Exam 13: Analysis of Financial Statements

Express the following income statement information in common-size percentages (round to nearest whole percent). Comment on the results. Haans Corp. Comparative Income Statements For the years ended December 31 Year 2 Year 1 Sales \ 1,200,000 \ 1,000,000 Cost of goods sold 804,000 650,000 Gross profit \ 396,000\ 350,000 Selling expenses 132,000 120,000 Administrative expenses 180,000 150,000 Net income 4,000 80,000

Market prospects are the ability to generate positive market expectations.

General-purpose financial statements include the (1)________, (2) ________, (3) ________, (4) ________ and (5) ________.

Standards for comparisons in financial statement analysis do not include:

Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as:

Express the following income statement information in common-size percentages and in trend percentages using Year 1 as the base year.

To compute trend percentages the analyst should:

Refer to the following selected financial information from Whirlpool Company. Compute the company's days' sales uncollected for Year 2. (Use 365 days a year.) Year 2 Year 1 Accounts receivable, net 86,500 82,750 Net sales 723,000 693,000

________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

Use the following selected information from Whitman Corp. to determine the Year 2 and Year 1 trend percentages for cost of goods sold using Year 1 as the base. Year 2 Year 1 Net sales \ 276,200 \ 231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820

The four building blocks of financial analysis are (1)________, (2) ________, (3) ________ and (4) ________.

Comparative financial statements are reports that show financial amounts in side by side columns on a single statement for analysis purposes.

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

A ratio expresses a relation between two amounts and can be expressed as a percent, rate, or proportion.

A corporation reports the following year-end balance sheet data. Calculate the following ratios: (a) working capital (b) acid-test ratio (c) current ratio (d) debt ratio (e) equity ratio (f) debt-to-equity ratio Cash $ 50,000 Current liabilities $ 64,000 Accounts receivable 35,000 Long-term liabilities 72,000 Inventory 60,000 Common stock 100,000 Equipment 140,000 Retained earnings 49,000 Total assets $285,000 Total liabilities and equity $285,000

A company had a market price of $27.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals:

Refer to the following selected financial information from Phantom Corp. Compute the company's inventory turnover for Year 2. Year 2 Year 1 Merchandise inventory 271,000 253,500 Cost of goods sold 486,400 433,100

A corporation reported cash of $14,000, total assets of $178,300, and net income of $50,000. Its common-size percent for cash equals 7.85%.

Refer to the following selected financial information from Gomez Electronics. Compute the company's times interest earned for Year 2. Year 2 Year 1 Net sales \ 478,500 \ 426,250 Cost of goods sold 276,300 250,120 Interest expense 9,700 10,700 Net income before tax 67,250 52,680 Net income after tax 46,050 39,900 Total assets 317,100 288,000 Total liabilities 181,400 167,300 Total equity 135,700 120,700

A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%.