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Exam 14: Financial Statement Analysis

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Question 21

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A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000; and inventories, $222,500. Current liabilities are $225,000. The current ratio is 2.5.

A) True
B) False

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Question 22

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When the return on total assets is greater than the return on common stockholders' equity, the management of the company has effectively used leverage.

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B) False

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Question 23

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Revenue and expense data for Bluestem Company are as follows: (a)Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales.(b)Comment upon significant changes disclosed by the comparative income statement.Round percentages to one decimal place.

The balance sheets at the end of each of the first two years of operations indicate the following: -The numerator of the return on common stockholders' equity is

The balance sheets at the end of each of the first two years of operations indicate the following: -Using the balance sheets for Kellman Company, if net income is $250,000 and interest expense is $30,000 for Year 2, what are the earnings per share on common stock for Year 2?

A common measure of liquidity is

A company reported the following: Calculate the company's price-earnings ratio. Round your answer to one decimal place.

In a common-sized balance sheet, 100% is

Match each definition that follows with the term (a-h) it defines. -an analysis of a company's ability to pay its current liabilities A)solvency B)leverage C)times interest earned D)horizontal analysis E)vertical analysis F)common-sized financial statements G)current position analysis H)profitability analysis

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

If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.

The balance sheet data of Randolph Company for two recent years appears below: (a)Using horizontal analysis, show the percentage change for each balance sheet item using Year 1 as a base year.(b)Using vertical analysis, prepare a comparative balance sheet.Round percentages to one decimal place.

-Based on the data for Privett Company, what is the amount of working capital?

A company reports the following: Sales $2,520,000 Average total assets (excluding long-term investments)1,400,000 Determine the asset turnover ratio. Round your answer to one decimal place.

Horizontal analysis is a technique for evaluating financial statement data

Match each ratio that follows to its use (items a-h). Items may be used more than once. -price-earnings (P/E) ratio A)assess the profitability of the assets B)assess how effectively assets are used C)indicate the ability to pay current liabilities D)indicate how much of the company is financed by debt and equity E)indicate instant debt-paying ability F)assess the profitability of the investment by common stockholders G)indicate future earnings prospects H)indicate the extent to which earnings are being distributed to common stockholders

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

A company reports the following: Determine the (a) inventory turnover, and (b) number of days' sales in inventory. Round your answer to one decimal place.

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.Assets Liabilities and Stockholders' Equity Income Statement -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. What is the return on total assets for this company?

CorpCo gathered the following information as of the end of the current fiscal year: What is CorpCo's dividend yield? Write your answer as a percent, rounded to one decimal place.