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Financial analysis does not include assessing future performance and risk because financial statements are based on past performance.

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A corporation reports the following year-end balance sheet data.Calculate the following ratios: (a)working capital (b)acid-test ratio (c)current ratio (d)debt ratio (e)equity ratio (f)debt-to-equity ratio A corporation reports the following year-end balance sheet data.Calculate the following ratios: (a)working capital (b)acid-test ratio (c)current ratio (d)debt ratio (e)equity ratio (f)debt-to-equity ratio

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A trend percent is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

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The ability to generate future revenues and meet long-term obligations is referred to as:


A) Liquidity and efficiency.
B) Solvency.
C) Profitability.
D) Market prospects.
E) Creditworthiness.

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Refer to the following selected financial information from Texas Electronics. Refer to the following selected financial information from Texas Electronics. -Compute the company's accounts receivable turnover for Year 2. A) 8.62. B) 8.28. C) 8.94. D) 5.78. E) 7.90. -Compute the company's accounts receivable turnover for Year 2.


A) 8.62.
B) 8.28.
C) 8.94.
D) 5.78.
E) 7.90.

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Refer to the following selected financial information from Gomez Electronics. Refer to the following selected financial information from Gomez Electronics. -Compute the company's debt-to-equity ratio for Year 2. A) 1.75. B) 2.34. C) 0.75. D) 1.34. E) 2.63. -Compute the company's debt-to-equity ratio for Year 2.


A) 1.75.
B) 2.34.
C) 0.75.
D) 1.34.
E) 2.63.

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Liquidity refers to the availability of resources to meet short-term cash requirements.

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Information from a manufacturing company's current year income statement follows.Calculate the company's (a)profit margin ratio,(b)gross margin ratio,and (c)times interest earned. Information from a manufacturing company's current year income statement follows.Calculate the company's (a)profit margin ratio,(b)gross margin ratio,and (c)times interest earned.

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(a) $90,600/$850,000...

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The comparative income statements for Silverlight Company are shown below.Calculate the following ratios for Year 2: (a)profit margin (b)gross margin (c)times interest earned. The comparative income statements for Silverlight Company are shown below.Calculate the following ratios for Year 2: (a)profit margin (b)gross margin (c)times interest earned.

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Intra-company analysis is based on comparisons with competitors.

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Match each of the appropriate formulas with correct term. -Match each of the appropriate formulas with correct term. - A) Days' sales in inventory B) Dividend yield C) Total asset turnover D) Inventory turnover E) Return on common stockholders' equity F) Gross margin ratio G) Days' sales uncollected H) Profit margin ratio I) Times interest earned J) Debt ratio


A) Days' sales in inventory
B) Dividend yield
C) Total asset turnover
D) Inventory turnover
E) Return on common stockholders' equity
F) Gross margin ratio
G) Days' sales uncollected
H) Profit margin ratio
I) Times interest earned
J) Debt ratio

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To be useful,a ratio must refer to economically important relationships,such as a sale price compared to its cost.

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A company's board of directors analyzes financial statements to improve operating performance and evaluate the performance of individual entry-level employees.

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Intra-company standards for financial statement analysis:


A) Are based on a company's prior performance and relations between its financial items.
B) Are often set by competitors.
C) Are set by the company's industry through published statistics.
D) Are based on rules of thumb.
E) Are published by analyst services such as Standard & Poor's.

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The higher the accounts receivable turnover,the less quickly accounts receivable are collected.

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Financial reporting refers to:


A) The application of analytical tools to general-purpose financial statements.
B) The communication of financial information useful for decision making.
C) General-purpose financial statements only.
D) Ratio analysis only.
E) Profitability.

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A common focus of financial statement users in evaluating a company's performance and financial condition includes evaluating its (1)________,(2)________,and (3)________.

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past and current performance; ...

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Match each of the following terms with the appropriate definitions.

Premises
A measure of solvency presented as the ratio of total liabilities to total equity.
A company's ability to generate positive market expectations.
A statement with amounts for two or more successive accounting periods placed in side-by-side columns,often with changes shown in dollar amounts and percentages.
The application of analytical tools to general-purpose financial statements and related data for making business decisions.
A company's ability to generate future revenues and meet long-term obligations.
A statement where each amount is expressed as a percent of a base amount to reveal the relative importance of each financial statement item.
The comparison of a company's financial condition and performance to a base amount.
Examination of financial data across time.
The availability of resources to meet short-term obligations and to efficiently generate revenues.
A company's ability to provide financial rewards sufficient to attract and retain capital.
Responses
Comparative financial statement
Market prospects
Vertical analysis
Financial statement analysis
Profitability
Solvency
Common-size financial statement
Liquidity and efficiency
Debt to equity ratio
Horizontal analysis

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A measure of solvency presented as the ratio of total liabilities to total equity.
A company's ability to generate positive market expectations.
A statement with amounts for two or more successive accounting periods placed in side-by-side columns,often with changes shown in dollar amounts and percentages.
The application of analytical tools to general-purpose financial statements and related data for making business decisions.
A company's ability to generate future revenues and meet long-term obligations.
A statement where each amount is expressed as a percent of a base amount to reveal the relative importance of each financial statement item.
The comparison of a company's financial condition and performance to a base amount.
Examination of financial data across time.
The availability of resources to meet short-term obligations and to efficiently generate revenues.
A company's ability to provide financial rewards sufficient to attract and retain capital.

When a negative amount is in the base period and a positive amount is in the analysis period (or vice versa),a meaningful percent change cannot be calculated.

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Three of the most common tools of financial analysis include horizontal analysis,vertical analysis,and ratio analysis.

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