Exam 16: Financial Statement Analysis

Figure 16-7 There were 30,000 shares of common stock outstanding throughout 2013. Dividends on common stock amounted to $21,000 and dividends on preferred stock amounted to $30,000. The market value of a share of common stock was $36 at the end of 2013. The income tax rate is 40%. The accounts receivable and inventory accounts had beginning balances of $58,500 and $101,400 respectively. Total assets at the beginning of the year were $430,500. -Refer to Figure 16-7. Required: Calculate the following ratios: A. Current ratio B. Quick ratio C. Accounts receivable turnover ratio and accounts receivable turnover in days D. Inventory turnover ratio and inventory turnover in days

Return on sales is calculated by dividing

Presented below are selected data from the financial statements of Harper Company for 2014, 2013, and 2012.

MATCHING Match the classifications of ratios with each description. a. Liquidity Ratio b. Leverage Ratio c. Profitability Ratio d. Horizontal Analysis e. Trend Analysis -A measure of the company's ability to pay its short-term liabilities out of short-term assets

Common-size statements are statements of companies of similar size and operations.

A successful grocery store would probably have

MATCHING Match the classifications of ratios with each description. a. Liquidity Ratio b. Leverage Ratio c. Profitability Ratio d. Horizontal Analysis e. Trend Analysis -A ratio that indicates what proportion of equity and debt the company is using to finance its assets.

The following information is available from the balance sheets at the end of 2014 and 2013 for Shelley Company: Net income for 2014 and 2013 was $340,000 and $300,000, respectively. Interest expense was $45,000 for 2014 and the tax rate is 30%. Answer the following:

Which of the following is considered a liquidity analysis ratio?

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

Eaton Corporation had net income of $6,000,000 in 2010. Using 2014 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014. Required: Compute the net income reported by Eaton Corporation for 2013 and 2014.

The use of common-size analysis makes comparisons more meaningful because percentages eliminate the effects of size.

MATCHING Match the classifications of ratios with each description. a. Liquidity Ratio b. Leverage Ratio c. Profitability Ratio d. Horizontal Analysis e. Trend Analysis -Measures the degree of protection provided to company creditors

_____________________ expresses a line item as a percentage of some other line item for the same period.

Which profitability ratio requires the use of earnings per share and the current market price?

Which of the following is an example of liquidity analysis?

The ratios that are used to determine a company's short-term debt paying ability are

A high accounts receivable turnover ratio indicates

The accounts receivable turnover and inventory turnover ratios are used to analyze

MATCHING Match the classifications of ratios with each description. a. Liquidity Ratio b. Leverage Ratio c. Profitability Ratio d. Horizontal Analysis e. Trend Analysis -A measure viewed by many investors as an important indicator of stock values. It is found by dividing the market price per share by the earnings per share