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Exam 14: Financial Statement Analysis

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Question 51

Multiple Choice

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A company reports the following: The company's earnings per share on common stock is

A) $13.33
B) $8.50
C) $7.50
D) $35.00

E) C) and D)
F) A) and B)

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Question 52

Multiple Choice

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One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

A) judge the relative potential of two companies of similar size in different industries
B) determine which companies in a single industry are of the same value
C) determine which companies in a single industry are of the same size
D) make a better comparison of two companies of different sizes in the same industry

E) A) and B)
F) None of the above

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Question 53

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Dollar amounts of working capital are difficult to assess when comparing companies of different sizes or in comparing such amounts with industry figures.

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

Based on the above data, what is the quick ratio, rounded to one decimal point?

Which of the following items appear on the corporate income statement before income from continuing operations?

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?

On a common-sized balance sheet, 100% is

In computing the rate earned on total assets, interest expense is subtracted from net income before dividing by average total assets.

The following items are reported on a company's balance sheet: Determine: (a) current ratio (b) quick ratio.   Round your answer to one decimal place.

The following information is available for Meyer Company: Which of the following statements is correct?

The following items are reported on Denver Company's balance sheet: Determine: (a) the current ratio (b) the quick ratio. Round to one decimal place.

The current ratio is

A 15% change in sales will result in a 15% change in net income.

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. What is the rate earned on common stockholders' equity for Diane Company?

A company reports the following income statement and balance sheet information for the current year: Determine the rate earned on total assets.  Round your answer to one decimal place.

Zeus Company reports the following for the current year: (a) Prepare a partial income statement for Zeus Company beginning with income from continuing operations before income tax. (b) Calculate the earnings per common share for Zeus, including per-share amount for unusual items.

Factors that reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability.

The relationship of $325,000 to $125,000, expressed as a ratio, is

Horizontal analysis is a technique for evaluating financial statement data