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Exam 15: Financial Statement Analysis

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Question 21

Multiple Choice

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Which of the following is not included in the computation of the quick ratio?

A) inventory
B) marketable securities
C) accounts receivable
D) cash

E) B) and C)
F) None of the above

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Question 22

True/False

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Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales, a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in inventory management.

A) True
B) False

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Question 23

Multiple Choice

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Based on the above data, what is the amount of working capital?

Condensed data taken from the ledger of St. Louis Company at December 31, for the current and preceding years, are as follows: Prepare a comparative balance sheet, with horizontal analysis, for December 31, Year 2 and Year 1. Round percents to one decimal point.)

The following information is available for Jase Company: Market price per share of common stock $25.00 Earnings per share on common stock $1.25 Which of the following statements is correct?

Income statement information for Lucy Company is provided below: Sales $175,000 Cost of goods sold 105,000 Gross profit $ 70,000 Prepare a vertical analysis of the income statement for Lucy Company.

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. -What is the ratio of sales to total assets for Diane Company?

Which of the following is required by the Sarbanes-Oxley Act?

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

In computing the rate earned on total assets, interest expense is subtracted from net income before dividing by average total assets.

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.

The excess of current assets over current liabilities is referred to as working capital.

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will

The following data are taken from the financial statements: Preferred dividends declared 25,000)25,000)Common dividends declared 70,000)60,000)Determine for the current year the a) rate earned on total assets, b) rate earned on stockholders' equity, c) rate e common stockholders' equity, d) earnings per share on common stock, e) price-earnings ratio on common stock, and yield on common stock. The current market price per share of common stock is $25. Round percentage values to one decimal place, dollar values to two decimal places, and other ratios to one decimal

Abigail 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.

When computing the rate earned on total common stockholders' equity, preferred stock dividends are subtracted from net income.

A common measure of liquidity is

For Garrison Corporation, the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year, reported as follows: Has the current position of Garrison Corporation improved? Explain.

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year, there has been an acceleration in the collection of receivables.

A clean audit opinion is the same as a qualified audit opinion.