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Exam 17: Financial Statement Analysis

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Question 21

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The following data are available for Martin Solutions, Inc.:? (1)Determine for each year: (a)Inventory turnover (b)Number of days' sales in inventory (Round intermediate calculation to the nearest whole number and your final answer to one decimal place.) (2)What conclusions can be drawn from these data concerning the inventories?

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? (2)The inventory position of the busi...

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Question 22

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The following information is available for Meyer Company:? $\begin{array}{lr}\text { Dividends per share of common stock } & \$ 1.80 \\\text { Market price per share of common stock } & \$ 30.00\end{array}$ Which of the following statements is correct?

A) The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks.
B) The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments.
C) The dividend yield is 16.7%, which is of interest to bondholders.
D) The dividend yield is 16.7%, which is an important measure of solvency.

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

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Question 23

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If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.

What information is generally included in the Management's Discussion and Analysis (MD&A) section of a corporate annual report?

Current position analysis is used by short-term creditors to assess how quickly they will be repaid.

Brock Company's financial information is listed below. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.​​ What is the current ratio?

Use the information below for Harding Company to answer the questions that follow. ​ $\text { Harding Company }$ $\begin{array}{lr}\text { Accounts payable } & 40,000 \\\text { Accounts receivable } & 65,000 \\\text { Accrued liabilities } & 7,000 \\\text { Cash } & 30,000 \\\text { Intangible assets } & 40,000 \\\text { Inventory } & 72,000 \\\text { Long-term investments } & 110,000 \\\text { Long-term liabilities } & 75,000 \\\text { Marketable securities } & 36,000 \\\text { Notes payable (short-term) } & 30,000 \\\text { Property, plant, and equipment } & 625,000 \\\text { Prepaid expenses } & 2,000\end{array}$ -Based on the data for Harding Company, what is the amount of quick assets?

Abigail Company reports the following:​ Determine the (a) return on stockholders' equity and (b) return on common stockholders' equity. Round your answers to one decimal place.

Match each ratio that follows to its use (items a-h) . Items may be used more than once. -Current ratio

The particular analytical measures chosen to analyze a company may be influenced by all of the following except

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. Use this information to answer the questions that follow. ​ -Using the data provided for Diane Company, what is the return on common stockholders' equity?

On a common-sized balance sheet, 100% is

A company reports the following: Income before income tax$600,000 Interest expense150,000? Determine the times interest earned. Round your answer to one decimal place.

A company reports the following income statement and balance sheet information for the current year: Net income$ 180,000Interest expense.....20,000 Average total assets.................................2,000,000 ?Determine the return on total assets. Round your answer to one decimal place.

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

A company reports the following: Net income$ .................................................350,000 Preferred dividends.......................................50,000 Average stockholders' equity.......................1,000,000 Average common stockholders' equity........800,000? Determine the (a) return on stockholders' equity and (b) return on common stockholders' equity. Round your answers to one decimal place.

Balance sheet and income statement data indicate the following:? $\begin{array} { l r } \text { Bonds payable, } 10 \% \text { (due in two years) } & \$ 1,000,000 \\\text { Preferred } 5 \% \text { stock, } \$ 100 \text { par (no change during year) } & 300,000 \\\text { Common stock, } \$ 50 \text { par (no change during year) } & 2,000,000 \\\text { Income before income tax for year } & 550,000 \\\text { Income tax for year } & 80,000 \\\text { Common dividends paid } & 50,000 \\\text { Preferred dividends paid } & 15,000\end{array}$ Based on the data presented, what is the times interest earned ratio? (Round to one decimal point.)

The following items are reported on a company's balance sheet:? $\begin{array} { l r } \text { Cash } & \$ 400,000 \\\text { Marketable securities } & 50,000 \\\text { Accounts receivable } & 150,000 \\\text { Inventory } & 200,000 \\\text { Accounts payable } & 250,000\end{array}$ Determine the (a) current ratio, and (b) quick ratio. Round your answers to one decimal place.

Match each ratio that follows to its use (items a-h) . Items may be used more than once. -Price-earnings (P/E) ratio

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to