Exam 14: Financial Statement Analysis

Which of the following items appear on the corporate income statement before income from continuing operations?

The analysis of increases and decreases in the amount and percentage of comparative financial statement items is referred to as horizontal analysis.

A company reports the following: Net income \ 160,000 Preferred dividends \ 10,000 Shares of common stock outstanding 20,000 Market price per share of common stock \ 35 The company's earnings per share on common stock is

Which of the following is not included in the computation of the quick ratio?

Revenue and expense data for Young Technologies Inc. are as follows: ​ Year 2 Year 1 Sales \ 500,000 \ 440,000 Cost of goods sold 325,000 242,000 Selling expenses 70,000 79,200 Administrative expenses 75,000 70,400 Income tax expense 10,500 16,400 ​ (a) Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round to the nearest whole percent. (b) Comment on the significant changes disclosed by the comparative income statement.

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Match each definition that follows with the term (a-h) it defines. -measures the risk that interest payments will not be made if earnings decrease

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

Horizontal analysis is a technique for evaluating financial statement data

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 amount of quick assets?

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales, a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

The following data are taken from the financial statements: ​ Current Preceding Year Year Current assets \ 745,000 \ 820,000 Property, plant, and equipment 1,510,000 1,400,000 Current liabilities (non-interest-bearing) 160,000 140,000 Long-term liabilities, 12\% 400,000 400,000 Preferred 10\% stock 250,000 250,000 Common stock, \ 25 par 1,200,000 1,200,000 Retained eamings, beginning of year 230,000 160,000 Net income for year 110,000 155,000 Preferred dividends declared (25,000) (25,000) Common dividends declared (70,000) (60,000) ​ Determine for the current year the (a) return on total assets, (b) return on stockholders' equity, (c) return on common stockholders' equity, (d) earnings per share on common stock, (e) price-earnings ratio on common stock, and (f) dividend yield. The current market price per share of common stock is $25. Round dollar values to two decimal places and other final answers to one decimal place.

A company reports the following: Sales \ 2,400,000 Average total assets (excluding long-term investments) 1,500,000 ​ Determine the asset turnover ratio. Round your answer to one decimal place.

Match each ratio that follows to its use (items a-h). Items may be used more than once. -return on common stockholders' equity

Leverage implies that a company

A loss due to a discontinued operation should be reported on the income statement

The following information is available for Jase Company: Market price per share of common stock \ 25.00 Earnings per share on common stock \ 1.25 Which of the following statements is correct?

The balance sheet data of Randolph Company for two recent years appears below: ​ Assets: Year 2 Year 1 Current assets \ 445 \ 280 Plant assets 680 520 Total assets \ 1,125 \ 800 Liabilities and stockholders' equity: Current liabilities \ 285 \ 120 Long-term debt 255 160 Common stock 325 320 Retained earnings 260 200 Total liabilities and stockholders' equity \1 ,125 \8 00 ​ (a) Using horizontal analysis, show the percentage change for each bal ance sheet item using Year 1 as a base year. (b) Using vertical analysis, prepare a comparative balance sheet. Round percentages to one decimal place.

Based on the following data for the current year, what is the number of days' sales in inventory Sales on account during year \ 1,204,500 Cost of goods sold during year 657,000 Accounts receivable, beginning of year 75,000 Accounts receivable, end of year 85,000 Inventory, beginning of year 85,600 Inventory, end of year 98,600

A loss on disposal of a segment would be reported in the income statement as a(n)