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Exam 17: Analysis of Financial Statements

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Question 31

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Evaluation of company performance can include comparison and/or assessment of:

A) Past performance.
B) Current performance.
C) Current financial position.
D) Future performance and risk.
E) All of the choices are correct.

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

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Question 32

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A ratio expresses a mathematical relation between two quantities and can be expressed as a percent,rate,or proportion.

A) True
B) False

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Question 33

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Describe ratio analysis including its purpose,application,and interpretation.

Profitability is the ability to generate positive market expectations.

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

Phoenix Company reported sales of $400,000 for Year 1,$450,000 for Year 2,and $500,000 for Year 3.Using Year 1 as the base year,what were the percentage increases for Year 2 and Year 3 compared to the base year?

In horizontal analysis the percent change is computed by:

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?

Guidelines (rules-of-thumb) are developed from:

Ratios may be expressed as (1)________________,(2)__________________,or (3)__________________.

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

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

Trend percentage is calculated by dividing _________________________ by ___________________________ and multiplying the result by 100.

A corporation reported cash of $14,000 and total assets of $178,300.Its common-size percent for cash equals:

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

Liquidity and efficiency are considered to be building blocks of financial statement analysis.

What are the standards for comparisons in financial analysis? Give an example of each.

Comparative calendar year financial data for a company are shown below.Calculate the following ratios for 2014: (a)return on total assets (b)return on common stockholders' equity.

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Identify the financial analysis building block most appropriately associated with each ratio listed below by placing the letter of the building block a through d beside each ratio 1 through 10.Each building block may be used more than once. A.Liquidity and Efficiency B.Solvency C.Profitability D.Market Prospects __________ (1) Equity Ratio __________ (2) Dividend Yield __________ (3) Accounts Receivable Turnover __________ (4) Days' Sales in Inventory __________ (5) Return on Total Assets __________ (6) Price Earnings Ratio __________ (7) Debt Ratio __________ (8) Times Interest Earned __________ (9) Basic Earnings per Share __________ (10) Inventory Turnover