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Exam 12: Financial Statement Analysis

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Question 41

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Ottoman Manufacturing Company reported net sales all credit of $120,000 and $140,000 for 2013 and 2014,respectively and net income of $24,000 and $32,000 for 2013 and 2014,respectively.Ottoman's 2013 and 2014 balance sheets appear below: Required: a.Calculate the working capital for 2014. b.Calculate the accounts receivable turnover for 2014. c.Calculate the debt ratio for 2014. Unit 12-3,

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a.$62,000 - $30,000 = $32,000 ...

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Question 42

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A firm's ability to convert non-cash assets into cash is referred to as liquidity.

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Question 43

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-Which of the following authorities require that companies present comparative financial statements that include both the current year and the previous year?

The high accounts receivable turnover rate may indicate all of the following except

Which of the following is the reason that preferred dividends declared during the period are deducted from net income in calculating return on common stockholders' equity?

The quality of assets is assessed through the profitability ratios.

The current ratio is calculated as

ABC Corporation reported net income of $26,000 last year.The company reported earnings per share of $2.80.ABC paid dividends of $1.75 on each share of outstanding stock.What was ABC's dividend payout ratio?

In a horizontal analysis balance sheet,the percentage change columns do not add up in the same way as the dollar amounts because each of the percentages was calculated using a different denominator.

In interpreting common-size financial statements denominated in a foreign currency,a word of caution is

On a common-size balance sheet,notes payable is shown as a percentage of

A high inventory turnover might signal

Investors,employees,managers,and creditors are all interested in a company's ability to remain profitable over the long-run.Answer the following questions relating to profitability ratios. a.What does the gross margin percentage measure and how is it calculated? b.What does the return on assets measure and how is it calculated? c.What does the return on common stockholders' equity measure and how is it calculated? Unit 12-3,

The type of analysis that looks at the changes in the account balances over time is referred to as horizontal analysis.

A helpful approach to examine changes in the relative size of account balances within a single statement is referred to as

On a common-size income statement,selling expense is shown as a percentage of

Most companies use a combination of debt and equity to obtain the assets needed to fund their operations.Two leverage ratios are the debt ratio and the debt-to-equity ratio.What do each of these measures,and how are they each calculated?

Inventory turnover measures how many times,on average,a company's inventory is sold during the year.

The 2013 and 2014 partial balance sheets for Ottoman Manufacturing Company appear below: What is the debt-to-equity ratio for 2014?

The balance sheet for Blan Corporation at the end of the current year indicates the following: Bonds payable,8% $4,000,000 6% Preferred stock,$100 par 1,000,000 Common stock,$10 par 2,000,000 Income before income taxes was $480,000 and income taxes expense for the current year amounted to $144,000.Cash dividends paid on common stock were $300,000,and the common stock was selling for $22 per share at the end of the year.There were no ownership changes during the year. Required: Calculate each of the following: a.Earnings per share b.Price/earnings ratio c.Dividend payout ratio Unit 12-3,