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Exam 14: Financial Statement Analysis

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Question 51

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

A) assess the profitability of the assets
B) assess how effectively assets are used
C) indicate the ability to pay current liabilities
D) indicate how much of the company is financed by debt and equity
E) indicate instant debt-paying ability
F) assess the profitability of the investment by common stockholders
G) indicate future earnings prospects
H) indicate the extent to which earnings are being distributed to common stockholders

I) E) and F)
J) B) and C)

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Question 52

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Dollar amounts of working capital are difficult to assess when comparing companies of different sizes or in comparing such amounts with industry figures.

A) True
B) False

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Question 53

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

A 15% change in sales will result in a 15% change in net income.

The relationship of $325,000 to $125,000,expressed as a ratio,is

On a common-sized balance sheet,100% is

A common measure of liquidity is

Revenue and expense data for Bluestem Company are as follows: ​ Round percentages to one decimal place.

The following data are available for Martin Solutions,Inc. ​

Using measures to assess a business's ability to pay its current liabilities is called current position 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.

What is the return on common stockholders' equity for Diane Company?

Selected data from the Carmen Company at year end are presented below: ​ ​ Calculate: (a)asset turnover ratio; (b)return on total assets; (c)return on common stockholders' equity; and (d)earnings per share on common stock.Assume the company had no preferred stock or interest expense.Round dollar values to two decimal places and other final answers to one decimal place.

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

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.

Match each ratio that follows to its use (items a-h) .Items may be used more than once. -measures the risk that interest payments will not be made if earnings decrease

A clean audit opinion is not the same as an unmodified opinion.

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.

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

The independent auditor's report