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Exam 23: Financial Statement Analysis

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Question 31

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A firm had current liabilities of $60,000 on December 31, 2012, and $51,000 on December 31, 2013. Current liabilities decreased by ____________________ percent.

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Question 32

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Which of the following is most likely to indicate that a firm is experiencing difficulty in collecting its receivables?

A) Its accounts receivable turnover decreases from 10 to 8.
B) Its accounts receivable turnover increases from 8 to 10.
C) Its average collection period decreases from 36 to 32.
D) Its average collection period increases from 25 to 28.

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

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Question 33

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If current assets are $90,000 and total assets are $270,000, what percentage of total assets are current assets?

Most trade associations provide common-size statements based on data gathered from member companies.

-Using the information given, analyze the financial strength of Sybaritic Corporation for 2013.

If the gross profit on sales is 20 percent of net sales, then cost of goods sold must be ____________________ percent of net sales.

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.

Differentiate between horizontal analysis and trend analysis. What does each reveal about the company being analyzed?

-Using the comparative balance sheet assets given below, prepare a horizontal analysis of all asset items. Carry all calculations to two decimal places and then round to one decimal place.

The price-earnings ratio is computed by dividing the current market value per share by the ____________________ per share.

If total merchandise available for sale is 72 percent of net sales and cost of goods sold is 64 percent of net sales, gross profit on sales is

The fair market value of a share of common stock is determined by dividing the stockholders' equity by the number of shares of common stock outstanding.

A firm reported total liabilities of $60,000 and total stockholders' equity of $140,000. The amount of total liabilities is ____________________ percent of total assets.

Which of the following is true of horizontal analysis?

-Using the information given below, calculate the gross profit percentage based on net sales. What conclusions can be made about this company based on this trend analysis?

-Using the information shown, prepare a vertical analysis. Carry all calculations to two decimal places and then round to one decimal place.

The comparison of dollar amounts or percentages over several periods is called ____________________ analysis.

Trend analysis looks at

The current ratio is a measure of profitability.

Comparison of amounts and percentages for only two years is adequate to indicate long-term trends.