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Exam 15: Financial Statement Analysis

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Question 31

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Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

A) True
B) False

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Question 32

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If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

A) True
B) False

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Question 33

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The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

Match each ratio that follows to its use items a-h) . Items may be used more than once. -rate earned on total assets

What is the rate earned on total assets for this company? -A company reports the following: Net income $160,000 Preferred dividends $10,000 Shares of common stock outstanding 20,000 Market price per share of common stock $35 The company's earnings per share on common stock is

Based on the following data, what is the accounts receivable turnover? Sales on account during year $700,000 Cost of merchandise sold during year 270,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year

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.

Define solvency and profitability. How are they alike?

Corporate annual reports typically do not contain

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. -What is the rate earned on total assets for Diane Company?

What is the rate earned on total assets for this company? -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.

A company reports the following income statement and balance sheet information for the current year: $\begin{array} { | l | l | } \hline \text { Net income } & \$ 180,000 \\\hline \text { Interest expense } & 20,000 \\\hline \text { Average total assets } & 2,000,000 \\\hline\end{array}$ Determine the rate earned on total assets. Round your answer to one decimal place.

The following information is available for Meyer Company: Dividends per share of common stock $1.80 Market price per share of common stock $30.00 Which of the following statements is correct?

Assume the following sales data for a company: Current year $325,000 Preceding year 250,000 What is the percentage increase in sales from the preceding year to the current year?

An increase in the accounts receivable turnover may be due to an improvement in the collection of receivables or to a change in the granting of credit and/or in collection practices.

An extraordinary item can result from

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.

Hsu Company reported the following on its income statement: Income before income taxes $420,000 Income tax expense 120,000 Net income $300,000 Interest expense was $80,000. Hsu Company's times interest earned is

From the following data for Norton Company for the year ended December 31, prepare a multiple-step income statement. Show earnings per share for the following: income from continuing operations, loss on discontinued operations less applicable income tax), income before extraordinary item, extraordinary item less applicable income tax), and net income.

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?