Exam 13: Analysis of Financial Statements

Measures taken from a selected competitor or a group of competitors are often excellent standards of comparison for analysis.

Three of the most common tools of financial analysis are (1)_________________________,(2)___________________________ and (3)______________________________.

Net sales divided by average total assets is equal to the:

The following information is available for the McCartney Corporation: Sales \ 750,000 Cost of goods sold 450,000 Gross profit 300,000 Operating income 85,000 Net income 42,000 Inventory, beginning-year 71,200 Inveritory, end-of-year 48,800 Calculate the company's inventory turnover and its days' sales in inventory.

The percent change is computed by subtracting the analysis period amount from the base period amount,then dividing the result by the base period amount and then multiplying that result by 100.

A corporation had cash of $14,000 and total assets of $178,300.On a common-size balance sheet,cash would be reported as 7.85%.

Use the financial data shown below to calculate the following ratios for the current year: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Days' sales uncollected (e)Inventory turnover (f)Days' sales in inventory Income statement data Sales \ 650,000 Cost of goods sold 425,000 Income before taxes 78,000 Net incorne 54,600 Ending Beginning Balances Balances Cash \ 19,500 \ 15,000 Accounts receivable (net) 65,000 60,000 Inventory 71,500 64,500 Plant and equipment (net) Total assets \ 351,000 \ 323,400 Current liabilities \ 62,400 \ 52,700 Long-term notes payable 97,500 100,000

A company has long-term notes payable of $175,625,taxes of $9,500,ending merchandise inventory of $450,290,interest expense of $14,050,net sales of $720,000 a gross profit ratio of 35%,a times interest earned ratio of 4.23,and total assets of $1,300,417.What is the company's earnings before interest and taxes?

Which of the following financial statement sections includes information on the background on a company,its industry,and its economic setting?

The following are summaries from the income statements and balance sheets of Red Shoe,Inc.and Blue Shoe,Inc. RED SHOE, INC. Consolidated Statement of Income May 31,2014 (in millions) Revenues \ 10,697.0 Cost of sales 6,313.6 Gross profit 4,383.4 Operating expenses 3,137.6 Operating income 1,245.8 Interest expense 42.9 Other revenues and expenses Income before tax 1,123.0 Income taxes 382.9 Income before effect of accounting change 740.1 Cumulative effect of accounting change, net of tax Net income \ 474.0 BLUE SHOE, INC. Consolidated Statement of Income January 3, 2014 (in millions) Revenues \ 133.5 Cost of sales 87.3 Gross profit 46.2 Operating expenses 37.3 Operating income 8.9 Interest expense (0.1) Other revenues and expenses Income before tax 9.1 Income taxes 3.9 Net income \ 5.2 (1)For both companies compute the following ratios for 2014: (a)Current ratio (b)Acid-test ratio (c)Accounts receivable turnover (d)Inventory turnover (e)Days' sales in inventory (f)Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2)For both companies compute the following ratios for 2014: (a)Profit margin ratio (b)Return on total assets (c)Return on common stockholders' equity Which company do you consider to have better profitability ratios?

Selected comparative income statement amounts for a company are shown below.Using 2013 as the base year for a horizontal analysis,compute the account with the most significant change. 2013 2014 Sales \ 400,000 \ 520,000 General and administrative expenses \ 27,000 \ 29,700 Interest expense \ 1,000 \ 1,700 Miscellaneous expense \ 100 \ 200

An extraordinary gain or loss is one that is both ________________ and _________________.

_______________ are reports where financial amounts are placed side-by-side in columns on a single statement for analytical purposes.

The comparison of a company's financial condition and performance to a base amount is known as:

David and Tom Gardner created The Motley Fool to help investors.What do David and Tom believe is their mission?

In horizontal analysis the percent change is computed by:

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

General standards or guidelines of comparisons include the 2 to 1 level for the current ratio and 1 to 1 level for the acid-test ratio.

The standards for comparisons in financial statement analysis include (1)_______________,(2)________________,(3)_________________ and (4)_______________.

The 2014 income statement for Golden Company is shown below: GOLDEN COMPANY Income Statements For the Year Ended December 31,2014 Sales \ 720,000 Cost of goods sold Gross profit \ 270,000 Operating expense 168,500 Income from operations \ 101,500 Interest expense Income before taxes \ 79,200 Income taxes 28,000 Net income 51,200 Calculate the times interest earned ratio for 2014.