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Exam 14: Financial Statement Analysis

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Question 61

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In computing the return on total assets, interest expense is subtracted from net income before dividing by average total assets.

A) True
B) False

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Question 62

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A company reports the following income statement and balance sheet information for the current year: Determine the return on total assets. Round your answer to one decimal place.

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Return on total assets = (Net income + I...

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Question 63

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Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.

In the vertical analysis of an income statement, each item is generally stated as a percentage of total assets.

The numerator of the return on total assets is

Match each ratio that follows to its use (items a-h) . Items may be used more than once. -return on common stockholders' equity

For Garrison Corporation, the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year, reported as follows: Has the current position of Garrison Corporation improved? Explain.

Selected data from the Carmen Company at year end are presented below: Calculate: (a) asset turnover ratio; (b) return on total assets; (c) return on common stockholders' equity; and (d) earnings per share on common stock. Assume the company had no preferred stock or interest expense. Round dollar values to two decimal places and other final answers to one decimal place.

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.Assets Liabilities and Stockholders' Equity Income Statement -Corporate annual reports typically do not contain

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

In a vertical analysis, the base for cost of goods sold is

The following data are taken from the balance sheet at the end of the current year.​ Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Round ratios to one decimal place.​

The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

The purpose of an audit is to

-A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability. The amount of working capital immediately after payment is

What information is generally included in the Management Discussion and Analysis (MD&A) section of a corporate annual report?

In a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company.

If two companies have the same current ratio, their ability to pay short-term debt is the same.

The following information was taken from Slater Company's balance sheet: Determine the company's (a) ratio of fixed assets to long-term liabilities, and (b) ratio of liabilities to stockholders' equity. Round your answer to one decimal place.

If a company has issued only one class of stock, the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.