Exam 13: Analyzing and Interpreting Financial Statements

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 debt to equity ratio for 2010?

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

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

A company has a current ratio of 3.4,total liabilities of $350,240,and long-term notes payable of $120,000.What is the total of current assets for the company?

The comparison of a company's financial condition and performance across time is known as ________________________________.

Selected balances from a company's financial statements are shown below: Dec. 31, Dec. 31, For the 2010 2011 Year 2011 Merchandise inventory \ 15,000 \ 20,000 Accounts payable 32,000 26,000 Salaries payable 4,400 3,000 Accounts receivable 24,000 21,000 Total assets 234,000 286,000 Sales (all on credit) \ 312,000 Cost of goods sold 165,600 Salaries expense 48,000 Other expenses 75,000 Net income 24,000 Use the information above to calculate the following current year ratios: (a)2011 Inventory turnover. (b)Days' sales uncollected at Dec.31,2011. (c)2011 Profit margin. (d)2011 Return on total assets.

The greater the times interest earned ratio,the greater the risk a company is exposed to.

Selected current year company information follows: Net incorne \ 325,000 Net sales 4,700,000 Total liabilities, begirring-year 550,000 Total liabilities, end-of-year 530,000 Total stockholders' equity, begirring-year 760,000 Total stockholders' equity, end-of-year 745,000 Calculate the following company ratios: (a)Profit margin. (b)Total asset turnover. (c)Return on total assets. (d)Return on common stockholders' equity (assume the company has no preferred stock).

The ability to generate positive market expectations is called:

A company reported net income of $78,000 and had 15,000 common shares outstanding throughout the current year.At year-end,the price per share of the company's stock was $49.40.What is the company's year-end price-earnings ratio?

A company has a profit margin of 12%.If net income is equal to $450,000 and average total asset is equal to $600,500,how much are sales?

The comparison of a company's financial condition and performance across time is known as:

Ratios can be expressed as a percent,rate or proportion.

A common focus of financial statement users in evaluating a company's performance includes evaluation of its (1)______________________________, (2)________________________ and (3)____________________________.

The debt ratio,the equity ratio,pledged assets to secured liabilities and times interest earned are all ___________________ ratios.

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

A change in inventory reporting from LIFO to FIFO is:

The "cumulative effect of a change in accounting principles" is shown below extraordinary items section on the income statement.

The ability to generate future revenues and meet long-term obligations is referred to as: