Exam 14: Financial Statement Analysis

Current assets are those assets that are expected to be converted into cash within a relatively short period of time.

In a classified balance sheet,assets are subdivided into current assets,plant and equipment and other assets,while all liabilities are classified as current.

The quick ratio:

Below are eight ratios.Match each equation to the correct ratio.If there is no match,use "None" as your response. ________ (a. )Net income minus preferred dividends divided by average number of common shares outstanding ________ (b. )Net sales divided by average accounts receivable ________ (c. )Operating income divided by average total assets ________ (d. )Current assets divided by current liabilities ________ (e. )Annual dividend divided by current stock price ________ (f).Current assets minus current liabilities ________ (g. )Total liabilities divided by total assets ________ (h. )Net income divided by average total equity ________ (i. )Common stockholders' equity divided by shares of common stock outstanding ________ (j)Current stock price divided by earnings per share

[The following information applies to the questions displayed below.] Shown below are selected data from the balance sheet of Compros,a small electronics store (dollar amounts are in thousands): -200 What is the quick ratio?

The following information is available for the Grant Company for 2018: Required: What are earnings per share for the current year? What is the P/E ratio? What is the book value per share of common stock? What is the dividend yield on common stock? What is the net profit ratio? What is the return on equity?

The yield rate on stock is measured by dividing dividends per share by market price per share.

The measurement that best reflects investors' expectations about future earnings is:

A comparative financial statement:

Multiple-step income statement Shown below is a recent income statement for Phaeton,Inc.: Prepare an income statement for the year in a multiple-step format.(Use the grid provided below. )

ROI: What and why? In general terms,what do all "ROI" ratios measure? Why are such computations useful?

The gross profit rate usually is lowest on fast moving merchandise and highest on specialty and novelty products.

If total current assets are $140,000 at the end of Year 1,increase by $50,000 by the end of Year 2,and increase by $50,000 in Year 3,the percentage increase over the preceding year is less in Year 3 than in Year 2.

Vertical analysis compares the results of financial information with a business in the same industry for a number of consecutive periods of time.

Income statement classifications Simon Hardware and Garfunkel Foods are sole proprietorships with similar amounts of total assets.Also,both businesses earn similar amounts of revenue,incur similar amounts of operating expenses,and report similar net incomes.However,Simon has a higher cost of goods sold,while Garfunkel Foods has higher interest expense. Indicate which of these companies has the higher (a)gross profit rate,and (b)return on assets.In each case,explain the reasons for each answer.

The acid test ratio includes marketable securities but does not include accounts receivable.

The return on assets ratio usually is computed as:

Which of the following is a measure of short-term liquidity?

When an income statement does not show gross profit or operating income,it is called a consolidated statement.

The Piazza Company has working capital of $540,000 and current assets of $810,000.The current ratio is: