Exam 13: Analysis of Financial Statements

Match each of the following terms with the appropriate definitions. -The comparison of a company's financial condition and performance to a base amount.

Use the following selected information from Wheeler,LLC to determine the 2017 and 2016 common size percentages for operating expenses using Net sales as the base. 2017 2016 Net sales \ 276,200 \ 231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820

Three of the most common tools of financial analysis are:

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

The ability to generate positive market expectations is called:

The four building blocks of financial analysis are (1)________, (2)________, (3)________ and (4)________.

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 times interest earned for Year 2.

The comparative balance sheet for Silverlight Co.is shown below.Express the balance sheet in common-size percentages. Silverlight Company Comparative Balance Sheets (in \0 00) December 31,2016-2018 2018 2017 2016 Cash \ 49.6 \3 4.2 \ 35.7 Accounts receivable 74.4 85.5 76.5 Merchandise inventory 148.8 125.4 91.8 Plant assets (net) 347.2 324.9 306.0 Total assets \6 20.0 \5 70.0 \5 10.0 Accounts payable \ 117.8 \ 51.3 \ 76.5 Bonds payable 130.2 159.6 107.1 Common stock 266.6 279.3 265.2 Retained earnings 105.4 79.8 Total liabilities and equity \ 620.0 \ 570.0 \ 510.0

A corporation reports the following year-end balance sheet data.The company's working capital equals: Cash \ 40,000 Current liabilities \ 75,000 Accounts receivable 55,000 Long-term liabilities 35,000 Inventory 60,000 Common stock 100,000 Equipment 145,000 Retained earnings 90,000 Total assets \ 300,000 Total liabilities and equity \ 300,000

The return on common stockholder's equity measures a company's success in earning net income for its owners.

Match each of the following terms with the appropriate definitions. -A company's ability to generate future revenues and meet long-term obligations.

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable,net of $78,500.The accounts receivable turnover ratio is:

The ability to provide financial rewards sufficient to attract and retain financing is called:

The gross margin ratio,return on total assets,and basic earnings per share are all ________ ratios.

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

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

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000.What is the company's return on common stockholders' equity?

A corporation reports the following year-end balance sheet data.Calculate the following ratios: (a)working capital (b)acid-test ratio (c)current ratio (d)debt ratio (e)equity ratio (f)debt-to-equity ratio Cash \5 0,000 Accounts receivable 35,000 Inventory. 60,000 Equipment. 140,000 Total assets. \2 85,000 Current liabilities \ 64,000 Long-term liabilities 72,000 Common stock 100,000 Retained earnings Total liabilities and equity \ 285,000

The following selected financial information for a company was reported for the current year end.Calculate the following company ratios: (a)Accounts receivable turnover. (b)Inventory turnover. (c)Days' sales uncollected Accounts receivable,beginning-year…………….$170,000 Accounts receivable,year-end…………………… 190,000 Merchandise inventory,beginning-year………….80,000 Merchandise inventory,year-end………………… 60,000 Cost of goods sold………………………………...580,000 Credit sales………………………………………..1,000,000

Use the balance sheets of Glover shown below to calculate the following ratios for 2018 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.