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Exam 17: Analysis of Financial Statements

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Question 81

Multiple Choice

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A component of operating efficiency and profitability,calculated by expressing net income as a percent of net sales,is the:

A) Acid-test ratio.
B) Merchandise turnover.
C) Price earnings ratio.
D) Accounts receivable turnover.
E) Profit margin ratio.

F) All of the above
G) A) and B)

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Question 82

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Earnings per share are calculated only on income from continuing operations.

A) True
B) False

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Question 83

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Net sales divided by average total assets is the:

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

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000.The Return on total assets is:

Refer to the following selected financial information from Shakley's Incorporated.Compute the company's times interest earned for Year 2.

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

Refer to the following selected financial information from Dodge Company.Compute the company's acid-test ratio.

Selected balances from a company's financial statements are shown below.Calculate the following ratios for 2016: (a)accounts receivable turnover (b)inventory turnover (c)days' sales uncollected (d)days' sales in inventory (d)profit margin (e)return on total assets.

A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.

Comparative calendar year financial data for a company are shown below.Calculate the following ratios for 2016: (a)return on total assets (b)return on common stockholders' equity.

Refer to the following selected financial information from Shakley's Incorporated.Compute the company's debt-to-equity ratio for Year 2.

If a company is comparing this year's financial performance to last year's financial performance,it is using horizontal analysis.

The comparison of a company's financial condition and performance to a base amount is known as _________________.

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________________________.

Profitability is the ability to generate future revenues and meet long-term obligations.

Use the balance sheets of Glover shown below to calculate the following ratios for 2016 (round to the hundredths): (a)Current ratio. (b)Acid-test ratio. (c)Debt ratio. (d)Equity ratio.

Horizontal analysis:

For the following financial statement items,calculate trend percentages using 2014 as the base year:

Financial analysis only refers to the communication of relevant financial information to decision makers.