FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Analysis of Financial Statements

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Essay

Review LaterAdd Note

Review Later

The following information is from Omega Corporation's balance sheets as of December 31,2013 and 2014 and its income statement for 2014: $\begin{array}{|l|r|r|}\hline&2014&2013\\\hline \text { Cash } & \$ 18,000 & \$ 22,000 \\\hline \text { Marketable securities } & 25,000 & 0 \\\hline \text { Accounts receivable } & 38,000 & 42,000 \\\hline \text { Inventory } & 61,000 & 52,000 \\\hline \text { Prepaid insurance } & 6,000 & 9,000 \\\hline \text { Long-term investments } & 49,000 & 20,000 \\\hline \text { Plant assets, net } & \underline{218,000} & 225,000 \\\hline \text { Total assets } & \$ 415,000 & \$ 370,000 \\\hline\\\hline \text { Net income } & \$ 62,250 \\\hline \text { Sales (all on credit) } & 305,000 \\\hline \text { Cost of goods sold } & 123,000 \\\hline \text { Interest expense } & 15,600 \\\hline \text { Income tax expense } & 27,000\\\hline \end{array}$ From the above information,calculate the following ratios for 2014: (a)Inventory turnover. (b)Accounts receivable turnover. (c)Return on total assets. (d)Times interest earned. (e)Total asset turnover.

Correct Answer

verified

(a) Inventary turnover:
times...

View Answer

Show Answer

Question 2

Short Answer

Review LaterAdd Note

Review Later

A company has an inventory turnover ratio of 2.90,merchandise inventory for 2014 of $46,095,and cost of goods sold of $173,420.What is the average inventory?

Correct Answer

verified

$59,800

Question 3

True/False

Review LaterAdd Note

The higher the accounts receivable turnover,the slower the accounts receivable are collected.

Net sales divided by average accounts receivable is equal to the:

Selected current year company information follows: $\begin{array} {| l | r |} \hline \text { Net income } & \$ 325,000 \\\hline \text { Net sales } & 4,700,000 \\\hline \text { Total liabilities, beginning-year } & 550,000 \\\hline \text { Total liabilities, end-of-year } & 530,000 \\\hline \text { Total stockholders' equity, beginning-year } & 760,000 \\\hline \text { Total stockholders' equity, end-of-year } & 745,000 \\\hline\end{array}$ Calculate the following company ratios: (a)Profit margin. (b)Total asset turnover. (c)Return on total assets. (d)Return on common stockholders' equity (assume the company has no preferred stock).

A common focus of financial statement users in evaluating a company's performance includes evaluation of its (1)______________________________,(2)________________________ and (3)____________________________.

Internal users of financial information:

Current assets minus current liabilities is equal to:

The use of horizontal and vertical analysis eliminates many differences between GAAP and IFRS,but the user must exercise some caution when drawing conclusions from these reports.

Financial reporting refers to:

Identify and describe three common tools of financial statement analysis.

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Match each of the following formulas with the appropriate terms

A change in inventory reporting from LIFO to FIFO is:

Corona Company's balance sheet accounts follow: $\begin{array}{lrrr}\text {At December 31}&2014&2013&2012\\\text {Assets}\\ \text { Cash } & \$ 25,868 & \$ 31,163 & \$ 31,182 \\\text { Accounts receivable, net } & 78,034 & 53,995 & 41,152 \\\text { Merchandise inventory } & 95,120 & 73,491 & 46,095\\\text { Prepaid expenses } & 8,330 & 8,099 & 3,429 \\\text { Plant assets,net } & 241,854 & 218,932 & 199,542\\\text { Total assets}&\$449,206&\$385,680&\$321,400\\\text {Liabilities and Equity}\\\text {Accounts payable}& \$ 108,058&\$ 67,135&\$ 42,849 \\\\text { Long-term notes payable secured by mortgages on}\\\text { plant assets}&85,791&87,819&71,029\\\text { Common stock, \$ 10 par value}&162,500&162,500&162,500\\\text { Retained earnings } & 92,857 & 68,226 & 45,022 \\ \text { Total liabilities and equity } & \$ 449,206 & \$ 385,680 & \$ 321,400 \\ \end{array}$ What is Corona Company's inventory turnover ratio for 2014,assuming net sales and gross profit for the period were $1,236,783,$927,587 respectively?

A company had a profit margin of 5%.If net income equaled $83,000 and average total assets equaled $45,000,how much were net sales?

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000.What is the company's return on common stockholders' equity?

A corporation reports the following year-end balance sheet data: $\begin{array} { | l | r | l | r | } \hline \text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 64,000 \\\hline \text { Accounts receivable } & 35,000 & \text { Long-term liabilities } & 72,000 \\\hline \text { Inventory } & 60,000 & \text { Common stock } & 100,000 \\\hline \text { Equipment } & 150,000 & \text { Retaired earnings } & 49,000 \\\hline \text { Total assets } & \$ 285,000 & \text { Total liabilities and equity } & \$ 285,000 \\\hline\end{array}$ Calculate the corporation's current ratio and its acid-test ratio.

A company has total assets of $5,600,482,common stock of $2,111,111,retained earnings of $1,058,473.What is the company's debt ratio?

A good financial statement analysis report usually includes the following six sections: (1)________________________,(2)______________________,(3)_________________,(4)__________________ (5)____________________ and (6)______________________.