Exam 13: Financial Statement Analysis

The most liquid of all assets is cash.

Following are selected data from the financial statements of Mother Nature Supplies: Accounts receivable \ 60,000 \ 38,000 Merchandise inventory 12,000 16,000 Total assets 450,000 380,000 Net sales 380,000 270,000 Cost of goods sold 160,000 210,000 -Refer to the data for Mother Nature Supplies. ? Which of the following would result from a horizontal analysis of its income statement?

______________________________________ is a line item on the income statement to reflect any gain or loss from an event that is both unusual in nature and infrequent in occurrence.

Since almost all debts require payment with quick assets, the quick ratio is more useful than the cash flow from operations to current liabilities ratio.

Which of the following formulas gives the inventory turnover ratio?

The acid-test ratio is a stricter test of a company's ability to pay its current debts as they are due than the current ratio is.

_____________ ratio is capable of telling the user everything there is to know about a particular company.

Crimson Company declared and paid $1,000,000 in dividends to the common stockholders.The effect of this transaction is that the

The three types of analysis that involve ratios are ____________________, ____________________, and ____________________.

Indicate the type of each ratio listed below. -Profit margin ratio

If Mussel Company has working capital of $540,000 and a current ratio of 3 to 1, the amount of current assets is:

Presented below are selected data from the financial statements of Parade Corp. 2016 Net income \ 150,000 \ 123,000 Weighted average number of common shares outstanding 105,000 95,000 Market price per share of common stock at the end of the year \ 12.00 \ 10.00 The price/earnings ratio for 2017 is

The two groups of users that are especially interested in profitability are ____________________ and ____________________.

Which of the following is a measure of the time that it takes to convert current assets into cash?

Dormont, Inc., a supplier, is thinking of extending credit to a Fab Company but decides not to because the Fab's current ratio is only 0.60.Do you agree with the supplier's decision? What other factors need to be considered in drawing any conclusions about a company's liquidity?

A company with a capital structure that shifts more toward debt financing will appear to be in a stronger position to pay interest and any principal amount that may be maturing by using its cash flows generated by operating activities.

The calculations for some profitability ratios are the same as the calculations for common-size analysis of the income statement.Which of the following profitability ratios would also be determined through a common-size analysis of the income statement?

Below is financial data for Fawnsworth Industries' current year. Net sales on account during year \ 500,000 Cost of merchandise sold during year 300,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000 -Refer to the data for Fawnsworth Industries. Based on this information, what is Fawnsworth's number of days' sales in inventory (assuming a 360 day year)?

For each of the following sentences, select the phrase or group of words that best completes the statement. -A measure of a company's success in earning a return for all providers of capital.

Which of the following items need not be reported separately at the bottom of the income statement?