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Exam 17: Financial Statement Analysis

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Question 81

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Match each ratio that follows to its use (items a-h) . Items may be used more than once. -Current 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

I) C) and D)
J) E) and G)

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Question 82

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CorpCo gathered the following information as of the end of the current fiscal year:​​ What is CorpCo's price-earnings ratio? Round your answer to one decimal place.

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CorpCo's price-earnings ratio ...

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Question 83

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A company reports the following:​ Calculate the company's earnings per share on common stock.

The relationship of each asset item as a percent of total assets is an example of vertical analysis.

The following income statement information is for Sadie Company:​ Using vertical analysis of the income statement for Sadie Company,determine the gross profit margin.

A common measure of liquidity is

A company reports the following income statement and balance sheet information for the current year:​ Determine the return on total assets.Round your answer to one decimal place.

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

Dividend yield on common stock is calculated as

A financial statement showing each item on the statement as a percentage of one key item on the statement is called a common-sized financial statement.

A company reports the following:​ Determine the (a)return on stockholders' equity and (b)return on common stockholders' equity.Round your answers to one decimal place.

Which of the following is not a characteristic evaluated in ratio analysis?

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year,there has been an acceleration in the collection of receivables.

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analyses?

Dollar amounts of working capital are difficult to assess when comparing companies of different sizes or in comparing such amounts with industry figures.

Match each definition that follows with the term (a-h) it defines. -An analysis of a company's ability to pay its current liabilities

An advantage of the current ratio is that it considers the makeup of the current assets.

Which of the following is the most useful in analyzing companies of different sizes?

Which of the following items appear on the corporate income statement before income from continuing operations?

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