Exam 13: Analyzing and Interpreting Financial Statements

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

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

Annual cash dividends per share divided by market price per share is equal to the:

A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000.What is the company's return on common stockholders' equity?

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.

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 days' sales in inventory ratio for 2011 assuming net sales and gross profit for the period were $1,236,783,$927,587 respectively?

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

The higher the accounts receivable turnover,the slower the accounts receivable are collected.

The comparative balance sheet for Golden Co.is shown below.Express these amounts in a comparative,common-size balance sheet. Golden Company Comparative Balance Sheets (in \ 000 ) December 31,2009-2011 2009 2010 2011 Cash \ 49.6 \ 34.2 \ 35.7 Accounts receivable 74.4 85.5 76.5 Merchandise inventory 148.8 125.4 91.8 Plant assets (net) Total assets \ 620.0 \ 570.0 \ 510.0 Accounts payable \ 117.8 \ 51.3 \ 76.5 Bonds payable 130.2 159.6 107.1 Common stock 266.6 279.3 265.2 Retained earnings Total liabilities and equity \ 620.0 \ 570.0 \ 510.0

Information from a manufacturing company's current year income statement follows for the current year: Sales \ 800,000 Cost of goods sold 455,000 Gross profit \ 345,000 Operating expenses 265,000 Operating income \ 80,000 Interest expense Income before taxes \ 48,000 Income taxes expense Net income Calculate the company's times interest earned.

Net income divided by net sales is equal to the:

For the following financial statement items,calculate trend percents using 2007 as the base year: 2011 2010 2009 2008 2007 Sales \ 1,195,400 \ 1,118,000 \ 1,049,000 \ 963,200 \ 860,000 Cost of sales 752,400 704,000 671,000 616,700 559,000 Gross profit \ 443,000 \ 414,000 \ 378,000 \ 346,500 \ 301,000

A company has a profit margin of 5%.If net income is equal to $83,000 and average total assets is equal to $45,000,how much are net sales?

Comparative statements for Kool Corporation are shown below: Kool Corporation Comparative Income Statement For the years ended December 31 2011 2010 2009 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 3,664 3,576 3,487 Operating income \ 2,911 \ 992 \2 ,132 Calculate trend percentages for all income statement amounts shown and comment on the results.Use 2009 as the base year.

The measurement of key relations among financial statement items is known as:

The return on total assets can be calculated as the profit margin times the total asset turnover.

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

A company has a profit margin of 8%.If net income is equal to $40,000 and average total assets is equal to $332,500,how much are net sales?

Simple Simon's balance sheet and income statement accounts follow: At December 31 2011 2010 2009 Assets Cash \ 30,872 \ 36,086 \ 37,974 Accounts receivable, net 89,476 63,151 50,632 Merchandise inventory 112,499 83,450 54,467 Prepaid expenses 9,942 9,473 4,219 Plant assets, net 291,143 268,126 244,108 Total assets \ 533,932 \ 460,286 \ 391,400 Liabilities and Equity Accounts payable \ 130,290 \ 76,233 \ 50,632 Long-term notes payable secured by 98,372 103,748 107,769 mortgages on plant assets 142,500 132,500 102,500 Common stock, \ 10 par value 182,770 147,805 130,499 Total liabilities and equity \5 33.932 \4 60,286 \3 91,400 What is Simple Simon's times interest earned ratio for 2010?

A good financial statement analysis report often includes the following sections: Executive summary,analysis overview,evidential matter,assumptions,key factors and inferences.