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Exam 15: Financial Statement Analysis

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Question 61

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In determining whether a company's financial condition is improving or deteriorating over time,horizontal analysis of financial statement data would be more useful than vertical analysis.

A) True
B) False

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Question 62

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If a company's operating cycle is much longer than its average payment period for suppliers,it creates the need to borrow money to fund its inventories and accounts receivable.

A) True
B) False

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Question 63

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Klein Corporation has provided the following data: $\begin{array}{lrr}& \text { year 2}& \text {Year 1 }\\\text { Total assets ........................ } & \$ 1,337,000 & \$ 1,310,000 \\\text { Total liabilities.................. } & \$ 598,000 & \$ 580,000 \\\text { Total stockholders' equity ...... } & \$ 739,000 & \$ 730,000\end{array}$ The company's equity multiplier is closest to:

Sperle Corporation has provided the following data concerning its stockholders' equity accounts: Net income for Year 2 was $30,400. Dividends on common stock during Year 2 totaled $6,400. The market price of common stock at the end of Year 2 was $3.08 per share. -The company's dividend yield ratio for Year 2 is closest to:

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. -The company's inventory turnover for Year 2 is closest to:

Deacon Corporation has provided the following financial data from its balance sheet and income statement: -The company's times interest earned for Year 2 is closest to:

The formula for the net profit margin percentage is: Net profit margin percentage = Net income ÷ Sales.

Gremel Corporation has provided the following financial data: Required: a.What is the company's working capital? b.What is the company's current ratio? c.What is the company's acid-test (quick)ratio?

Uhri Corporation has provided the following data: Dividends on common stock during Year 2 totaled $4,000.The market price of common stock at the end of Year 2 was $6.08 per share.The company's dividend payout ratio for Year 2 is closest to:

Symons Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share. -The company's dividend payout ratio for Year 2 is closest to:

Kearin Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at the end of Year 2 was $2.02 per share. -The company's gross margin percentage for Year 2 is closest to:

A company could improve its acid-test ratio by selling some equipment it no longer needs for cash.

Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. -The average collection period for Year 2 is closest to:

Sperle Corporation has provided the following data concerning its stockholders' equity accounts: Net income for Year 2 was $30,400. Dividends on common stock during Year 2 totaled $6,400. The market price of common stock at the end of Year 2 was $3.08 per share. -The company's price-earnings ratio for Year 2 is closest to:

Data from Fontecchio Corporation's most recent balance sheet appear below: $\begin{array} { l } \text {Cash. }&\$ 18,000\\ \text { Marketable securities}&\$ 24,000\\ \text { Accounts receivable.}&\$39,000 \\ \text {Short-term notes receivable. }&\$ 0\\ \text {inventory }&\$ 60,000\\ \text {Prepaid expenses }&\$14,000 \\ \text { Current liabilities}&\$120,000 \\\end{array}$ The corporation's acid-test ratio is closest to:

Rawdon Corporation's net operating income in Year 2 was $52,429,net income before taxes was $34,429,and the net income was $24,100.Total common stock was $360,000 at the end of both Year 2 and Year 1.The par value of common stock is $4 per share.The company's total stockholders' equity at the end of Year 2 amounted to $976,000 and at the end of Year 1 to $960,000.The company's earnings per share for Year 2 is closest to:

The price-earnings ratio is determined by dividing market price per share of stock by the earnings per share.

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. -The acid-test (quick) ratio at the end of Year 2 is closest to:

Nickolls Corporation has provided the following financial data: -The company's current ratio is closest to:

Neiger Corporation has provided the following financial data: Required: a.What is the company's working capital at the end of Year 2? b.What is the company's current ratio at the end of Year 2? c.What is the company's acid-test (quick)ratio at the end of Year 2? d.What is the company's times interest earned ratio for Year 2? e.What is the company's debt-to-equity ratio at the end of Year 2? f.What is the company's equity multiplier at the end of Year 2?