FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 28: Financial Analysis of Performance

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Within a few days of certain major events,a report must be issued by publicly held corporations to

A) stockholders.
B) the SEC.
C) Dun & Bradstreet.
D) creditors.

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following best describes the debt to equity ratio?

A) Average total assets divided by total liabilities
B) Average total assets divided by stockholders' equity
C) Stockholders' equity divided by total liabilities
D) Total liabilities divided by stockholders' equity

E) B) and D)
F) A) and D)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

What is the best way to study the relationship of the components of financial statements?

A change in the company's auditors must be reported to the SEC within a few days of the change.

Following are the financial statements for Starman Corporation for the year ended December 31,20xx.Assume that all balance sheet amounts represent both average and ending figures. \begin{array}{c}\text {Starman Corporation}\\\text {Balance Sheet}\\\text {December 31,20 \mathrm{xx} }\\\begin{array}{lcr}&\text { Assets }\\\text { Cash } && \$ 20,000 \\\text { Marketable securities } && 30,000 \\\text { Accounts receivable } && 50,000 \\\text { Inventory } && 100,000 \\\text { Long-term receivables } && 35,000 \\\text { Property, plant, and equipment } && 65,000 \\\text { Total assets } && \$ 300,000\\\\&\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } && \$ 100,000 \\\text { Long-term liabilities } && 60,000 \\\text { Stockholders' equity } && 140,000 \\ \text { Total liabilities and stockholders' equity } && \$ 300,000 \\\end{array}\end{array} $\begin{array}{c}\text { Starman Corporation}\\\text { Income Statement}\\\text { For the Year Ended December 31, 20xx}\\\begin{array}{lr}\text { Net sales } & \$ 400,000 \\\text { Cost of goods sold } & 240,000 \\\text { Gross margin } & \$ 160,000 \\\text { Operating expenses } & 40,000 \\\text { Income before income taxes } & \$ 120,000 \\\text { Income taxes expense } & \$ 30,000 \\\text { Net income } & \$ 90,000 \\\end{array}\end{array}$ What is the inventory turnover for this corporation? Round your answer to one decimal place.

Which of the following describes the interest coverage ratio?

Per the Sarbanes-Oxley Act of 2002,public corporations must establish a compensation committee to determine how its top executives will be compensated.

For details about the financial histories of companies,one could consult publications of Moody's and Standard & Poor's.

Horizontal analysis of comparative financial statements includes the

Following are the financial statements for Starman Corporation for the year ended December 31,20xx.Assume that all balance sheet amounts represent both average and ending figures. \begin{array}{c}\text {Starman Corporation}\\\text {Balance Sheet}\\\text {December 31,20 \mathrm{xx} }\\\begin{array}{lcr}&\text { Assets }\\\text { Cash } && \$ 20,000 \\\text { Marketable securities } && 30,000 \\\text { Accounts receivable } && 50,000 \\\text { Inventory } && 100,000 \\\text { Long-term receivables } && 35,000 \\\text { Property, plant, and equipment } && 65,000 \\\text { Total assets } && \$ 300,000\\\\&\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } && \$ 100,000 \\\text { Long-term liabilities } && 60,000 \\\text { Stockholders' equity } && 140,000 \\ \text { Total liabilities and stockholders' equity } && \$ 300,000 \\\end{array}\end{array} $\begin{array}{c}\text {Starman Corporation}\\\text { Income Statement}\\\text { For the Year Ended December 31, 20xx}\\\begin{array}{lr}\text { Net sales } & \$ 400,000 \\\text { Cost of goods sold } & 240,000 \\\text { Gross margin } & \$ 160,000 \\\text { Operating expenses } & 40,000 \\\text { Income before income taxes } & \$ 120,000 \\\text { Income taxes expense } & 30,000 \\\text { Net income } & \$ 90,000 \\\end{array}\end{array}$ What is the return on assets for this corporation? Round your answer to one decimal place.

Determining the percentage change in an item from one year to the next is a type of horizontal analysis.

Use the following information to calculate the ratios requested below.Round answers to two decimal places.Show your work. $\begin{array} { l r } \text { Average total assets } & \$ 112,500 \\\text { Current assets, December 31 } & 32,000 \\\text { Current liabilities, December } 31 & 10,000 \\\text { Dividends paid } & 7,000 \\\text { Stockhol ders' equity, December 31 } & 62,500 \\\text { Net sales } & 270,000 \\\text { Total liabilities, December 31 } & 50,000 \\\text { Market price, December 31, on 2,000 shares } & \$ 70 / \text { share }\end{array}$ $\begin{array} { | l | l | l|l| } \hline \text { Dividends yield } &\quad\quad& \text { Debt to equity ratio } &\quad\quad \\\hline \text { Current ratio } && \text { Asset turnover } & \\\hline\end{array}$

Prepare a trend analysis of the following data,using Year 1 as the base year.Place your answers in the chart provided.Comment on the trend. $\begin{array} { | l r r r | } \hline & \text { Year 3 } & { \text { Year 2 } } & { \text { Year 1 } } \\\text { Net sales } & \$ 324,000 & \$ 330,000 & \$ 300,000 \\\text { Net income } & 33,000 & 31,800 & 30,000 \\\hline\end{array}$ $\begin{array} { |l | l | l | l |} \hline& \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\ \text { Net sales } \\\text { Net income } & & & \\\hline\end{array}$

The following data pertain to Golden State Corporation: $\begin{array}{lr}\text { Days' sales uncollected for } 2010 & 25 \\\text { Accounts receivable, } 12 / 31 / 2009 & \$ 78,000 \\\text { Accounts receivable, } 12 / 31 / 2010 & \$ 82,000\end{array}$ Calculate the amount of net sales reported for 2010.Use 365 days per year.

A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be comparable.

A primary purpose of vertical analysis is to observe trends over a five-year period.

The operating cycle is equal to days' sales uncollected plus days' inventory on hand.

Which of the following describes the asset turnover ratio?

Form 10-Q refers to the annual report filed with the SEC.

A company that is leveraged is one that