,200.) (e)Times interest earned ratio. (f)Return on common stockholders' equity.(Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.) (g)Earnings per share (assuming the corporation has a simple capital structure,with only common stock outstanding). (h)Price earnings ratio.(Assume the company's stock is selling for $26 per share.) (i)Divided yield ratio.(Assume that the company paid $1.25 per share in cash dividends.)

Current Assets 306,450 Plant assets 338,000 Current Liabilities 107,800 Net sales 676,000 Net Income 75,000 -Refer to the following selected financial information from Frankle Corp.Compute the company's working capital.

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Comparative calendar-year financial data for a company are shown below.Calculate the following ratios for the company for 2018: (a)accounts receivable turnover (b)day's sales uncollected (c)inventory turnover (d)days' sales in inventory 2017 Sales \ 720,000 \ 607,500 Cost of goods sold 450,000 382,700 Operating expenses 168,500 134,900 Net income 51,200 51,700 December 31, December 31, Accounts receivable (net) \ 157,500 \ 162,500 Inventory 139,500 110,500 Total assets 1,012,500 944,800

Intra-company analysis compares a company's current performance to its own prior performance.

The base amount for a common-size balance sheet is usually total assets.

If a company is comparing this year's financial performance to last year's financial performance,it is using horizontal analysis.