Exam 12: Financial Statement Analysis

Use the following information for questions: The following data was taken from the accounting records of Darias Corporation: 2011 2010 Total assets \ 950,000 \ 850,000 Total liabilities 250,000 240,000 Preferred shares 75,000 75,000 Common shares 300,000 300,000 Retained earnings 325,000 235,000 Additional data: Net income 140,000 Preferred dividend 15,000 Interest expense 25,000 Sales revenue 980,000 Tax rate 32\% -The return on equity for 2011 is closest to:

Which of the return on investment ratios would be of most interest to the management of a firm?

Analyzing financial data on the same company over time is called cross sectional analysis.

Use the following information for questions: Consider the following income statement data for Milan Inc.: 2011 2010 Sales revenue \9 7,000 \8 6,200 Less: Cost of goods sold 45,600 53,400 Gross profit 51,700 32,800 Less: Selling and administration costs Income before 22,500 18,300 income tax 29,200 14,500 -What was the 2011 net profit margin before income tax closest to?

Which of the following transactions will increase the current ratio assuming the ratio is initially greater than 1)?

Use the following data to answer questions . From the year-end financial statements of Fraggle Rock Ltd: Common Preferred Average shareholders' equity \ 1,500,000 \ 120,000 Average number of shares outstanding 100,000 30,000 Dividends paid 50,000 90,000 Net Income \ 340,000 Interest expense \ 22,000 Average Total assets \ 2,535,000 -By comparing Fraggle Rock's ROE and ROA, the following conclusions can be drawn:

Use the following information for questions: Review of the financial statements revealed the following for Sonoma Inc.: Sales $1,250,000, Net income $37,500, Total assets $650,000, Long-term debt $750,000, Interest expense $65,000 and Cost of goods sold $775,000. -What is the Sonoma's gross profit margin closest to:

Use the following data to answer questions . From the year-end financial statements of Fraggle Rock Ltd: Common Preferred Average shareholders' equity \ 1,500,000 \ 120,000 Average number of shares outstanding 100,000 30,000 Dividends paid 50,000 90,000 Net Income \ 340,000 Interest expense \ 22,000 Average Total assets \ 2,535,000 -The ROE for Fraggle Rock is closest to:

Use the following information for questions: The following data was taken from the accounting records of Darias Corporation: 2011 2010 Total assets \ 950,000 \ 850,000 Total liabilities 250,000 240,000 Preferred shares 75,000 75,000 Common shares 300,000 300,000 Retained earnings 325,000 235,000 Additional data: Net income 140,000 Preferred dividend 15,000 Interest expense 25,000 Sales revenue 980,000 Tax rate 32\% -The total asset turnover for 2011 is closest to:

Use the following information for questions: Review of the financial statements revealed the following for Sonoma Inc.: Sales $1,250,000, Net income $37,500, Total assets $650,000, Long-term debt $750,000, Interest expense $65,000 and Cost of goods sold $775,000. -Assuming a corporate tax rate of 35%, what is the company profit margin ratio closest to?

The auditor's report guarantees the accuracy of the information presented in the financial statements.

Financial leverage occurs when the after-tax cost of borrowed funds is:

Use the following information for questions: Dorada Industries' books revealed the following data for 2011: Total assets \ 575,000 Shareholders' equity \ 222,900 Current liabilities 52,100 Long-term liabilities 300,000 Operating Cash flow 125,500 -The debt\equity ratio for 2011 is closest to:

Which of the following companies would be least likely to calculate accounts receivable turnover ratios?

Which of the following ratios would be considerably higher for a financial services company as opposed to a manufacturer?

On a common size income statement, all items are shown as:

All of the following are measures of a company's short-term liquidity except?

All of the following measure activity except for:

Which of the following is a short-term liquidity ratio?

Which of the following would indicate a decrease in a company's short-term liquidity?