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Exam 15: Financial Statement Analysis

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Question 51

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$\begin{array}{ll}530,000 & \text { Accounts payable } \\65,000 & \text { Accounts receivable } \\7,000 & \text { Accrued liabilities } \\25,000 & \text { Cash } \\40,000 & \text { Intangible assets } \\72,000 & \text { Inventory } \\100,000 & \text { Long-term investments } \\75,000 & \text { Long-term liabilities } \\36,000 & \text { Marketable securities } \\20,000 & \text { Notes payable (short-term) } \\625,000 & \text { Property, plant, and equipment } \\2,000 & \text { Prepaid expenses }\end{array}$ Based on the above data, what is the amount of working capital?

A) $243,000
B) $143,000
C) $183,000
D) $69,000

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

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Question 52

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Under which of the following cases may a percentage change be computed?

A) There is no amount in the base year.
B) There is a negative amount in the base year and a negative amount in the subsequent year.
C) The trend of the amounts is decreasing but all amounts are positive.
D) There is a negative amount in the base year and a positive amount in the subsequent year.

E) None of the above
F) A) and D)

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Question 53

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A loss due to a discontinued operation should be reported in the income statement

A company reports the following: Determine the (a) inventory turnover, and (b) number of days' sales in inventory. Round your answer to one decimal place.

One reason that a common-size statement is a useful tool in financial analysis is that it enables the user to

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

When a company changes from one acceptable accounting method to another, the change is reported

Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.

If two companies have the same current ratio, their ability to pay short-term debt is the same.

The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Liabilities and Stockholders' Equity Income Statement What is the price earnings ratio for this company?

When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio, the management of the company has effectively used leverage.

In a common size balance sheet, the 100% figure is:

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Liabilities and Stockholders' Equity Income Statement What is the rate earned on total assets for this company?

A company reports the following: Determine the (a) rate earned on stockholders' equity, and (b) rate earned on common stockholders' equity. Round your answer to one decimal place.

The numerator of the rate earned on total assets ratio is equal to

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Liabilities and Stockholders' Equity Income Statement What is the dividend yield for this company? Round your answer to one decimal point.

The relationship of each asset item as a percent of total assets is an example of vertical analysis.

The following items are reported on a company's balance sheet: Determine the (a) current ratio, and (b) quick ratio. Round your answer to one decimal place.

$\begin{array}{ll}\$ 30,000 & \text { Accounts payable } \\65,000&\text { Accounts receivable } \\7,000 & \text { Acculud liabilities } \\20,000 & \text { Cash } \\40,000 & \text { Intangible assets } \\72,000 & \text { Inventory } \\100,000 & \text { Long-term investments } \\75,000 & \text { Long-term liabilities } \\36,000 & \text { Marketable securities } \\20,000 & \text { Notes payable (short-term) } \\625,000 & \text { Property, plant, and equipment } \\2,000 & \text { Prepaid expenses }\end{array}$ Based on the above data, what is the quick ratio, rounded to one decimal point?