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Exam 13: Analysis of Financial Statements

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Question 31

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The four building blocks of financial analysis are (1)____________________,(2)__________________________,(3)____________________ and (4)_____________________.

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liquidity and effici...

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Question 32

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A company's sales in 2012 were $280,000 and its sales in 2013 were $341,600.Using 2012 as the base year,what is the sales trend percent for 2013?

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$341,600/$...

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Question 33

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The current ratio is calculated as current liabilities divided by current assets.

A company had a return on common stockholders' equity of 22%.Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000.Compute the amount of the preferred dividends declared.

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

An advantage of common-size statements is that they reflect the relative sizes of different companies under analysis.

____________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

The ability to meet short-term obligations and to generate revenues using the least amount of resources is called:

The common-size percent is computed by:

The return on total assets ratio is a profitability measure.

A company had a market price of $37.50 per share,earnings per share of $1.25,and dividends per share of $0.40.Its price-earnings ratio is equal to:

A company has sales of $2,458,422,a gross profit ratio of 23%,a days' sales in inventory ratio of 12.4,and total current assets of $539,600.What is the ending inventory for the year?

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

A company's balance sheet and income statement accounts follow: $\begin{array}{lrrr} \text {At December 31}&2014&2013&2012\\ \text { Assets}\\ \text { Cash } & \$ 30,872 & \$ 36,086 & \$ 37,974 \\ \text { Accounts receivable, net } & 89,476 & 63,151 & 50,632 \\ \text { Merchandise inventory } & 112,499 & 83,450 & 54,467 \\\text { Prepaid expenses } & 9,942 & 9,473 & 4,219 \\\text { Plant assets, net } & 291,143 & 268,126 & 244,108 \\\text { Total assets } & \$ 533,932 & \$ 460,286 & \$ 391,400 \\\text { Liabilities and Equity}\\\text { Accounts payable } & \$ 130,290 & \$ 76,233 & \$ 50,632 \\ \text { Long-term notes payable secured by } & \\\text { mortgages on plant assets } & 98,372 & 103,748 & 107,769 \\ \text { Common stock, } \$ 10 \text { par value } & 142,500 & 132,500 & 102,500 \\\text { Retained earnings } & 182,770 & 147,805 & 130,499 \\ \text { Total liabilities and equity } &\$ 533,932 & \$ 460,286 & \$ 391,400\end{array}$ What is the company's times interest earned ratio for 2013?

Given the following information about a corporation's current year activities,answer the questions below: $\begin{array}{|l|r|r|}\hline& \text {Debit}&\text {Credit}\\\hline \text { Sales } & & \$ 250,000 \\\hline \text { Cost of goods sold } & \$ 90,000 & \\\hline \text { Other operating expenses } & 54,000 & \\\hline \begin{array}{l}\text { Income from operation of discontinued Division W (net } \\\text { of } \$ 9,200 \mathrm{tax} \text { ) }\end{array} & & 30,800 \\\hline \begin{array}{l}\text { Extraordinary loss from hurricane damage (net of } \\\$ 11,000 \text { tax benefit) }\end{array} & 37,000 \\\hline \begin{array}{l}\text { Loss from disposal of Division W (net of } \$ 15,000 \mathrm{tax} \\\text { benefit) }\end{array} & 45,000 \\\hline \text { Unusual loss on sale of equipment } & 12,000 \\\hline \begin{array}{l}\text { Effect on prior years' income of changing depreciation } \\\text { methods (net of } \$ 4,000 \text { tax) }\end{array} & 13,500 \\\hline\end{array}$ Compute the amounts that should be reported on the income statement as: (1)Income from continuing operations. (2)Income before extraordinary items and cumulative effect of changes in accounting principles. (3)Net income.

Reporting of discontinued segments includes:

Financial reporting includes not only general purpose financial statements,but also information from SEC filings,press releases,shareholders' meetings,forecasts,management letters,auditor's reports,and Webcasts.

Trend analysis is also called:

The ability to provide financial rewards sufficient to attract and retain financing is called:

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