Exam 5: Using Financial Statement Information

Assume that the following financial ratios were computed from the 2009 financial statements of Florida Industries: What was the return on equity for Florida in 2009? a. 4% b. 33% c. 51% d. 11%

In what ways might an investor use accounting information provided by a foreign company differently from information provided by a domestic corporation?

The use of financial statements for predicting future earnings and cash flows is limited due to

A standard audit report

Briefly describe the solvency and profitability of a company with a quick ratio of 4.74 and return on equity of 0.49.

Assume that the following financial ratios were computed from the 2009 financial statements of Florida Industries: If Florida holds its other ratios constant in 2010, but increases its capital structure leverage ratio to 3.00, what will be the 2010 return on equity? a. 15% b. 51% c. 86% d. 44%

Which of the following ratios would be of primary importance to a creditor in deciding to extend long-term credit?

Many ratios require an average be used for the balance sheet numbers because the

How might a company overstate performance? Why might this occur?

Use the information that follows taken from Tyler Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 13 through 19. -The industry in which Tyler is a member has an average debt/equity ratio of 0.98. Determine if, as measured by Tyler's debt/equity ratio on December 31, 2010, Tyler is taking full advantage of investing borrowed capital in its operations relative to that of the average firm in its industry.

Information concerning industry averages will likely be found in

Samson Company has common stock of $150,000 and retained earnings of $140,000 at yearend. During the year, 20,000 shares of stock were outstanding. Net income was reported as $70,000. What is the company's earnings per share? a. $3.50 b. $1.07 c. $0.73 d. $10.25

Use the information that follows taken from Tyler Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 13 through 19. -If the industry in which Tyler is a member has an average return on assets of 11%, determine if in 2010, Tyler is more or less profitable than the average firm in its industry. Assume Tyler has no interest expense.

Assume that the following financial ratios were computed from the 2009 financial statements of Florida Industries: If Florida holds its other ratios constant in 2010, but increases its profit margin to 36%, what will be the 2010 return on assets? a. 5% b. 78% c. 61% d. 51%

Using borrowed funds to generate returns for the shareholders is called

Why are all companies not audited by certified public accountants?

The current ratio is

Which one of the following is a reason a company's reported book value and its true value may differ?

Use the information that follows taken from Campbell Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 45 through 48. -Calculate Campbell's inventory turnover ratio and accounts receivable turnover ratio for the year ended 2010. Further, assume that in Campbell's industry, the industry average inventory turnover ratio is 12 and the industry average receivables turnover ratio is 14.

How does operating performance differ from financial flexibility?