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Exam 23: Financial Statement Analysis

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Question 61

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If the cost of goods sold is 65 percent of net sales, gross profit on sales would be----------- percent of net sales.

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Question 62

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A horizontal analysis of balance sheet data involves a comparison of a balance sheet amount on a given date with:

A) the amount for the same balance sheet item on a previous date.
B) the net sales from the income statement for the period ending on that date.
C) the total stockholders' equity on the balance sheet for that date.
D) the total of the assets on the balance sheet for that date.

E) A) and B)
F) B) and D)

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Question 63

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The rate of return on net sales is a basic measure of operating efficiency and------------

Using the comparative balance sheet given below, prepare a vertical analysis of all asset items. Carry all calculations to two decimal places and then round to one decimal place. (Leave all vertical analysis percentages unadjusted. )

A company reported net income of $96,000. It paid a cash dividend of $32,000 to preferred stockholders. If the company has 16,000 shares of common stock outstanding, earnings per share is----------- .

If the comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from 2019 to 2020, the firm used:

A vertical analysis of the income statement calculates each income statement item as a percentage of -----------as reported on that income statement.

A common technique for measuring earnings per share requires a company to compute the weighted average shares outstanding during the year.

Which of the following is true of horizontal analysis?

Vertical analysis of income statement data most often involves a comparison of each income statement item with:

Quick assets include cash, receivables, and inventories.

A firm has liabilities of $72,000 and stockholders' equity of $228,000. The percentage of total liabilities to total assets is:

If liabilities are $75,000, two-thirds of which represent current liabilities, and total assets are $500,000, what is the ratio of Stockholders' Equity to Total Equities?

Peterson Company has current liabilities of $210,000 and working capital of $56,000. Its current assets, therefore, must equal $266,000.

Selected financial ratios are given for Canard Industries and Canaille Manufacturing. Both firms have come to your bank and requested loans. You are a loan officer at Noir Bank but can only loan funds to one of the firms. Make your decision based on the information provided. In a short paragraph, explain the basis for the selection you made.

On a comparative income statement, gross revenues were $310,000, sales returns and allowances were $14,000 and sales discounts amounted to $2,200. Selling expenses of $54,000 were incurred during the year. The vertical analysis would show current year selling expenses as 18.4%.

Use the following information . Quotidian Industries Income Statement For the Year Ended June 30, 2020 & 2019 Liabilities and Stockholders' Equity Long-Term Liabilities -Using the information given, analyze the financial strength of Quotidian Industries for 2020.

A company had income of $136,000 in 2019 and $210,000 in 2020. The increase in net income from 2019 to 2020 is:

Use the following information for the questions. -Using the information shown, prepare a vertical analysis of all asset items. Carry all calculations to two decimal places and then round to one decimal place. (Leave all percentages unadjusted.)

The current ratio measures a company's ability to pay its current debts using current assets.