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Exam 17: Analysis of Financial Statements

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Question 71

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The comparison of a company's financial condition and performance to a base amount is known as ___________________________.

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Question 72

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Selected current year end financial information for a company is presented below. Calculate the following company ratios: (a) Profit margin. (b) Total asset turnover. (c) Return on total assets. (d) Return on ordinary shareholders' equity (assume the company has no preference shares).

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(a) Profit margin = ($325,000/$4,700,000...

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Question 73

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Refer to the following selected financial information from Hansen's, LLC. Compute the company's return on total assets for Year 2.

An advantage of common-size statements is that they reflect the dollar magnitude (size) of the different companies under analysis.

Use the following information from the current year financial statements of a company to calculate the ratios below: (a) Current ratio. (b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.) (c) Days' sales uncollected. (d) Inventory turnover. (Assume the prior year's inventory was $50,200.) (e) Times interest earned ratio. (f) Return on ordinary shareholders'equity. (Assume the prior year's share capital on ordinary shares balance was $480,000 and the retained earnings balance was $128,000.) (g) Earnings per share (assuming the corporation has a simple capital structure, with only ordinary shares outstanding). (h) Price earnings ratio. (Assume the company's shares are selling for $26 per share.) (i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.)

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

The gross margin ratio, return on total assets, and basic earnings per share are all _____________ ratios.

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

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

Internal users of financial information:

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

Three of the most common tools of financial analysis are (1) _______________________, (2) _________________________, and (3) ____________________________.

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.

The standards for comparisons in financial statement analysis include (1) _____________, (2) ______________, (3) _______________, and (4) _____________.

Working capital is computed as current liabilities minus current assets.

The following current year information is available from a manufacturing company: Calculate the company's accounts receivable turnover and its days' sales uncollected.

The comparison of a company's financial condition and performance across time is known as:

Express the following income statement information in common-size percents (round to nearest whole percent). Comment on the results.

Net income divided by net sales is the:

Use the following selected information from Farris, LLC to determine the Year 2 and Year 1 trend percents for net sales using Year 1 as the base.