Exam 17: Financial Statement Analysis

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

The analysis of increases and decreases in the amount and percentage of comparative financial statement items is referred to as horizontal analysis.

The following data are taken from the financial statements:​​ Determine for the current year: (a) Return on total assets (b) Return on stockholders' equity (c) Return on common stockholders' equity (d) Earnings per share on common stock (e) Price-earnings ratio on common stock (f) Dividend yield​The current market price per share of common stock is $25.​Round dollar values to two decimal places and other final answers to one decimal place.

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.

Use the information below for Harding Company to answer the questions that follow. ​ $\text { Harding Company }$ Accounts payable 40,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 110,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 30,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 -Based on the data for Harding Company, what is the amount of working capital?

Corporate annual reports typically do not contain

For Garrison Corporation, the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year, reported as follows:?? Has the current position of Garrison Corporation improved? Explain.

The following items are reported on Denver Company's balance sheet:?? Cash \ 190,000 Marketable securities 160,000 Accounts receivable (net) 240,000 Inventory 350,000 Accounts payable 600,000 Determine the (a) current ratio and (b) quick ratio. Round your answers to one decimal place.

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

In computing the asset turnover ratio, long-term investments are excluded from average total assets.

The current ratio is

In the vertical analysis of an income statement, each item is generally stated as a percentage of total assets.

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will

Based on the following data for the current year, what is the number of days' sales in receivables? Sales on account during year \ 584,000 Cost of goods sold during year 300,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000

Condensed data taken from the ledger of St. Louis Company at December 31, for the current and preceding years, are as follows:? Year 2 Year 1 Current assets \ 160,000 \ 130,000 Property, plant, and equipment 450,000 400,000 Intangible assets 20,700 30,000 Current liabilities 70,000 80,000 Long-term liabilities 210,000 250,000 Common stock 225,000 150,000 Retained earnings 125,700 80,000 Prepare a comparative balance sheet, with horizontal analysis, for December 31, Year 2 and Year 1. (Round percents to one decimal place.)

If Epsilon Company's price-earnings ratio on common stock is greater than Iota Company's, then Iota Company would be expected to have the best potential for future common stock price appreciation.

Match each definition that follows with the term (a-h) it defines. -A percentage analysis of increases and decreases in related items on comparative financial statements

Based on the following data for the current year, what is the number of days' sales in inventory? Sales on account during year \ 1,204,500 Cost of goods sold during year 657,000 Accounts receivable, beginning of year 75,000 Accounts receivable, end of year 85,000 Inventory, beginning of year 85,600 Inventory, end of year 98,600

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.