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Exam 14: Financial Statement Analysis

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Question 31

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Using the balance sheets for Kellman Company,if net income is $250,000 and interest expense is $20,000 for Year 2,and the market price of common shares is $30,what is the price-earnings ratio on common stock for Year 2? (Round intermediate calculation to two decimal places and final answers to one decimal place.)

A) 7.5
B) 13.4
C) 12.1
D) 8.5

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

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Question 32

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Match each ratio that follows to its use (items a-h) .Items may be used more than once. -ratio of liabilities to stockholders' equity

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) A) and H)
J) D) and E)

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Question 33

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

What is the return on total assets for Diane Company?

Based on the data for Privett Company,what is the quick ratio,rounded to one decimal point?

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

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

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

Comparative financial statements are designed to compare the financial statements of two or more corporations.

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

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

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

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

The numerator of the return on total assets is

Abigail Company reports the following: ​ Determine the (a)return on stockholders' equity,and (b)return on common stockholders' equity.Round your answer to one decimal place.

Brock Company's financial information is listed below.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 ​ What is the current ratio?

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

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

Comparative information taken from the 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.

What are the dividends per common share for Diane Company?