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Exam 17: Financial Statement Analysis

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Question 1

Multiple Choice

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On a common-sized income statement,100% is the

A) net cost of goods sold
B) net income
C) gross profit
D) sales

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

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Question 2

Multiple Choice

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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. ​ Assets Liabilities and Stockholders' Equity Income Statement -Using the data provided for Diane Company,what is the asset turnover?

A) 1.00
B) 2.94
C) 0.18
D) 0.34

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

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Question 3

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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.

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

An increase in the accounts receivable turnover may be due to a change in how credit is granted and/or in collection practices.

The following information has been condensed from the December 31 balance sheets of Gabriel Co.:​ ​ Round your answers to two decimal places.

The independent auditor's report

The following selected data were taken from the financial statements of the Winter Group for the three most recent years of operations:​ The Year 3 net income was $242,000,and the Year 2 net income was $308,000.No dividends on common stock were declared during the three years.​

The following information is available for Jase Company:​ Which of the following statements is correct?

Gallant Company reported net income of $2,500,000.The income statement included a $200,000 loss on discontinued operations,after applicable income tax.There were 100,000 shares of $10 par common stock and 40,000 shares of 4% preferred stock of $100 par outstanding throughout the current year.​Prepare the earnings per share section of Gallant Company's income statement.

What type of analysis is indicated by the following?

Factors that reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency,profitability,and liquidity.

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

The ratio of the sum of cash,receivables,and marketable securities to current liabilities is referred to as the current ratio.

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. ​ Assets Liabilities and Stockholders' Equity Income Statement -Using the data provided for Diane Company,what is the return on common stockholders' equity?

In a vertical analysis,the base for cost of goods sold is

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

Which of the following is not an unusual item?

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

The percent of fixed assets to total assets is an example of