Exam 3: Financial Statements and Ratio Analysis

Colonial Furniture's net profits before taxes for 2019 totaled $354,000.The company's total retained earnings were $338,000 for 2018 year-end and $389,000 for 2019 year-end.Colonial is subject to a 21 percent tax rate.What was the cash dividend declared by Colonial Furniture in 2019?

A firm had the following accounts and financial data for 2019: The firm's net profit after taxes for 2019 is ________.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31,2019 Balance Sheet Dana Dairy Products December 31,2019 -Dana Dairy Products' gross profit margin was inferior to the industry standard.This may have resulted from ________.(See Table 3.2)

Market ratios only measure a firm's risk.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31,2019 Balance Sheet Dana Dairy Products December 31,2019 -Using the modified DuPont formula allows the analyst to break Dana Dairy Products return on equity into 3 components: the net profit margin,the total asset turnover,and a measure of leverage (the financial leverage multiplier).Which of the following mathematical expressions represents the modified DuPont formula relative to Dana Dairy Products' 2019 performance? (See Table 3.2)

Table 3.1 Information (2019 values) 1.Sales totaled $110,000 2.The gross profit margin was 25 percent. 3.Inventory turnover was 3.0. 4.There are 360 days in the year. 5.The average collection period was 65 days. 6.The current ratio was 2.40. 7.The total asset turnover was 1.13. 8.The debt ratio was 53.8 percent. -Net fixed assets for CEE in 2019 were ________.(See Table 3.1)

The ________ ratios are primarily used as measures of return.

Which of the following ratios is difficult for the creditors of a firm to analyze from the published financial statements?

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31,2019 Balance Sheet Dana Dairy Products December 31,2019 -If Dana Dairy Products has credit terms which specify that accounts receivable should be paid in 25 days,the average collection period ________ since 2018.(See Table 3.2)

Reliable Auto Parts has 5,000 shares of common stock outstanding.The company also has the following amounts in revenue and expense accounts. Calculate (a)gross profits. (b)operating profits. (c)net profits before taxes. (d)net profits after taxes (assume a 21 percent tax rate). (e)earnings available to common stockholders. (f)earnings per share.

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

A firm's total asset turnover increased from 0.75 to 0.90.Which of the following is TRUE about the given data?

In an effort to analyze Clockwork Company finances,Jim realized that he was missing the company's net profits after taxes for the current year.Find the company's net profits after taxes using the following information. Return on total assets = 2% Total asset turnover = 0.5 Cost of goods sold = $105,000 Gross profit margin = 0.30

The ________ is used by financial managers as a structure for dissecting a firm's financial statements to assess its financial condition.

Other things being equal,a decrease in total asset turnover will result in ________ in the return on total assets.

The ________ measures the overall effectiveness of management in generating profits with its available assets.

The ________ ratio measures the return earned on the common stockholders' investment in the firm.

Due to inflationary effects,inventory costs and depreciation write-offs can differ from their replacement values,thereby distorting profits.

Total assets less net fixed assets equals ________.

The modified DuPont formula relates the firm's return on total assets (ROA)to its ________.