Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base. \[\begin{array} { | l | r | r | } \hline & { \mathbf { 2 0 1 7 } } &{ \mathbf { 2 0 1 6 } } \\ \hline \text { Net sales } & \$ 276,200 & \$ 231,400 \\ \hline \text { Cost of goods sold } & 151,900 & 129,590 \\ \hline \text { Operating expenses } & 55,240 & 53,240 \\ \hline \text { Net earnings } & 27,820 & 19,820 \\ \hline \end{array}\]

A) 119.4% for 2017 and 100.0% for 2016. B) 65.1% for 2017 and 56.0% for 2016. C) 36.4% for 2017 and 41.1% for 2016. D) 55.0% for 2017 and 56.0% for 2016. E) 117.2% for 2017 and 100.0% for 2016. A) 119.4% for 2017 and 100.0% for 2016. B) 65.1% for 2017 and 56.0% for 2016. C) 36.4% for 2017 and 41.1% for 2016. D) 55.0% for 2017 and 56.0% for 2016. E) 117.2% for 2017 and 100.0% for 2016.

Express the following income statement information in common-size percentages (round to nearest whole percent). Comment on the results. Haans Corp. Comparative Income Statements For Years Ended December 31, 2018 and 2017 $\begin{array}{ll|l|l} & & 2018 & 2017 \\ \hline \text { Sales } & 103 & \$ 1,200,000 & \$ 1,000,000 \end{array}$ \[\begin{array} { | l | c | c | } \hline \text { Sales } & \$ 1,200,000 & \$ 1,000,000 \\ \hline \text { Cost of goods sold } & 804,000 & 6 5 0 , 0 0 0\\ \hline \text { Grost profit } & \$ 396,000 & \$ 350,000 \\ \hline \text { Selling expentes } & 132,000 & 120,000 \\ \hline \text { Adrinistrative expenses } & 180,000 & 150,000 \\ \hline \text { Net income } & \$ 84,000 & \$ 80,000 \\ \hline \end{array}\]

\[\begin{array} {| l | c | c |} \hline&

Refer to the following selected financial information from McCormik, LLC. Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.) \[\begin{array} { | l | r | r | } \hline & { \text { Year 2 } } & { \text { Year 1 } } \\ \hline \text { Cash } & \$ 37,500 & 6 , 8 5 0 \\ \hline \text { Short-term investments } & 90,000 & 90,000 \\ \hline \text { Accounts receivable, net } & 85,500 & 86,250 \\ \hline \text { Merchandise inventory } & 121,000 & 117,000 \\ \hline \text { Prepaid expenses } & 12,100 & 13,500 \\ \hline \text { Plant assets } & 388,000 & 392,000 \\ \hline \text { Accounts payable } & 113,400 & 111.750 \\ \hline \text { Net sales } & 711,000 & 706,000 \\ \hline \text { Cost of goods sold } & 390,000 & 385,500 \\ \hline \end{array}\]

A) 113.2. B) 80.0. C) 42.3. D) 43.9. E) 46.2. A) 113.2. B) 80.0. C) 42.3. D) 43.9. E) 46.2.

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 \[\begin{array} { l | l | l } & 2018 & 2017 \\ \hline \text { Sales } & \$ 720,000 & \$ 607,500 \\ \hline \text { Cost af goods sold } & 450,000 & 382,700 \\ \hline \text { Operating expenses } & 168,500 & 134,900 \\ \hline \text { Net income } & 51,200 & 51,700 \\ \hline & & \\ \hline & \text { December 31. } & \text { December 31. } \\ \hline & 2018 & 2017 \\ \hline \text { Accounts receivable (net) } & \$ 157,500 & \$ 162,500 \\ \hline \text { Inventory } & 139,500 & 110,500 \\ \hline \text { Total assets } & 1,012,500 & 944,800 \\ \hline \end{array}\]

(a) $720,000/[($157,500 + $162,500)/2] =

Exam 17: Analysis of Financial Statements

The background on a company, its industry, and its economic setting is usually included in which of the following sections of a financial statement analysis report?

(Multiple Choice)

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Question 141

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base. 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

(Multiple Choice)

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Question 142

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

(True/False)

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Question 143

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

(True/False)

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Question 144

Express the following income statement information in common-size percentages (round to nearest whole percent). Comment on the results. Haans Corp. Comparative Income Statements For Years Ended December 31, 2018 and 2017 2018 2017 Sales 103 \ 1,200,000 \ 1,000,000 Sales \ 1,200,000 \ 1,000,000 Cost of goods sold 804,000 650,000 Grost profit \ 396,000 \ 350,000 Selling expentes 132,000 120,000 Adrinistrative expenses 180,000 150,000 Net income \ 84,000 \ 80,000

(Essay)

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Question 145

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

(True/False)

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Question 146

Three of the most common tools of financial analysis are:

(Multiple Choice)

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Question 147

Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as:

(Multiple Choice)

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Question 148

Identify the financial analysis building block most appropriately associated with each ratio listed below by placing the letter of the building block a through d beside each ratio 1 through 10. Each building block may be used more than once. A. Liquidity and Efficiency B. Solvency C. Profitability D. Market Prospects (1) Price Earnings Ratio (2) Dividend Yield (3) Accounts Receivable Turnover (4) Days' Sales in Inventory (5) Return on Total Assets (6) Equity Ratio (7) Debt Ratio (8) Inventory Turnover (9) Basic Earnings per Share (10) Times Interest Earned

(Short Answer)

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Question 149

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:

(Multiple Choice)

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Question 150

The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

(True/False)

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Question 151

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

(Multiple Choice)

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Question 152

A trend percent, or index number, is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

(True/False)

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Question 153

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

(Short Answer)

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Question 154

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

(Multiple Choice)

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Question 155

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the_____________ .

(Short Answer)

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Question 156

Refer to the following selected financial information from McCormik, LLC. Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.) Year 2 Year 1 Cash \ 37,500 6,850 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

(Multiple Choice)

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Question 157

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

(True/False)

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Question 158

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 2018 2017 Sales \ 720,000 \ 607,500 Cost af goods sold 450,000 382,700 Operating expenses 168,500 134,900 Net income 51,200 51,700 December 31. December 31. 2018 2017 Accounts receivable (net) \ 157,500 \ 162,500 Inventory 139,500 110,500 Total assets 1,012,500 944,800

(Essay)

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Question 159

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:

(Multiple Choice)

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Question 160

Exam 17: Analysis of Financial Statements

The background on a company, its industry, and its economic setting is usually included in which of the following sections of a financial statement analysis report?

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base. 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

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

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

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

Three of the most common tools of financial analysis are:

Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as:

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:

The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

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

A trend percent, or index number, is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

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

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

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the_____________ .

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

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