Exam 14: Analysis and Interpretation of Financial Statements

Which ratio can provide an indication of the salability of the company's products?

In trend analysis, of what amount is each item expressed as a percentage?

A single-step income statement for a merchandising firm:

Aladdin Grocer's 2019 financial statements show average shareholders' equity of $15,309 million, net income of $2,940 million, and average total assets of $65,025 million. How much is Aladdin Grocer's return on assets for the year?

Dils Brothers' 2019 balance sheet shows average stockholders' equity of $36,000 million, net operating profit after tax of $2,280 million, net income of $760 million, and common shares issued of $3,832 million. The company has no preferred shares issued. Dils Brothers' return on common stockholders' equity for the year is:

Listed below are five items or sections that may be found in a multiple-step income statement. Place the numbers 1 through 5 in to indicate the sequence of these items or sections in the income statement (with 1 assigned to the first item or section, and so on). -Net operating income

Texas, Inc. has net income for 2019 of $555,000. At January 1, 2019, the company had outstanding 54,000 shares of $75 par value common stock and 10,000 shares of 6%, $150 par value cumulative preferred stock. On September 1, 2019, an additional 18,000 shares of common stock were issued. What is the earnings per share for 2019 (to the nearest cent)?

Return on assets is computed as:

Earnings per share is the amount a company earns and pays out as dividends for each share of common stock outstanding.

Selected balance sheet and income statement information from the Vegan's Company for fiscal years 2018 through 2020 follows (Amounts in millions): Period Current assets Current liabilities Pretax income Interest expense Total assets Equity 2020 \ 15,306 \ 9,912 \ 4,834 \ 732 \ 39,526 \ 17,110 2019 18,662 13,146 7,182 732 42,080 18,226 2018 16,130 11,092 6,186 783 39,360 17,544 a. Compute the times-interest-earned ratio for each year and discuss any trends. b. What concerns about Vegan's ability to meet its interest obligations might creditors have? Explain.

Use the following selected 2019 balance sheet and income statement information for Homer Glen Supply Co. (in millions) to compute the return on assets to the nearest hundredth. Net income Gross profit on sales Average total assets Sales Tax rate on operating profit

Chinchilla Company is preparing trend percentages for its service fees earned for the period 2016 through 2020. The base year is 2016. The 2019 trend percentage is computed as:

Selected recent balance sheet and income statement information for Book Products, Inc. follows (in $ millions): Average accounts receivable \ 9,846 Average inventory 5,814 Net sales 56,504 Cost of goods sald 30,632 Pretax incame (933) Net income (1,798) Compute accounts receivable turnover and inventory turnover.

Aladdin Grocer's 2019 balance sheet shows average stockholders' equity of $18,000 million, net operating profit after tax of $1,710 million, net income of $665 million, and common shares issued of $2,874 million. The company has no preferred shares issued. Aladdin Grocer's return on common stockholders' equity for the year is:

The following information relates to Reed, Inc.: a. Compute Cordova's 2019 earnings per share. b. Compute Cordova's price-earnings ratio at December 31, 2019.

Selected recent balance sheet and income statement information from Hats Co. and Gloves, Inc. follows: (\ millions) Hats Co. Gloves, Inc. Sales \ 7,230 \ 11,305 Cost of goods sold ,178 Average accounts receivable 77 485 Average irventory 770 1,449 Average total assets 4,190 10,827 a. Compute the following turnover rates for each company: 1. Accounts receivable turnover 2. Inventory turnover 3. Asset turnover b. Interpret and comment on any differences you observe between the turnover rates for these two companies

Twin Lakes Company has the following values taken from its 2019 annual report (in thousands): Interest expense \ 37,000 Sales 480,000 Earnings before interest and taxes 300,000 Total liabilities 797,500 Stockhalders' equity 600,000 a. Calculate Twin Lakes Company's times-interest-earned ratio. b. Calculate Twin Lakes Company's debt-to-equity ratio.

One benefit of using ratio analysis to compare two firms in the same industry is that ratios are immune to size and current accounting rules.

Which of the following is one measure of liquidity?

The partial balance sheets and income statements for Weasley's, Inc., for fiscal years ending June 30, 2019 and 2018 follow: a. Calculate accounts receivable turnover for 2019 and 2018. Accounts receivable in 2017 totaled $29,831 million. Has accounts receivable turnover improved during the year or worsened? b. Calculate inventory turnover for 2019 and 2018. Inventories in 2017 were $30,686 million. Has inventory turnover improved during the year or worsened? c. Calculate asset turnover for 2019 and 2085 considering that 2017 total assets are $434,214 million.