Exam 13: Appendix: Managerial Analysis of Financial Statements

Alternative accounting procedures such as methods of depreciation and inventory cost flow methods affect both the income statement and the balance sheet.

-The gross margin percentage for 2017 is:

The return on sales ratio is

-Which of the following would result from a vertical analysis of Robbins Corporation's income statement?

Factors that influence the financial statements and evaluation methods include:

Ratios useful in assessing long term solvency are the current ratio, acid test ratio, inventory turnover, and days sales in receivables.

-Which of the following results would be found through a vertical analysis of the balance sheet or the income statement of Robbins Corporation?

Which of the following is considered a solvency analysis measure?

-In the judgment of the credit analysts of Joshua Company, what issue would be of most concern or source of optimism?

In using industry benchmarking and comparisons:

A firm's performance evaluation does not reflect on its

Comparative income statements and balance sheets for Metro Track Company follow for 2017 and 2016. Required: a. Prepare a comprehensive analysis of Metro Track for 2017 including the following measures (round all calculations to three decimal places. 1. Short-term solvency ratios (current ratio, acid test, inventory turnover, and days sales in receivables ratios) 2. Long-term solvency ratios (debt-to-equity and times-interest-earned ratios) 3. Performance measurement ratios (asset turnover, return on sales, return on assets, and return on equity ratios) b. Comment on the financial condition of Metro Track with respect to short-term solvency, long-term solvency, and performance. c. Using the data for Metro Track Company, prepare common size statements. For the balance sheets, use total assets as the base; for the income statements, make one set using sales of each year as the base and another set using the year 2016 as the base for both years. d. Comment on the condition of Metro Track drawing on the common size statements.

-Kamal Company's times interest earned ratio for 2017:

List and describe briefly the factors that influence analysis of a firm's financial statements.

Show the effect of each of the transactions below on total liabilities and working capital by using one of the following symbols in each box to complete the table.

A solvency measure used also to assist in performance evaluation is:

-In the judgment of the credit analysts of Oakbrook Company, what issue would be of most concern or source of optimism?

Which of the following is used to analyze a company's solvency?

Financial Statement Analysis is analysis:

In order to determine the meaning of common size percentages, some kind of comparison, such as an industry average, trend analysis, or a firm's own history, is helpful.