Exam 13: Analysis of Financial Statements

Powers Company reported net sales of $1,200,000, average Accounts Receivable, net of $78,500, and net income of $51,025. The Day's sales uncollected (rounded to whole days) is:

Debt financing is considered riskier than equity financing because of its required payments of interest and principal.

Financial reporting refers to:

The current year-end balance sheet data for a company are shown below. Calculate the company's: (a) working capital (b) current ratio (c) acid-test ratio. Assets: Cash $ 38,000 Marketable securities 45,000 Accounts receivable (net) 127,500 Merchandise inventory 149,500 Long-term investments 135,000 Plant assets (net) 517,500 Total assets $ 1,012,500 Liabilities and equity: Accounts payable $ 148,700 Accrued liabilities 90,000 Notes payable (secured by plant assets) 254,800 Common stock ($12 par) 180,000 Contributed capital in excess of par 135,000 Retained earnings 204,000 Total liabilities and equity $1,012,500

Earnings per share is calculated using income before interest and income taxes.

Evaluation of company performance can include comparison and/or assessment of all but which of the following:

An example of an intracompany comparison is comparing Apple's profit margin to the industry's profit margin.

Comparative calendar-year financial data for a company are shown below. Calculate the following ratios for the company for Year 2: (a) accounts receivable turnover (b) day's sales uncollected (c) inventory turnover (d) days' sales in inventory

Use the financial data shown below to calculate the following ratios for the current year: (a) Current ratio. (b) Acid-test ratio. (c) Accounts receivable turnover. (d) Days' sales uncollected. (e) Inventory turnover. (f) Days' sales in inventory. Income statement data Sales (all on credit) $650,000 Cost of goods sold 425,000 Income before taxes 78,000 Net income 54,600 Ending Balance Beginning Balance Cash \ 19,500 \ 15,000 Accounts receivable (net) 65,000 60,000 Inventory 71,500 64,500 Plant and equipment (net) 195,000 183,900 Total assets \ 351,000 \ 323,400 Current liabilities \ 62,400 \ 52,700 Long-term notes payable 97,500 100,00

Refer to the following selected financial information from Texas Electronics. Compute the company's days' sales uncollected for Year 2. (Use 365 days a year.) Year 2 Year 1 Cash \ 37,500 \ 36,850 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

Refer to the following selected financial information from Whirlpool Company. Compute the company's accounts receivable turnover for Year 2. Year 2 Year 1 Accounts receivable, net 86,500 82,750 Net sales 723,000 693,000

Market prospects is the ability to meet short-term obligations.

Net sales divided by average total assets is the:

The comparison of a company's financial condition and performance to a base amount is known as ________.

A corporation reports the following year-end balance sheet data. The company's current ratio equals: Cash \ 40,000 Current liabilities \ 5,000 Accounts receivable 55,000 Long-term liabilities 35,000 Inventory 60,000 Common stock 100,000 Equipment 145,000 Retained earnings 90,000 Total assets \ 300,000 Total liabilities and equity \ 300,000