Exam 13: Analysis of Financial Statements

Match each of the following terms with the appropriate formulas. - $\frac { \text { Net income } } { \text { Net sales } }$

Match each of the following terms with the appropriate definitions. -A company's ability to generate positive market expectations.

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

Financial analysis only refers to the communication of relevant financial information to decision makers.

Year 2 Year 1 Merchandise inventory 271,000 253,500 Cost of goods sold 486,400 433,100 -Refer to the following selected financial information from Graceworks,Corp.Compute the company's days' sales in inventory for Year 2.(Use 365 days a year.)

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

The comparative income statements for Silverlight Company are shown below.Calculate the following ratios for 2018: (a)profit margin (b)gross margin (c)times interest earned. $\text { Silverlight CompanyIncome StatementsFor Years Ended December 31, }$ 2018 2017 Net sales \ 720,000 \ 607,500 Cost of goods sold 450,000 382,700 Gross profit \ 270,000 \ 224,800 Operating expense 168,500 134,900 Income from operations \ 101,500 \ 89,900 Interest expense 22,300 11,200 Income before taxes \ 79,200 \ 78,700 Income taxes 28,000 27,000 Net income \ 51,200 \ 51,700

Match each of the following terms with the appropriate definitions. -A company's ability to provide financial rewards sufficient to attract and retain capital.

Market prospects are the ability to generate positive market expectations.

The building blocks of financial statement analysis do not include:

Three of the most common tools of financial analysis include horizontal analysis,vertical analysis,and ratio analysis.

Powers Company reported Net sales of $1,200,000 and Accounts Receivable,net of $78,500.The Day's sales uncollected (rounded to whole days)is:

Current assets divided by current liabilities is the:

Comparative financial statements are reports that show financial amounts in side by side columns on a single statement for analysis purposes.

External users of accounting information make the strategic and operating decisions of a company.

Suppliers use financial statement information in establishing credit terms.

How long a company holds inventory before selling it can be measured by dividing cost of goods sold by the average inventory balance to determine the:

Match each of the following terms with the appropriate definitions. -Examination of financial data across time.

A company reports basic earnings per share of $3.50,cash dividends per share of $0.75,and a market price per share of $64.75.The company's dividend yield equals 21.4%.

An advantage of common-size statements is that they reflect the dollar magnitude (size)of the different companies under analysis.