Exam 9: Metric Analysis of Financial Statements

The percentage analysis of accounts payable to total liabilities is an example of:

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

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

The balance sheets at the end of each of the first two years of operations indicate the following: ? 2017 2018 Total current assets \ 600,000 \ 560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 125,000 80,000 Total long-term liabilities 350,000 250,000 Preferred 9\% stock, \ 100 par 100,000 100,000 Common stock, \ 10 par 600,000 600,000 Paid-in capital in excess of par-common stock 60,000 60,000 Retained earnings 325,000 210,000 ? Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, what is the return on stockholders' equity for 2017 (round to one decimal place)?

Based on the following data for the current year, compute the inventory turnover. ? Net sales on account during the year \ 585,000 Cost of merchandise sold during the year 380,000 Accounts receivable, beginning of year 47,000 Accounts receivable, end of year 36,000 Inventory, beginning of year 92,000 Inventory, end of year 113,000

The percentage change in long-term liabilities between two balance sheet dates is an example of:

A company with $60,000 in current assets and $40,000 in current liabilities pays a $1,000 current liability.As a result of this transaction, the current ratio and working capital will:

Which of the following focuses on the ability of a company to earn profits?

The balance sheets at the end of each of the first two years of operations indicate the following: 2017 2018 Total current assets \ 600,000 \ 560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 125,000 80,000 Total long-term liabilities 350,000 250,000 Preferred 9\% stock, \ 100 par 100,000 100,000 Common stock, \ 10 par 600,000 600,000 Paid-in capital in excess of par-common stock 60,000 60,000 Retained earnings 325,000 210,000 ? Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, and the market price is $40, what is the price-earnings ratio on common stock (round to one decimal place)?

The ratio of current assets to current liabilities is referred to as the acid-test ratio.

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

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

Which of the following is included in the computation of the quick ratio?

If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.

The relationship of $320,000 to $200,000, expressed as a ratio, is:

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.

Which of the following is the formula to calculate current ratio?

Based on the following data for the current year, determine the accounts receivable turnover. ? Net sales on account during the year Cost of merchandise sold during the year Accounts receivable, beginning of year Accounts receivable, end of year Inventory, beginning of year Inventory, end of year $\$ 550,000$ 350,000 35,000 25,000 80,000 125,000

The following data are taken from the financial statements: Current Preceding Year Year Net sales \ 3,592,000 \ 4,056,000 Cost of goods sold 2,092,000 2,656,000 Average monthly inventory 332,000 328,000 Inventory, end of year 372,000 347,000 ? (a)Determine for each year (1) the inventory turnover and (2) the days' sales in inventory. (b)Comment on the favorable and unfavorable trends revealed by the data.

The comparison of the financial data of a single company for two or more years is called horizontal analysis.