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Exam 11: Financial Statement Analysis

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Question 31

Multiple Choice

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The dividend yield evaluates:

A) a company's stock as an investment
B) a company's ability to pay non-current debt
C) a company's ability to convert receivables into cash
D) a company's ability to finance assets

E) A) and C)
F) All of the above

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Question 32

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An efficient capital market is one in which market prices fully reflect all information available to the public.

A) True
B) False

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Question 33

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Horizontal analysis involves the study of:

For each of the following items,explain its significance and show how the ratio mentioned is calculated: a.A decrease in the current ratio b.An increase in inventory turnover c.An increase in the days' sales in receivables d.A decrease in the debt ratio e.An increase in the rate of return on net sales

Most financial analyses cover trends of three,five,or even 10 years.

The following data represent selected information from the comparative income statement and balance sheet for Hot Rolled Corporation for the years ended December 31,2017 and 2016: •10,000 shares of common shares have been issued and outstanding since the company was established.They had a market value of $90 per share on December 31,2016,and they were selling for $91.50 on December 31,2017. Refer to the table above.The accounts receivable turnover for Hot Rolled Corporation for the year ended December 31,2017,was:

Which of the following statements about current ratios is most appropriate?

Lucky Strike Tackle Inc.had the following results for 2017: Calculate: a.inventory turnover b.accounts receivable turnover c.day's sales in receivables

Data for the most recent four fiscal years of Burleigh Falls Corp.are given below: Required: a.Prepare an analysis showing the trend percentages for the four-year period using 2014 as the base year. b.What do the trend percentages indicate regarding Burleigh Falls Corp.'s income statement data?

Yukon Company has total current liabilities equal to $600,000 and working capital of $30,000.North Company has the same amount of working capital,but it has total current liabilities of $40,000.The company with the better working capital position is:

Given the following data: If net sales decreases by 10%,and cost of goods sold increases by 15%,gross margin would:

On a statement of cash flows of a healthy company,net income would ordinarily be:

Which of the following statements about inventory turnover is most appropriate?

Prepare vertical analysis calculations by filling in the far right column of the following balance sheet with the appropriate percentages. Current assets Current liabilities Shareholders' equity

It is generally considered more useful to know the absolute dollar amount of change in financial statement amounts from year to year than to know the percentage change.

The analysis of trend percentages is a form of vertical analysis.

There are at least two ratios that are used to analyze the company's stock as an investment.Identify two and state how each ratio is calculated.

Common-size financial statements represent a form of:

The following data represent selected information from the comparative income statement and balance sheet for Hot Rolled Corporation for the years ended December 31,2017 and 2016: •10,000 shares of common shares have been issued and outstanding since the company was established.They had a market value of $90 per share on December 31,2016,and they were selling for $91.50 on December 31,2017. Refer to the table above.Hot Rolled Corporation's times-interest-earned ratio for the year ended December 31,2017,was:

If a balance sheet is subjected to vertical analysis which shows that current assets (using total assets as the base) have decreased from 53% to 36%,this would always mean that: