Exam 13: Financial Statement Analysis

Inventory is more liquid than accounts receivable because receivables must be collected and some customers may not be willing to pay, while inventory need only be sold in a retail store.

If two companies in the same industry use different methods to value inventory, this makes comparisons more difficult but not impossible.

Select the ratio that each statement below most properly satisfies. -The relationship between net sales and total assets

The concept of leverage refers to the practice of using borrowed funds and amounts received from preferred stockholders in an attempt to earn an overall return that is higher than the cost of these funds.

Seashell Company is considered "very liquid" for the year ended December 31, 2016.This means that Seashell

If a company must pay more for the amounts provided by creditors and preferred stockholders than it can earn overall, as indicated by the return on assets, there will be favorable leverage.

Following are selected data from Westmoreland Company's financial statements. Current liabilities \ 230,000 \ 160,000 Long-term debt 120,000 320,000 Stockholders' equity 420,000 540,000 Cash payments for additions to plant and equipment 45,000 32,000 Net cash flow from operating activities 80,000 51,000 Interest and principal payments 12,000 8,000 Net operating cash flows before interest and taxes 68,000 43,000 Net income 90,000 72,000 Interest expense 8,500 11,500 Income taxes 16,000 14,500 Dividends paid 15,000 30,000 ​ -Refer to the Westmoreland Company data. ? The company's debt-to-equity ratio was 0.83 to 1 in 2017 and 0.89 to 1 in 2016.Which of the following statements is true concerning Westmoreland?

___________________ statements recast all items on the statement as a percentage of a selected item on the statement.

Presented below are selected data from the financial statements of Carnival Corp.for 2017 and 2016. ? 2017 2016 Net income \ 110,000 \ 123,000 Cash dividends paid on common stock \ 42,000 \ 38,000 Market price per share of common stock at the end of the year \ 16.00 \ 13.00 Shares of common stock outstanding 140,000 140,000 The dividend yield ratio for 2017 is

Santana Company issued additional shares of common stock.The effect of the transaction is

Apple Company had terms of net 60 days for customers.The number of days' sales in accounts receivable for Apple was 42 days.Apple is efficient in the collection of its receivables.

In a vertical analysis of the income statement, the 100% amount is

Solvency and liquidity differ in a company's ability

Select the ratio that each statement below most properly satisfies. -The relationship between dividends and the market price of a company's stock

Indicate the type of each ratio listed below. -Return on assets ratio

What is the minimum number of years for which publicly traded companies must include the following statements in their annual report filed with the SEC? ​ Balance Sheet Income Statements and Statements of Cash Flows a. 3 Years 3 Years b. 2 Years 2 Years c. 2 Years 3 Years d. 3 Years 2 Years

An increase in a company's revenue and expense accounts will automatically cause an increase in net income for the period.

The amount of working capital is more meaningful to users than the current ratio because it provides information on the composition of the current accounts.

A company that uses leverage is attempting to earn an overall return that is higher than the cost of funds received from

The dollar change and percentage change in the accounts receivable account from 2016 to 2017 is calculated for Allison Corporation.This is an example of