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Exam 17: Financial Statement Analysis

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Question 71

Multiple Choice

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Which of the following would appear as an unusual item on the income statement?

A) loss resulting from the sale of fixed assets
B) gain resulting from the disposal of a segment of the business
C) presentation of earnings per share
D) stock split

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Question 72

Multiple Choice

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Which of the following items should be classified as an unusual item on an income statement?

A) gain on the retirement of a bond payable
B) gain on a sale of a long-term investment
C) loss due to a discontinued operation in Colorado
D) selling treasury stock for more than the company paid for it

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Question 73

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

All of the following are typically included in the Management's Discussion and Analysis in annual reports except

Revenue and expense data for Young Technologies Inc.are as follows:​​

Assume the following sales data for a company:​​ What is the percentage increase in sales from the preceding year to the current year?

If Epsilon Company's price-earnings ratio on common stock is greater than Iota Company's,then Iota Company would be expected to have the best potential for future common stock price appreciation.

Which of the following is required by the Sarbanes-Oxley Act?

Solvency analysis focuses on the ability of a business to pay its long-term liabilities.

Comparative information taken from Friction Company's financial statements is shown below.Using horizontal analysis,show the percentage change and direction (increase or decrease)from Year 1 to Year 2 with Year 1 as the base year.

Rho,Sigma,and Tau companies have the following data for the current year:​​ Which company would be expected to have the best potential for future common stock price appreciation?

Selected data from Carmen Company at year-end are presented below.​​ Calculate: (a) Asset turnover ratio (b) Return on total assets (c) Return on common stockholders' equity (d) Earnings per share on common stock.​Assume the company had no preferred stock or interest expense.​Round dollar values to two decimal places and other final answers to one decimal place.

Leverage implies that a company

On a common-sized income statement,all items are stated as a percent of total assets or equities at year-end.

Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000.It had 50,000 shares of common stock outstanding during the entire year.Richards Corporation's common stock is selling for $35 per share.The price-earnings ratio is

The analysis of increases and decreases in the amount and percentage of comparative financial statement items is referred to as horizontal analysis.

The numerator of the return on common stockholders' equity is

The numerator in calculating the accounts receivable turnover is

Define solvency and profitability.How are they alike?

On a common-sized balance sheet,100% is