Exam 5: Using Financial Statement Information

Use the information that follows taken from Carter Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 3 through 9. -If the industry in which Carter is a member has an average return on equity of 22%, determine if in 2010, Carter is more or less profitable than the average firm in its industry.

A standard audit report states that the financial statements

Identify two forms of analyzing financial statements at a particular point in time. Which of these forms is subject to great variation among different analysts?

Norton Company has the following assets on January 1, 2010 and January 1, 2009. If Norton's current ratio is 2.20 for 2009 and its current liabilities are $550,000, what is the amount of its inventory? a. $197,000 b. $381,000 c. $238,636 d. There is not enough information to answer this question.

Accounting numbers are useful in that they

Which of the following ratios would be of primary importance to a manager in evaluating the success of a computerized collection process?

Walker Company has the following assets on January 1, 2010 and January 1, 2009. If Walker's quick ratio is 3.00 for 2010, what is the amount of its current liabilities? a. $325,000 b. $259,000 c. $285,000 d. There is not enough information to answer this question.

Buffalo Company has current assets, current liabilities, and long-term liabilities of $9,000, $3,000, and $4,000, respectively at the end of 2010. How much cash can Buffalo use to acquire equipment and retain a current ratio of at least 2.0? a. $1,000 b. $3,000 c. $4,000 d. $6,000

Financial statements help present and potential investors, creditors, and other users in assessing the amount, timing, and uncertainty of

Investors who use accounting information to guide trading in foreign securities

Use the information that follows taken from Carter Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 3 through 9. -The industry in which Carter is a member has an average return on assets of 18%. Carter reported no interest expense during 2010. Determine if Carter is more or less profitable in 2010 than the average firm in its industry.

Return on equity helps assess a company's

Match the correct ratio name from the list below labeled a through f with the ratio formulas appearing in items 1 through 4. ____ 1. Market price per share / earnings per share ____ 2. Dividends per share / market price per share ____ 3. Average total liabilities / average total shareholders' equity ____ 4. Net income / average shareholders' equity

The quick ratio helps assess a company's

Operating performance is a company's ability to

Book value fails to reflect true value primarily because:

What role do investment services, such as Moody's and Standard & Poor's, play in the assessment of a business environment?

Norton Company has the following assets on January 1, 2010 and January 1, 2009. If Norton's quick ratio is 2.60 for 2010 and its current liabilities are $512,000, what is the amount of its accounts receivables? a. $324,000 b. $204,800 c. $715,200 d. There is not enough information to answer this question.

Match the correct ratio category from the list below labeled a through e with each ratio that appears in items 1 through 12.

Explain the concept of leverage.