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Exam 14: Financial Statement Analysis

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Question 21

Multiple Choice

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The following information pertains to Newman Company.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets Income Statement

A)
B)
C)
D)

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Question 22

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Leverage implies that a company

A) contains debt financing
B) contains equity financing
C) has a high current ratio
D) has a high earnings per share

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Question 23

Multiple Choice

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On a common-sized balance sheet, 100% is

The following data are taken from the financial statements: ^a Assuming that credit terms on all sales are n/45, determine for each year 1 the accounts receivable turnover and 2 the number of days' sales in receivables. Round intermediate calculations to whole numbers and final answers to two decimal places. ^b Comment on any significant trends revealed by the data.

The numerator of the rate earned on total assets ratio is

Cash and accounts receivable for Adams Company are provided below: What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?

Income statement information for Sadie Company is below: Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.

If a company has issued only one class of stock, the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

Brock Company's financial information is listed below.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets Liabilities and Stockholders' Equity Number of shares of common stock 6,000 Market price of common stock $20 What is the current ratio?

When computing the rate earned on total common stockholders' equity, preferred stock dividends are subtracted from net income.

An extraordinary item can result from

The independent auditor's report

Revenue and expense data for Young Technologies are as follows: a Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales.Round to the nearest whole percent. b Comment on the significant changes disclosed by the comparative income statement.

When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard.

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

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

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.

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

Match each definition that follows with the term a-h it defines. -useful for comparing one company to another or a company with industry averages

Based on the following data for the current year, what is the number of days' sales in inventory?