Exam 14: Financial Statement Analysis

The current ratio is

Using vertical analysis of the income statement, a company's net income as a percentage of sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

Based on the following data for the current year, what is the inventory turnover Sales on account during year \ 700,000 Cost of goods sold during year 270,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000

Which of the following is not an unusual item?

Unusual items affecting the prior period's income statement consist of changes in or errors in applying accounting principles.

The following information is available for Meyer Company: Dividends per share of common stock \ 1.80 Market price per share of common stock \ 30.00 Which of the following statements is correct?

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

In a common-sized balance sheet, 100% is

A company reports the following: Income before income tax \ 600,000 Interest expense 150,000 ​ Determine the times interest earned. Round your answer to one decimal place.

Which of the following is not a characteristic evaluated in ratio analysis?

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

Match each ratio that follows to its use (items a-h). Items may be used more than once. -quick ratio

From the following data for Norton Company for the year ended December 31, prepare a multiple-step income statement. Include the earnings per share presentation on the income statement. ​ Common stock \ 50 par \ 200,000 Cost of goods sold 342,000 Administrative expenses 48,250 Income tax (applicable to continuing operations) 142,000 Interest expense 3,750 Loss on discontinued operations, net of applicable tax of \ 2,700 5,400 Sales 865,000 Selling expenses 83,000

Privett Company Accounts payable 30,000 Accounts receivable 35,000 Accrued liabilities 7,000 Cash 25,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 400,000 Prepaid expenses 2,000 -Based on the data for Privett Company, what is the quick ratio, rounded to one decimal point?

A company reported the following: Net income \ 270,000 Preferred dividends \ 10,000 Shares of common stock outstanding 20,000 Market price per share of common stock \ 36.40 ​ Calculate the company's price-earnings ratio. Round your answer to one decimal place.

Brock Company's financial information is listed below. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets Cash and short-term investments \ 40,000 Accounts receivable (net) 30,000 Inventory 25,000 Property, plant, and equipment 215,000 Total assets \ 310,000 Liabilities and Stockholders' Equity Current liabilities \ 60,000 Long-term liabilities 95,000 Common stock, \ 10 par 60,000 Retained earnings 95,000 Total liabilities and stockhol ders' equity \ 310,000 Income Statement Sales \ 90,000 Cost of goods sold 45,000 Gross margin \ 45,000 Operating expenses 20,000 Net income \ 25,000 Number of shares of common stock 6,000 Market price of common stock \ 20 What is the current ratio?

In computing the asset turnover ratio, long-term investments are excluded from average total assets.

Corporate annual reports typically do not contain

Comparative information taken from the Friction Company's financial statements is shown below: Year 2 Year 1 (a) Notes receivable \ 25,500 \ 30,000 (b) Accounts receivable 106,200 90,000 (c) Retained earnings 77,000 70,000 (d) Sales 654,000 600,000 (e) Operating expenses 160,000 200,000 (f) Income taxes payable 28,000 20,000 Using horizontal analysis, show the percentage change and direction (increase or decrease) from Year 1 to Year 2 with Year 1 as the base year.

The dividend yield is equal to the dividends per share divided by the par value per share of common stock.