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Exam 13: Financial Analysis: The Big Picture

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Question 1

Multiple Choice

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Lupton Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a $160,000 loss in the year of disposal. The loss on disposal of the segment was $80,000. If the tax rate is 30%, and income before income taxes was $1,300,000,

A) the income tax expense on the income before discontinued operations is $318,000.
B) the income from continuing operations is $910,000.
C) net income is $1,060,000.
D) the losses from discontinued operations are reported net of income taxes at $240,000.

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

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Question 2

Multiple Choice

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The following amounts were taken from the financial statements of R.Dodd Company: The times interest earned for 2014 is

A) 4.0 times.
B) 5.0 times.
C) 4.5 times.
D) 5.5 times.

E) B) and C)
F) All of the above

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Question 3

Multiple Choice

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Which of the following would be considered an "Other comprehensive income" item?

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the price earnings ratio for this company?

Here is the income statement for Ginsberg, Inc. Additional information: 1. Common stock outstanding January 1, 2014, was 30,000 shares, and 40,000 shares were outstanding at December 31, 2014. 2. The market price of Gillman, Inc., stock was $15.86 in 2014. 3. Cash dividends of $16,000 were paid, $4,500 of which were to preferred stockholders. Instructions Compute the following measures for 2014. (a) Earnings per share. (b) Price-earnings ratio. (c) Payout ratio. (d) Times interest earned.

Return on common stockholders' equity is most closely related to

Which of these is not a liquidity ratio?

Boone Trading Company reported net sales of $400,000, $440,000, and $520,000 in the years 2013, 2014, and 2015, respectively. If 2013 is the base year, what is the trend percentage for 2015?

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on assets for this company?

In performing a vertical analysis, the base for sales returns and allowances is

Using these data from the comparative balance sheet of K. Leen Company, perform vertical analysis.

Declining profitability and liquidity ratios are indications that a company may not survive.

Assume the following sales data for a company: If 2013 is the base year, what is the percentage increase in sales from 2013 to 2014?

Which of the following is not an acceptable way of displaying the components of other comprehensive income?

Somen to Park Corporation had net credit sales of $4,060,000 and cost of goods sold of $3,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $650,000 and $750,000, respectively. The accounts receivable turnover was

The ratios that are used to determine a company's short-term debt paying ability are

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

The comparative balance sheet of Delta Company appears below: Instructions (a) Using horizontal analysis, show the percentage change for each balance sheet item using 2013 as a base year. (b) Using vertical analysis, prepare a common size comparative balance sheet.

Inventory turnover measures the number of times on average the inventory was sold during the period.

A balance sheet that displays only component percentages is called a ________ balance sheet.