Exam 13: Analysis of Financial Statements

Oakley Corporation has the following comparative income statements.Which of the following statements is false with regard to this comparative data? OAKLEY CORPORATION Comparative Income Statements For Years Ended December 31, 2014 and 2013 2014 2013 Sales \ 360,000 \ 267,500 Cost of goods sold 237,600 140,170 Gross profit 122,400 127,330 Operating expenses Net income \ 46,800 \ 75,435

A company has an inventory turnover ratio of 2.81,merchandise inventory for 2014 of $93,303,and average inventory of $83,397.What is the cost of goods sold?

External users of financial information:

Corona Company's balance sheet accounts follow: At December 31 2014 2013 2012 Assets Cash \ 25,868 \ 31,163 \ 31,182 Accounts receivable, net 78,034 53,995 41,152 Merchandise inventory 95,120 73,491 46,095 Prepaid expenses 8,330 8,099 3,429 Plant assets,net 241,854 218,932 199,542 Total assets \4 49,206 \3 85,680 \3 21,400 Liabilities and Equity Accounts payable \ 108,058 \ 67,135 \ 42,849 \ Long-term notes payable secured by mortgages on plant assets 85,791 87,819 71,029 Common stock, \ 10 par value 162,500 162,500 162,500 Retained earnings 92,857 68,226 45,022 Total liabilities and equity \ 449,206 \ 385,680 \ 321,400 What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783,$927,587 respectively?

Liquidity and efficiency are measures of a company's ability to meet short-term obligations.

The three most common tools of financial analysis are:

______________________ ratios include the price-earnings ratio and dividend yield.

A company reports the following comparative income statements: 2014 2013 Net sales \ 736,000 \ 840,000 Cost of goods sold 518,880 571,200 Gross profit \ 217,120 \ 268,800 Operating expenses 104,800 130,000 Net income \ 112,320 \ 138,800 What are the costs of goods sold in common-size percents for 2013 and 2014,respectively?

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

Comparative horizontal analysis is used to reveal patterns in data covering successive periods.

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

The following current year information is available from a manufacturing company: Sales \ 640,000 Gross profit on sales 276,000 Operating income 64,000 Income before taxes 44,000 Net income 33,600 Accounts receivable, beginnirg-year 58,000 Accounts receivable, end-of-year 70,000 Calculate the company's accounts receivable turnover and its days' sales uncollected.

Comparative statements for Kool Corporation are shown below: KOOL CORPORATION Comparative Income Statement For the Years Ended December 31 2014 2013 2012 Sales \ 14,800 \ 13,229 \ 13,994 Cost of goods sold 8,225 8,661 8,375 Gross profit 6,575 4,568 5,619 Operating expenses Operating income \ 2.911 \ 992 \ 2.132 Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2012 as the base year.

Extraordinary items are reported in the operating section of the income statement.

Which of the following items is not likely to be considered an extraordinary item?

A _____________________________ is a part of a company's operations that serves a particular line of business or class of customers.

Quick assets divided by current liabilities is equal to the:

If a company's activities include operations that are being discontinued,the income or loss from the discontinued operations are included on the income statement as part of income from continuing operations.

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.