Exam 17: Financial Statement Analysis

The financial statements for Barrington Service Company include the following items: 2019 2018 Cash \ 49,500 \ 50,000 Short-term Investments 29,000 19,000 Net Accounts Receivable 60,000 46,000 Merchandise Inventory 156,000 48,000 Total Assets 532,000 544,000 Accounts Payable 133,500 127,000 Salaries Payable 20,000 15,000 Long-term Note Payable 59,000 54,000 Compute the current ratio for 2018.(Round answer to two decimal places.)

Which of the following is used to see how a company's operating expenses,as a percentage of net sales,have changed from one year to the next?

The formula for calculating the cash ratio is ________.

The cash ratio helps to determine a company's ability to meet its short-term obligations using cash and cash equivalents.

Ratios can be used to analyze a company's ability to pay long-term debt.

The trend analysis report of Poplar,Inc.is given below (in millions): 2019 2018 2017 2016 2015 Net income \ 700 \ 606 \ 470 \ 405 \ 402 Trend percentages 174\% 151\% 117\% 101\% 100\% Which of the following is a correct conclusion from the above analysis?

Which of the following describes working capital?

Candle Shop,Inc.has net sales on account of $1,700,000.The average net accounts receivable are $630,000.Calculate the days' sales in receivables.(Use 365 days for any calculations.Round any intermediate calculations and your final answer to two decimal places.)

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

Grand Office Supply reported the following gross profit percentages: 2017: 37.5%; 2018: 36.2%; 2019: 20.8%.The industry average is 35%.What are some possible reasons for the decline in 2019?

The rate of return on common stockholders' equity shows how much income is earned for each $1 of total stockholders' equity.

Horizontal analysis compares each item in the income statement to the net sales amount.

Vertical analysis involves comparing an amount for a line item in the financial statements with a corresponding amount for the line item of the previous year.

The financial statements for Silver Service Company include the following items: 2019 2018 Cash \ 49,500 \ 40,000 Short-term Investments 33,000 20,500 Net Accounts Receivable 52,000 53,000 Merchandise Inventory 132,000 45,000 Total Assets 530,000 547,000 Accounts Payable 131,500 122,000 Salaries Payable 15,000 18,000 Long-term Note Payable 58,000 57,000 Compute the acid-test ratio for 2018.(Round your answer to two decimal places)

Data for Michelle,Inc.follow: Assets Current Assets: Michelle, Inc. Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Cash \ 12,000 \ 10,200 Accounts Receivable, Net 16,100 16,800 Merchandise Inventory 45,000 31,000 Prepaid Expenses Total Current Assets 79,600 61,900 Property, Plant, and Equipment, Net Total Assets \ 344,600 \ 294,900 Liabilities Total Current Liabilities \ 9,900 \ 11,200 Long-term Liabilities Total Liabilities 61,200 Stockholders' Equity Preferred Stock, 3\%, \ 50 par 75,000 75,000 Common Stockholders' Equity, no par 158,700 Total Liabilities and Stockholders' Equity \3 44,600 \ 294,900 Prepare a horizontal analysis of the comparative balance sheet of Michelle,Inc.(Round to one decimal place.)

Trend analysis is a form of horizontal analysis.

Data for Sherwood,Inc.for the years ended December 31,2019 and 2018 are as follows: Net Sales \ 850,000 \ 798,000 Cost of Goods Sold 635,000 580,000 Selling and Administrative Expenses 50,000 35,000 Other Expenses (Interest Expense) 20,000 15,000 Income Tax 40,000 55,000 Prepare a horizontal analysis of the comparative income statement of Sherman,Inc.(Round to one decimal place.)Use a multi-step income statement.

The asset turnover ratio is a way to evaluate how well a company can pay its short-term liabilities.

The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.

Which of the following best describes trend analysis?