Exam 14: Financial Statement Analysis Available Online in Connect

Darden Company has cash of $40,000, accounts receivable of $60,000, inventory of $32,000, and equipment of $100,000. Assuming current liabilities of $48,000, this company's working capital is:

The following balance sheet information is provided for Patton Company: Assuming Year 2 cost of goods sold is $730,000, what is the company's average days to sell inventory? (Use 365 days in a year. Do not round your intermediate calculations.)

The following balance sheet information was provided by Western Company: Assuming Year 2 net credit sales totaled $270,000, what was the company's average days to collect receivables? (Use 365 days in a year. Do not round your intermediate calculations.)

Financial statement analysis involves forms of comparison including:

Phips Company paid total cash dividends of $200,000 on 25,000 outstanding common shares. On the most recent trading day, the common shares sold at $80. What is this company's dividend yield?

Which of the following statements regarding net margin is not true?

The following balance sheet information was provided by O'Connor Company: If net credit sales for Year 2 totaled $270,000, what is the company's most recent accounts receivable turnover?

Which of the following is (are)objective(s)of ratio analysis?

Longwood Company had a current ratio of 3:1 at the end of Year 1. The asset section of the company's balance sheet is provided below: Required:1)Compute Longwood Company's end-of-year working capital.2)Compute the company's quick (acid-test)ratio.3)The company has a debt agreement with its bank that authorizes the bank to call in its loan to the company if the company's current ratio falls below 3:1 as of the last day of any month during the term of the loan. During January Year 2, the company engaged in the three following transactions:(a)Collected $100,000 on account;(b)Purchased inventory on account, $50,000(c)Paid accounts payable, $60,000Will the company be in default after completing these transactions? Justify your answer. Round your answers to two decimal places.

Which of the following statements about financial statement analysis is not true?

Alpha Company provided the following balance sheet for Year 2: What is the company's plant assets to long-term liabilities ratio?

Miller Company reported gross sales of $850,000, sales returns and allowances of $15,000 and sales discounts of $5,000. The company has average total assets of $500,000, of which $250,000 is property, plant, and equipment. What is the company's asset turnover ratio?

Indicate whether each of the following statements about financial statement analysis is true or false.________ a)The ratio, plant assets to long-term liabilities, is a measure of a company's ability to obtain additional long-term financing.________ b)Generally, a company's current assets should be purchased using long-term financing such as bonds payable.________ c)Ratios that measure a company's profitability provide some measure of the effectiveness of the company's management.________ d)Net margin indicates the amount remaining from each sales dollar after cost of goods sold has been subtracted out.________ e)Net margin is also sometimes called the return on assets ratio.

Working capital is defined as:

The accounting concept or principle that is perhaps the greatest single culprit in distorting the results of financial statement analysis is the:

You are considering an investment in Apple stock and wish to assess the firm's short-term debt-paying ability. All of the following ratios are used to assess liquidity except:

Benson Company declared and paid a cash dividend totaling $500,000 on its common stock. As a result of this transaction, the company's debt to assets ratio will:

Solvency ratios are used to assess a company's:

While horizontal analysis examines one item over many time periods, vertical analysis examines many items in the same interval of time.

The following balance sheet information is provided for Duke Company for Year 2: What is the company's current ratio? (Round your answer to 2 decimal places.)