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Exam 13: Analyzing and Interpreting Financial Statements

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Question 1

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Carducci Corporation reported Net sales of $3.6 million and beginning total assets of $0.9 million and ending total assets of $1.3 million.The average total asset amount is:

A) $2.3 million.
B) $2.7 million.
C) $0.25 million.
D) $0.36 million.
E) $1.1 million.

F) C) and E)
G) A) and D)

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Question 2

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Refer to the following selected financial information from Graphics,Inc.Compute the company's times interest earned. Irterest experse $~~~~~~~~~~~~~~~~~\$ 9,100$ Incorne tax experse $~~~~~~~~~~~~22,700$ Net incorne after tax $~~~~~~~~~~~ 56,500$

A) 6.2.
B) 2.5.
C) 8.7.
D) 9.7.
E) 3.7.

F) None of the above
G) A) and C)

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Question 3

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Calculate the percent increases for each of the following selected balance sheet items.

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

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

Explain the purpose of financial statement analysis for both external and internal users.

Quick assets divided by current liabilities is the:

Three of the most common tools of financial analysis are:

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

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

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

When an item has a value in the base period and zero in the analysis period,the decrease is 100 percent.

Refer to the following selected financial information from Shakley's Incorporated.Compute the company's debt-to-equity ratio for Year 2. $\begin{array} { l r r } & \text { Year 2 } & \text { Year } 1 \\\text { Net sales } & \$ 478,500 & \$ 426,250 \\\text { Cost of goods sold } & 276,300 & 250,120 \\\text { Irterest experse } & 9,700 & 10,700 \\\text { Net incomebefore tax }& 67,250 & 52,680 \\\text { Net income after tax } & 46,050 & 39,900 \\\text { Total assets } & 317,100 & 288,000 \\\text { Total liabilities }& 181,40 0 & 167,300 \\\text { Total equity } & 135,70 0 & 120,700\end{array}$

The ability to generate positive market expectations is called:

The background on a company,its industry,and its economic setting is usually included in which of the following sections of a financial statement analysis report?

Selected balances from a company's financial statements are shown below.Calculate the following ratios for 20X2: (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 high level of expected risk suggests a low price-earnings (PE)ratio.

Express the following income statement information in common-size percentages and in trend percentages using Year 1 as the base year.

Use the financial data shown below to calculate the following ratios for the current year: (a)Current ratio. (b)Acid-test ratio. (c)Accounts receivable turnover. (d)Days' sales uncollected. (e)Inventory turnover. (f)Days' sales in inventory. Income statement data Sales (all on credit)………………………………… $650,000 Cost of goods sold………………………………….425,000 Income before taxes……………………………….. 78,000 Net income………………………………………… 54,600

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals: