Exam 3: Financial Statements and Ratio Analysis

In general, the more debt a firm uses, the smaller its financial leverage.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -The average collection period for Dana Dairy Products in 2013 was ________. (See Table 3.2)

The ________ is a popular approach for evaluating profitability in relation to sales by expressing each item on the income statement as a percent of sales.

________ ratios are a measure of the speed with which various accounts are converted into sales or cash.

A firm with a gross profit margin which meets industry standard and a net profit margin which is below industry standard must have excessive ________.

Common stock dividends paid to stockholders is equal to the earnings available for common stockholders divided by the number of shares of common stock outstanding.

The higher, the value of ________ ratio, the better able a firm is to fulfill its interest obligations.

Ratios merely direct an analyst to potential areas of concern and it does not provide conclusive evidence as to the existence of a problem.

A single key ratio of a firm provides all the information required to judge the overall performance of the firm.

Earnings available for common stockholders is calculated as net profits ________.

A firm's year-end retained earnings balances are $670,000 and $560,000, for 2014 and 2015 respectively. The firm paid $10,000 in dividends in 2015. The firm's net profit after taxes in 2015 was ________.

The use of differing accounting treatments-especially relative to inventory and depreciation-can distort the results of ratio analysis, regardless of whether cross-sectional or time-series analysis is used.

The statement of cash flows ________.

The financial leverage multiplier is the ratio of a firm's total assets to common stock equity.

A firm's year-end retained earnings balances are $320,000 and $400,000, for 2014 and 2015 respectively. The firm reported net profits after taxes of $100,000 in 2015. The firm's dividend payment for 2015 is ________.

Two frequently cited ratios of profitability that can be read directly from the common-size income statement are ________.

The ________ measures the activity, or liquidity, of a firm's stock of goods.

Nico Corporation has cost of goods sold of $300,000 and inventory of $30,000, then the inventory turnover is ________ and the average age of inventory is ________.

When preparing the retained earnings statement, ________ is(are) subtracted in order to derive at the ending balance of retained earnings.

The Sarbanes-Oxley Act of 2002 established the Private Company Accounting Oversight Board (PCAOB) which is a for-profit corporation that oversees CEOs of public corporations.