Exam 12: Analyzing and Interpreting Financial Statements

The components of Tofield Ltd.'s capital structure and their related costs are as follows: Current liabilities \ 400,000 Long-term liabilities \ 1,000,00 Preferred shares \ 250,00 Common shares \ 250,00 Retained earnings \ 672,500 Net income \ 112,500 \ 80.000 interest paid \ 12,500 dividends paid \ 2,500 dividends paid If Tofield's corporate tax rate was 25%, what was their return on assets closest to?

What does an increase in a company's price-to-earnings ratio generally indicate?

What does an increase in the accounts receivable turnover mean?

What is another name for horizontal analysis?

High earnings quality is most likely to:

All of the following are items that management could use to manage earnings except:

The return on assets ratio is the product of which of the following?

Gross margin would be a meaningful ratio to calculate for all of the following types of businesses except:

Leiminster Co.is analyzing the solvency of Acme Manufacturing and has collected the following data: Total debt \ 2,000 \ 1,900 \ 1,750 Total equity \ 4,000 \ 4,500 \ 5,000 What would be a reasonable explanation of these financial results?

In a horizontal or trend analysis, what is each item expressed as a percentage of?

Grandview Company reported net earnings of $425,000 for 2014.Their retained earnings were $1,125,000 on January 1, 2014, and on $1,425,000 on December 31, 2014.Grandview had 50,000 common shares outstanding throughout the year with a recorded value of $200,000.What were their dividend payout ratio and book value per share for 2014? Dividend Book Value Pavout Ratio per Share A) 0 \ 4.00 B) 0 \ 32.50 C) 29.4\% \ 4.00 D) 29.4\% \ 32.50

What is a general rule to use in assessing the average collection period?

What is the problem with the current ratio and quick ratio as measures of liquidity? What other financial statement amounts would be useful in assessing liquidity?

What is Kang's interest coverage ratio closest to?

The following data are taken from the financial statements of Chow Company: 2015 2014 Average accounts receivable \ 540,000 \ 450,000 Net sales \ 5,970,000 \ 4,680,000 60% of sales are on account and the terms for all credit sales are 2/10 n/30. Required: A) Calculate the accounts receivable turnover and the average collection period for both years. B) What conclusions can an analyst draw about Chow's management of the accounts receivable? C) If management were able to collect the accounts receivable in line with their credit terms, what would their average accounts receivable balance be in each year? What would be the impact on the liquidity of the company?

What are the receivables turnover and inventory turnover used to analyze?

What might a decreasing accounts payable turnover ratio indicate?

What are Kang's debt-to-total assets ratio and debt-to-equity ratio closest to? Debt-to- Debt-to- total Assets A. $\quad31.3 \% \quad\quad\quad 45.6 \%$ B. $\quad31.3 \% \quad\quad\quad 31.3 \%$ C. $\quad23.8 \% \quad\quad\quad 45.6 \%$ D. $\quad23.8 \% \quad\quad\quad 31.3 \%$

Why is it important to separate a company's earnings into permanent earnings and transitory earnings?

A company had the following current assets and current liabilities: Cash \ 5,000 FVTOCI securities 15,000 Accounts receivable 75,000 Inventory 32,500 Prepaid insurance 2,500 Accounts payable 18,500 Unearned revenue 20,000 Current portion of long-term debt 5,000 What is their quick ratio closest to?