Exam 16: Financial Statement Analysis

Jill's Market has an inventory turnover of 120 times. Scott's Market has a turnover of 128 times. Scott's is more effective in managing inventory.

Selected financial data from Harlow Company for the most recent year appear below: The income tax rate is 30%. The return on sales ratio was closest to

Swanson Company had $250,000 of current assets and $90,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Swanson Company's current ratio?

Last year Neil Company had a net income of $170,000, income tax expense of $37,000, and interest expense of $24,000. The company's times-interest-earned ratio was closest to

Last year Fuller Company had a net income of $410,000, income tax expense of $50,000, and interest expense of $34,000. The company's times-interest-earned ratio was closest to

In vertical analysis, line items on the income statement are generally expressed as a percentage of

Boyle Corporation had the following comparative current assets and current liabilities: During 2014, credit sales and cost of goods sold were $600,000 and $350,000, respectively. Required: Compute the following liquidity measures for 2014:

Assuming a starting point of a 1:1 relationship, state the effect of the following transactions on the current ratio. Use increase, decrease, or no effect for your answer.

Figure 16-4. Condensed financial statements for Black Company appear below: There were 72,000 shares of common stock outstanding throughout the 2014. Dividends on common stock amounted to $320,400 and dividends on preferred stock amounted to $45,000. The market value of a share of common stock was $54 at the end of 2014. The income tax rate is 30%. -Refer to Figure 16-4. Required: Calculate the following leverage ratios for 2014:

Common-size analysis expresses each item in a financial statement as a percent of a base amount.

Earnings per share is an indication of how much

The current ratio is a

A common measure of profitability is

MATCHING Match the classifications of ratios with each description. a. Liquidity Ratio b. Leverage Ratio c. Profitability Ratio d. Horizontal Analysis e. Trend Analysis -Debt-to-equity ratio

____________________ represents the percentage of each sales dollar that is left over from net income after all expenses have been subtracted.

Investors who prefer gains through appreciation will generally prefer a ___________ payout ratio.

What do profitability ratios measure and what is their significance?

The following information is summarized from the balance sheets of Kress Inc. and Ross Corp. at December 31, 2013. Neither company has inventory.

Smith Inc. is a wholesaler of snow skiing gear. During 2014, Smith expanded its retail business by adding over 50 shops. The following information is obtained from the comparative financial statements included in the company's 2014 annual report.

Figure 16-4. Condensed financial statements for Black Company appear below: There were 72,000 shares of common stock outstanding throughout the 2014. Dividends on common stock amounted to $320,400 and dividends on preferred stock amounted to $45,000. The market value of a share of common stock was $54 at the end of 2014. The income tax rate is 30%. -Refer to Figure 16-4. Required: Calculate the following liquidity ratios for 2014.