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Exam 17: Analysis of Financial Statements

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Question 81

Multiple Choice

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Selected current year company information follows: $\begin{array} { l | r } \text { Net income } & \$ 15,953 \\\hline \text { Net sales } & 712,855 \\\hline \text { Total liabilities, beginning-year } & 83,932 \\\hline \text { Total liabilities, end-of-year } & 103,201 \\\hline \text { Total stockholders' equity, beginning-year.... } & 198,935 \\\hline \text { Total stockholders' equity, end-of-year } & 121,851\end{array}$ The total asset turnover is:

A) 2.81 times
B) 6.28 times
C) 3.64 times
D) 2.24 times
E) 4.67 times

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

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Question 82

Multiple Choice

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The ability to meet short-term obligations and to efficiently generate revenues is called:

A) Creditworthiness.
B) Solvency.
C) Profitability.
D) Liquidity and efficiency.
E) Market prospects.

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

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Question 83

Multiple Choice

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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:

The ability to generate future revenues and meet long-term obligations is referred to as:

The greater the times interest earned ratio, the greater the risk a company is exposed to.

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

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

When an item has a value in the base period and zero in the analysis period, the decrease is 100 percent.

Liquidity refers to the availability of resources to meet short-term cash requirements.

A corporation reports the following year-end balance sheet data. The company's debt-to-equity ratio equals: $\begin{array} { l | r | l | r } \hline\text { Cash } & \$ 40,000 & \text { Curtent liabilities } & \$ 75,000 \\\hline \text { Accounts receivable } & 55,000 & \text { Iong-term liabilities } & \mathbf { 3 5 , 0 0 0 } \\\hline \text { Inventory } & 60,000 & \text { Common stock } & 100,000 \\\hline \text { Equipment } & \underline { 145,000 } & \text { Retaned eamings } & 90,000 \\\hline \text { Total assets } & \underline { \$3 00,000 } & \text { Total liabilities and equity } & \$ 300,000 \\\hline\end{array}$

Match each of the following terms with the appropriate formulas. - $\frac{\text {Ending inventory }}{\text { Cost of goods sold}}$ *365

When an item has a value in the base period and zero in the analysis period, the decrease is 0 percent.

Suppliers use financial statement information in establishing credit terms.

A company reports basic earnings per share of $3.50, cash dividends per share of $1.25, and a market price per share of $64.75. The company's dividend yield equals:

Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The average Inventory amount is:

Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:

Current assets minus current liabilities is:

What is the purpose of a good financial statement analysis report? What are the key components?

Rajan Company's most recent balance sheet reported total assets of $1.9 million, total liabilities of $0.8 million, and total equity of $1.1 million. Its Debt to equity ratio is:

A corporation reports the following year-end balance sheet data. The company's current ratio equals: $\begin{array}{lrlr}\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \\\text { Accounts receivable } & 55,000 & \text { Long-term liabilities } & 35,000 \\\text { Inventory } & 60,000 & \text { Common stock } & 100,000\\\text { Equipment }&145,000&\text { Retained earnings }&90,000\\\text { Total assets }&\$300,000&\text { Total liabilities and equity }&\$300,000\\\end{array}$ A) 0.37 B) 0.58 C) 0.63 D) 1.27 E) 2.07