Exam 13: Analysis and Interpretation of Financial Statements

Use the following selected 2019 balance sheet and income statement information for Life Improvements Co. (in millions) to compute the gross profit percentage to the nearest hundredth of a percent.

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Question 1

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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.

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Question 2

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a. 2019 accounts receivable turnover = Sales / Average accounts receivable
= $276,602 / [($26,262 + $30,425) / 2] = 9.76
2018 accounts receivable turnover = $286,118 / [(30,425 + $29,831) / 2] = 9.50
Accounts receivable turnover has improved during the year, but not significantly. The company collected its receivables almost 9.50 times during 2019.

b. 2019 inventory turnover = Cost of goods sold / Average inventory
= $136,143 / [($30,960 + $37,872) / 2] = 3.96
2018 inventory turnover = $138,376 / [($37,872 + $30,686) / 2] = 4.04
Inventory turnover has deteriorated slightly during the year.

c. 2019 asset turnover = Sales / Average assets
= $276,602 / [($240,399 + $261,521) / 2] = 1.102
2018 asset turnover = $286,118 / [($261,151 + $434,214) / 2] = 0.823

Aladdin Grocer's 2019 financial statements show net income of $2,940 million, sales of $230,199 million, and average total assets of $69,525 million. How much is Aladdin Grocer's return on sales for the year?

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Question 3

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Listed below are five items or sections that may be found in a multiple-step income statement. Place the numbers 1 through 5 in the blank spaces provided 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).

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Question 4

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.

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Question 5

The balance sheets and income statements for Star Morning Communications follow: a. Compute the company's current ratio for 2019 and 2018. Comment on any observed trend. b. Compute the debt-to-equity ratio for 2019 and 2018. Comment on any observed trend.

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Question 6

At December 31, 2019, Gevas Company has total assets of $3,000,000, total liabilities of $450,000, and total owner's equity of $2,550,000. At December 31, 2019, Gevas debt-to-equity ratio is:

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Question 7

Use the following selected 2019 balance sheet and income statement information for Homer Glen Supply Co. (in millions) to compute asset turnover (AT) to the nearest hundredth of a percent.

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Question 8

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?

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Question 9

Use the following selected 2019 balance sheet and income statement information for Homer Glen Supply Co. (in millions) to compute the gross profit percentage to the nearest hundredth of a percent.

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Question 10

Selected recent balance sheet and income statement information for the computer software companies, Valley Enterprises and Mountain Industries follow: a. Compute accounts receivable turnover for Valley Enterprises and Mountain Industries. b. Interpret and comment on the differences between the receivables turnover rates between each company assuming the industry average is 6.0 times.

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Question 11

At December 31, 2019, David Bash Company has total assets of $1,000,000, total liabilities of $720,000, and total owner's equity of $280,000. At December 31, 2019, David Bash Company's debt-to-equity ratio is:

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Question 12

Selected balance sheet and income statement information from the Vegan's Company for fiscal years 2018 through 2020 follows (Amounts in millions): 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.

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Question 13

At December 31, 2019, Jose Company has total assets of $1,800,000, total liabilities of $480,000, and total owner's equity of $1,320,000. At December 31, 2019, Jose Company's debt-to-equity ratio is:

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Question 14

Showing 1 - 14 of 14

Use the following selected 2019 balance sheet and income statement information for Life Improvements Co. (in millions) to compute the gross profit percentage to the nearest hundredth of a percent.

Aladdin Grocer's 2019 financial statements show net income of $2,940 million, sales of $230,199 million, and average total assets of $69,525 million. How much is Aladdin Grocer's return on sales for the year?

Listed below are five items or sections that may be found in a multiple-step income statement. Place the numbers 1 through 5 in the blank spaces provided 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).

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.

The balance sheets and income statements for Star Morning Communications follow: a. Compute the company's current ratio for 2019 and 2018. Comment on any observed trend. b. Compute the debt-to-equity ratio for 2019 and 2018. Comment on any observed trend.

At December 31, 2019, Gevas Company has total assets of $3,000,000, total liabilities of $450,000, and total owner's equity of $2,550,000. At December 31, 2019, Gevas debt-to-equity ratio is:

Use the following selected 2019 balance sheet and income statement information for Homer Glen Supply Co. (in millions) to compute asset turnover (AT) to the nearest hundredth of a percent.

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?

Use the following selected 2019 balance sheet and income statement information for Homer Glen Supply Co. (in millions) to compute the gross profit percentage to the nearest hundredth of a percent.

At December 31, 2019, David Bash Company has total assets of $1,000,000, total liabilities of $720,000, and total owner's equity of $280,000. At December 31, 2019, David Bash Company's debt-to-equity ratio is:

At December 31, 2019, Jose Company has total assets of $1,800,000, total liabilities of $480,000, and total owner's equity of $1,320,000. At December 31, 2019, Jose Company's debt-to-equity ratio is:

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