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Exam 17: Analysis of Financial Statements

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Question 91

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Refer to the following selected financial information from Hansen's, LLC. Compute the company's return on total assets for Year 2.

A) 9.6%.
B) 15.2%.
C) 2.6%.
D) 22.2%.
E) 14.5%.

F) A) and B)
G) C) and D)

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Question 92

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Use the balance sheets of Sando shown below to calculate the following ratios for 2012 (round to the hundredths): (a) Current ratio. (b) Acid-test ratio. (c) Debt ratio. (d) Equity ratio.

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Question 93

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Working capital is computed as current liabilities minus current assets.

Financial statement analysis may be used for personal investment decisions.

Refer to the following selected financial information from Hansen's, LLC. Compute the company's times interest earned for Year 2.

Net income divided by average total assets is:

Liquidity refers to the availability of resources to meet short-term cash requirements.

What are the standards for comparisons in financial analysis? Give an example of each.

Refer to the following selected financial information from Fennie's, LLC. Compute the company's current ratio for Year 2.

Intracompany analysis is based on comparisons with competitors.

Financial reporting refers to:

A corporation reports the following year-end balance sheet data. Calculate the following ratios: (a) working capital (b) acid-test ratio (c) current ratio (d) debt ratio (e) equity ratio (f) debt-to-equity ratio

For the following financial statement items, calculate trend percents using 2009 as the base year:

Use the following selected information from Farris, LLC to determine the Year 2 and Year 1 common size percents for cost of goods sold using Year 1 net sales as the base.

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

Identify and explain the four building blocks of financial statement analysis.

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Ratios, like other analysis tools, are only historically oriented.

The following current year information is available from a manufacturing company: Calculate the company's accounts receivable turnover and its days' sales uncollected.

General-purpose financial statements include the (1) income statement, (2) balance sheet, (3) statement of stockholders' equity (or statement of retained earnings), (4) statement of cash flows, and (5) notes to these statements.