Exam 14: Financial Statement Analysis

Match each definition that follows with the term a-h it defines. -a percentage analysis of increases and decreases in related items on comparative financial statements

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

Which of the following is considered an unusual item affecting the prior period's income statement?

An advantage of the current ratio is that it considers the makeup of the current assets.

The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

In horizontal analysis, each item is expressed as a percentage of the

The number of times interest expense is earned is computed as

The following items are reported on a company's balance sheet: Determine the a current ratio, and b quick ratio.Round your answer to one decimal place.

Define solvency and profitability.How are they alike?

Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000.It had 50,000 shares of common stock outstanding during the entire year.Richards Corporation's common stock is selling for $35 per share.The price-earnings ratio is

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

If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

The following information was taken from Slater Company's balance sheet: Determine the company's a ratio of fixed assets to long-term liabilities, and b ratio of liabilities to stockholders' equity.Round your answer to one decimal place.

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

Match each ratio that follows to its use items a-h.Items may be used more than once. -dividends per share

The following selected data were taken from the financial statements of the Winter Group for the three most recent years of operations: The Year 3 net income was $242,000 and the Year 2 net income was $308,000.No dividends on common stock were declared during the 3 years. a Determine the rate earned on assets, the rate earned on stockholders' equity, and the rate earned on common stockholders' equity for Years 2 and 3.Round to one decimal place. b What conclusion can be drawn from these data as to the company's profitability?

A financial statement showing each item on the statement as a percentage of one key item on the statement is called a common-sized financial statement.

If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.