Exam 13: Analysis of Financial Statements

Match each of the following terms with the appropriate formulas. - $\frac { \text { Accounts receivable } } { \text { Net sales } }$ * 365

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

Match the financial analysis building block most appropriately associated with each ratio. Each building block may be used more than once. -Dividend Yield

Year 2 Year 1 Accounts receivable, net 86,500 82,750 Net sales 723,000 693,000 -Refer to the following selected financial information from Marston Company.Compute the company's days' sales uncollected for Year 2.(Use 365 days a year.)

Calculate the percent increases for each of the following selected balance sheet items. 2018 2017 Cash \ 569 \4 48 Accounts receivable 2,234 2,337 Merchandise inventory 1,062 1,071 Plant assets 2,432 2,138 Bonds payable 1,164 1,668 Equity 2,777 2,894

Express the following income statement information in common-size percentages and in trend percentages using 2016 as the base year.

In horizontal analysis the percent change is computed by:

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

The building blocks of financial statement analysis include (1)liquidity, (2)salability, (3)solvency,and (4)profitability.

Intra-company analysis is based on comparisons with competitors.

Annual cash dividends per share divided by market price per share is the:

The debt ratio,the equity ratio,pledged assets to secured liabilities,and times interest earned are all ________ ratios.

Year 2 Year 1 Net sales \ 478,500 \ 426,250 Cost of goods sold 276,300 250,120 Interest expense 9,700 10,700 Net income before tax 67,250 52,680 Net income after tax 46,050 39,900 Total assets 317,100 288,000 Total liabilities 181,400 167,300 Total equity 135,700 120,700 -Refer to the following selected financial information from Shakley's Incorporated.Compute the company's profit margin for Year 2.

The percent change of a comparative financial statement item is computed by subtracting the analysis period amount from the base period amount,dividing the result by the base period amount and multiplying that result by 100.

Efficiency refers to how productive a company is in using its assets,and is usually measured relative to how much revenue is generated from a certain level of assets.

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

Year 2 Year 1 Net sales \ 478,500 \ 426,250 Cost of goods sold 276,300 250,120 Interest expense 9,700 10,700 Net income before tax 67,250 52,680 Net income after tax 46,050 39,900 Total assets 317,100 288,000 Total liabilities 181,400 167,300 Total equity 135,700 120,700 -Refer to the following selected financial information from Shakley's Incorporated.Compute the company's debt-to-equity ratio for Year 2.

Vertical analysis is the comparison of a company's financial condition and performance across time.

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

________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.