Exam 10: Using Financial Statement Analysis to Evaluate Firm Performance

Indicate which of the following ratios are being used in each situation.Some ratios may be used more than once.Others may not be used at all. a.solvency b.profitability c.market indicator d.liquidity

The debt-to-equity ratio is a measure of a company's solvency.

Markot Corporation purchased $400,000 of securities and classified them as available-for-sale.The market value of the securities went down to $375,000.Markot Corporation should ________.

Wilson Wong received an inheritance from his grandfather.Wilson wants to invest the money in stocks.He is interested in long-term investments in companies with solid financial performance.Explain to Wilson the four major categories of financial ratios and how they are used to help investors analyze the performance of companies.

Ratios used to determine whether or not a company can pay its bills on time are ________.

Which financial statement(s)do you need to calculate the cash from operations to current liabilities ratio?

The following information is from Acme's annual report for the years ended Dec. 31: -Refer to the Acme annual report above.Calculate return on equity for 2012.

Comprehensive income is ________.

The return on equity ratio is a ________ ratio.

One way to diversify is to ________.

Which financial statement(s)do you need to calculate the accounts receivable turnover ratio?

The following information has been adapted from the 2004 and 2005 annual reports of Halliburton Company's worldwide operations, available online at http://ir.halliburton.com/phoenix.zhtml?c=67605&p=irol-irhome HALLIBURTON COMPANY Consolidated Statements of Operations HALLIBURTON COMPANY Condensed Consolidated Statements of Cash Flows HALLIBURTON COMPANY Consolidated Balance Sheets -Divide the class into teams of three or four people.Each team member should work the following problem separately outside of class.Then give the students time in class to compare answers with their teammates and put together a final,correct copy of the problem.Each team should turn in only one copy of the problem for grading.All team members will receive the same grade. Use the adapted financial statements from Halliburton Company to answer the following questions: 10.Use the liquidity ratios you have just calculated to discuss Halliburton Company's liquidity. 14.Use the solvency ratio you have just calculated to discuss Halliburton Company's solvency.

The following information is from Acme's annual report for the years ended Dec. 31: -Refer to the Acme annual report above.Calculate the current ratio for 2010.

Owning only stocks is riskier than owning both stocks and bonds.

The debt-to-equity ratio is a ________ ratio.

Discontinued operations need to be treated separately from regular business operations on the ________.

In horizontal analysis,each item on a balance sheet is expressed as a percentage of total assets.

Comprehensive income is the total of all items that affect shareholders' equity except transactions with the owners.

Which financial statement(s)do you need to calculate the debt-to-equity ratio?

The following information is provided from Ace Electronics' annual report for the years ended December 31: -Refer to the Ace Electronics annual report above.Using horizontal analysis with 2010 as the base year, $\bold{2012}$ Gross profit would be represented as ________.