Exam 4: Financial Statement Analysis and Forecasting

The only debt a firm has outstanding is a $10 million, 8.0% bond issue.If their earnings before taxes is $5.2 million, then their times-interest-earned ratio would be:

Alberta High Skies Company has net income of $3 million.It issued 500,000 shares two years ago at an issue price of $20 per share, and the shares are now trading at $35 per share.What is Alberta High Skies' price-earnings ratio?

Which of the following is a productivity ratio?

Which of the following is NOT an efficiency ratio?

If two firms, GUW and BFG, have the same return on equity (ROE), then: I.The two companies must have the same operating performance. II.If GUW has higher leverage than BFG, then GUW must also have higher operating performance. III.If BFG has lower operating performance than GUW, then BFG must have higher leverage.

Return on equity (ROE)can be calculated by: Net Income / Average Shareholders' Equity.The reasoning for this method is:

When using a percent of sales method for forecasting, which is the most important variable to estimate?

What is the difference between the P/E ratio and the forward P/E ratio?

In 2022, Inglis Arctic Sports (IAS)had total sales of $35 million.The firm earned $3.00 per share and paid dividends of $1.00 per share.There are 1 million shares currently outstanding.The 2022 year-end balance sheet is shown below: Inglis Arctic Sports Consolidated Balance Sheet (at year end in thousands of dollars) You are a financial analyst with IAS and have been asked to prepare a financial plan for next year.You have been given the following information and projections for 2023 from the marketing and production departments: $\bullet$ Sales are projected to grow by 15.0% in 2023.Cash, accounts receivable, accounts payable and wages payable are expected to grow at the same rate as sales. $\bullet$ New capital expenditures will be $3.75 million for the replacement of a production line. $\bullet$ Depreciation expense of $1,200,000 will be recorded in 2023. $\bullet$ The new more efficient production line is expected to result in an inventory increase of only 7.5% from 2022 levels. $\bullet$ Management would like to achieve a total debt-to-equity ratio of 1.0 in 2023, while keeping long-term debt unchanged from 2022. $\bullet$ Management expects the net profit margin and dividend payout ratios to remain the same as in 2022. Forecast the 2023 balance sheet for IAS.

Charles invested $3 million in the bonds of Toys & Tots Company eight years ago.Recent recalls of some toys produced by Toys & Tots has Charles worried about whether he will receive his annual interest cheque from the firm.Which ratio(s)will most directly address Charles' concern? I.Debt / asset II.Debt / equity III.Times interest earned

Voyage Company is in a very high growth industry while EZgoing Company is in a low growth industry.Comparing their dividend payout ratios we would expect:

Igor the intern has obtained the following financial data for PDQ Corporation: The net profit margin for 2022 is:

On their most recent balance sheet, a company reports total assets of $8 million, common shares of $4 million, and retained earnings of $2 million.The debt-to-asset ratio is:

Mr.B.Baggins has just computed the operating margin and the gross profit margin for Hoppit Company and has found that the operating margin is greater than the gross profit margin.Is this possible? Why or why not? Explain your reasoning.

The external financing requirements (EFR)of a firm are a function of:

The International Financial Reporting Standards (IFRS)apply to Canadian public companies.How does that affect comparability of financial statements across countries?

What is the risk of comparing financial ratios reported by different companies?

The following information was extracted from Webb Company's financial statements: The current ratio and quick ratio for Webb Company are:

.Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or expense or opening or closing inventory), The break-even point for Widget Company is:

What is the difference between a liquidity ratio and a leverage ratio?