Exam 17: Analysis of Financial Statements

The ability to provide financial rewards sufficient to attract and retain financing is called:

Refer to the following selected financial information from Graceworks Corp. Compute the company's inventory turnover for Year 2. Year 2 Year 1 Merchandise inventory 271,000 253,500 Cost of goods sold 486,400 433,100

Match each of the following terms with the appropriate formulas. - $\frac{\text {Net sales - Cost of goods sold }}{\text {Net sales }}$

All of the following statements regarding a business segment are true except:

Explain the purpose of financial statement analysis for both external and internal users.

A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals 7.85%.

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base. 2016 Net sales \ 276,200 \ 231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820

Refer to the following selected financial information from Marston Company. Compute the company's accounts receivable turnover for Year 2. Year 2 Year 1 Accounts receivable, net 86,500 82,750 Net sales 723,000 693,000

Refer to the following selected financial information from McCormik, LLC. Compute the company's working capital for Year 2. Year 2 Year 1 Cash \ 37,500 36,850 Short-term investments 90,000 90,000 Accounts receivable, net 85,500 86,250 Merchandise inventory 121,000 117,000 Prepaid expenses 12,100 13,500 Plant assets 388,000 392,000 Accounts payable 113,400 111.750 Net sales 711,000 706,000 Cost of goods sold 390,000 385,500

External users of accounting information manage and operate the company.

Profitability is the ability to provide financial rewards sufficient to attract and retain financing.

The ability to generate positive market expectations is called:

Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:

The current ratio is calculated as current liabilities divided by current assets.

Desjardin Landscaping's income statement reports net income of $75,300, which includes deductions for interest expense of $11,500 and income taxes of $34,900. Its times interest earned is:

Vertical analysis is the comparison of a company's financial condition and performance across time.

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for operating expenses using Net sales as the base. 2016 Net sales \ 276,200 \ 231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820

A corporation reports the following year-end balance sheet data. The company's equity ratio equals: Cash \ 40,000 Curtent liabilities \ 75,000 Accounts receivable 55,000 Iong-term liabilities Inventory 60,000 Common stock 100,000 Equipment Retaned eamings 90,000 Total assets Total liabilities and equity \ 300,000

Describe the purpose of horizontal financial statement analysis and how it is applied.

Evaluation of company performance does not include analysis of (1)past and current performance, (2)current financial position, and (3)future performance and risk.