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Exam 17: Analysis of Financial Statements

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Question 31

Multiple Choice

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Industry standards for financial statement analysis:

A) Are based on a single competitor's financial performance.
B) Are set by the government.
C) Are available for the financial performance and condition of the company's industry.
D) Are based on rules of thumb.
E) Compare a company's income with its prior year's income.

F) B) and C)
G) A) and D)

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Question 32

Multiple Choice

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Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current ratio is:

A) 1.4:1.
B) 0.7:1.
C) 0.3:1.
D) 1:1.
E) 0.4:1.

F) A) and B)
G) All of the above

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Question 33

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Comparative calendar-year financial data for a company are shown below.Calculate the following ratios for the company for 2016: (a)accounts receivable turnover (b)day's sales uncollected (c)inventory turnover (d)days' sales in inventory

Internal users of financial information:

A good financial report does not link interpretations and conclusions of analysis with the underlying information.

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:

Zhang Company reported Cost of goods sold of $835,000 and ending Inventory of $41,750.The Days' sales in inventory (rounded to whole days) is:

Ash Company reported sales of $400,000 for Year 1,$450,000 for Year 2,and $500,000 for Year 3.Using Year 1 as the base year,what were the percentage increases for Year 2 and Year 3 compared to the base year?

Profitability is the ability to generate positive market expectations.

The percent change of a comparative financial statement item is computed by subtracting the analysis period amount from the base period amount,dividing the result by the base period amount and multiplying that result by 100.

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

Information from a manufacturing company's current year income statement follows.Calculate the company's (a)profit margin ratio, (b)gross margin ratio,and (c)times interest earned.

Financial reporting refers to:

The return on common stockholder's equity measures a company's success in earning net income for its owners.

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

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

Calculate the percent increases for each of the following selected balance sheet items.

Yeats Corporation's sales in Year 1 were $396,000 and in Year 2 were $380,000.Using Year 1 as the base year,the percentage change for Year 2 compared to the base year is:

Common-size statements:

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.