Exam 13: Analyzing and Interpreting Financial Statements

Describe the purpose of vertical financial statement analysis and how it is applied.

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

A corporation reported cash of $14,000 and total assets of $178,300.Its common-size percent for cash equals 7.85%.

Corona Company's balance sheet accounts follow: At December 31 2011 2010 2009 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 \ 449,206 \ 385,680 \ 321,400 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 \4 49,206 \ 385,680 \ 321,400 What is Corona Company's current ratio for 2011?

The dollar change for a financial statement item is calculated by:

The common-size percent is computed by:

Quick assets divided by current liabilities is equal to the:

Horizontal analysis is used to reveal changes in the relative importance of each financial statement item.

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

The gross margin ratio,return on total assets and basic earnings per share are all _____________ ratios.