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 101

True/False

Review LaterAdd Note

Review Later

An advantage of common-size statements is that they show patterns in data across periods.

A) True
B) False

Correct Answer

verified

Show Answer

Question 102

True/False

Review LaterAdd Note

Review Later

A trend percent is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

A) True
B) False

Correct Answer

verified

Show Answer

Question 103

True/False

Review LaterAdd Note

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

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:

________ ratios include the price-earnings ratio and dividend yield.

The comparative income statements for Silverlight Company are shown below. Calculate the following ratios for Year 2: (a) profit margin (b) gross margin (c) times interest earned.

Financial information for Sigma Company is presented below. Calculate the following ratios for Year 2: (a) Inventory turnover. (b) Accounts receivable turnover. (c) Return on total assets. (d) Times interest earned. (e) Total asset turnover.

Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

Gains and losses that are neither unusual nor infrequent are reported as:

Refer to the following selected financial information from Mojave Corp. Compute the company's times interest earned. $\begin{array}{lr}\text { Interest expense } & \$ 9,100 \\\text { Income tax expense } & 22,700 \\\text { Net income after tax } & 56,500\end{array}$

Vertical analysis is the comparison of a company's financial condition and performance across time.

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

Industry standards for financial statement analysis:

The building blocks of financial statement analysis include (1) liquidity, (2) solvency, (3) profitability, and (4) market prospects.

What are the four standards for comparisons in financial analysis? Give an example of each.

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

The following current year information is available from a manufacturing company: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 740,000 \\\hline \text { Gross profit on sales } & 276,000 \\\hline \text { Operating income } & 64,000 \\\hline \text { Income before taxes } & 44,000 \\\hline \text { Net income } & 33,600 \\\hline \text { Accounts Receivable, beginning-year } & 58,000 \\\hline \text { Accounts Receivable, end-of-year } & 72,000 \\\hline\end{array}$ Calculate the company's accounts receivable turnover and its days' sales uncollected.

External users of accounting information make the strategic and operating decisions of a company.

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:

Net income divided by average total assets is: