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Exam 14: Financial Statement Analysis

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Question 51

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Selected data from the Carmen Company at year end are presented below: Calculate: a ratio of sales to assets; b rate earned on total assets; c rate earned on common stockholders' equity and d earnings per share on common stock.Assume the company had no preferred stock or interest expense.Round percentage values to one decimal place and dollar values to zero decimal place.

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With the information provided, the profi...

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Question 52

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

A)
B)
C)
D)

E) A) and B)
F) A) and C)

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Question 53

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A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

If two companies have the same current ratio, their ability to pay short-term debt is the same.

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.

The purpose of an audit is to

Match each definition that follows with the term a-h it defines. -occurs when a company abandons a segment

The following information has been condensed from the December 31 balance sheets of Gabriel Co.: a Determine the ratio of fixed assets to long-term liabilities for each year. b Determine the ratio of liabilities to stockholders' equity for each year. c Comment on the year-to-year changes for both ratios.Round your answers to two decimal places.

Based on the above data, what is the quick ratio, rounded to one decimal point?

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.

The following data are taken from the balance sheet at the end of the current year. Determine the a working capital, b current ratio, and c quick ratio.Round ratios to the nearest tenth.

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

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

An extraordinary item must be either unusual in nature or infrequent in occurrence.

Factors that reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability.

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

A firm selling food should have higher inventory turnover rate than a firm selling office furniture.

A loss on disposal of a segment would be reported in the income statement as an

A company reports the following: Income before income tax $600,000 Interest expense 150,000 Determine the number of times interest charges are earned.Round your answer to one decimal place.