Exam 8: Using Financial Statements to Guide a Business

Steve has heard that formulating a common-sized statement for analysis is a good practice. Explain what he needs to do.

The ________ ratio tells you whether you have enough cash to cover your current debt.

Jared analyzed the income statement for his independent label and found that for every dollar of sales, 30 cents were spent on cost of goods sold. The gross profit per dollar was 70 cents. If 20 cents were spent on operating costs and 10 cents on taxes, what is the net profit per dollar?

Owner's equity consists of ________.

To see how costs are affecting net profit, try analyzing the income statement by expressing each ________.

A business's operating ratios are computed by ________.

What analytic tool allows you to compare income statements from different periods, even if the dollar figures are very different?

How would you express a ratio as a percentage?

Owner's equity is also called ________.

In a business formula such as Return on Investment, "on" means ________.

Define debt and equity and explain the difference between them. Where does each appear on financial statements?

Calculate the return on sales for a business that has net income of $25,000 and sales of $60,000.

You can create ________ from your income statement that will help you analyze your business further.

In the United Kingdom, the income statement is called the ________.

If you extend credit, it is critical to minimize this number to keep cash flowing.

Liabilities that will be paid over a period of more than one year are ________.

What must balance with assets on the balance sheet?

Ideally, you want to have a positive "double" bottom line. This means ________.

In the income statement, EBIT minus interest costs equals ________.

The expression, "What you made over what you paid, times one hundred," is a device to remember how to compute ________.