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Exam 23: Financial Statement Analysis

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Question 31

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Ratios can be classified into all of the following categories except:

A) financial strength.
B) profitability.
C) liquidity.
D) marketability.

E) All of the above
F) A) and B)

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Question 32

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The acid-test ratio, also called the quick ratio, is a measure of a company's immediate liquidity and includes only liquid assets that can be quickly converted to cash.

A) True
B) False

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Question 33

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

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

Simon Company has current liabilities of $30,000 and a current ratio of 1.2. Its current assets, therefore, must equal $25,000.

A firm had current liabilities of $90,000 on December 31, 2019, and $71,100 on December 31, 2020. Current liabilities decreased----------- percent.

Aston Corporation has a .7 to 1 ratio of stockholders' equity to total equities. If stockholders' equity is $420,000, then its total liabilities are $180,000.

Peabody's stock has a market price of $86 per share with a dividend yield of 10 percent. Peabody pays dividends in equal amounts each quarter. The annual dividend payment is $8.60.

Selected financial ratios for Riparian Products and Escarpment Equipment are given. Assess the ratios given for each company and explain which company the ratios suggest is the stronger of the two.

The yield on common stock is computed by dividing the dividend per share of common stock by the current------------ of the share.

A company reported net income of $84,000 for 2019, and net income of $107,520 for 2020. Net income increased by---------- percent.

On a comparative income statement that shows horizontal analysis, the percentage of change in each category is based on gross sales for that year.

The Yipsilon Company has current assets of $50,000 and current liabilities of $45,000. Its current ratio, therefore, must equal .9.

The following financial information was taken from a firm's accounting records on December 31, 2019. Use this information to determine the items below. $\begin{array}{ll}\text { Accounts Payable } & \$ 157,000 \\\text { Bonds Payable, 2023 } & 180,000 \\\text { Common Stock ( } \$ 25 \text { par value) } & 300,000 \\\text { Retained Earnings } & 242,000\end{array}$ Market price of the common stock on December 31, 2019 was $50. (1.) Ratio of stockholders' equity to total equities (2.)Ratio of stockholders' equity to total liabilities (3.) Book value per share of common stock

If current assets are $90,000 and total assets are $360,000, what percentage of total assets are the current assets?

The following financial information was taken from a firm's accounting records on December 31, 2019. Use this information to determine the items below. Assume that the company uses net income after income tax to calculate the rate. (1.)Rate of return on net sales (2.)Rate of return on total assets (3.) Asset turnover

The following financial information was taken from a Unit Sales Inc.'s accounting records on December 31, 2019. Use this information to determine the items below. (1.)Rate of return on net sales (2.)Rate of return on total assets (3.) Asset turnover

Use the following information for the questions Shaw Enterprises Comparative Balance Sheet December 31, 2020 and 2019 -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?

In vertical analysis, it is customary to express each item on the balance sheet as a percentage of either the total assets or the total of liabilities and stockholders' equity.

Comparing the amount of a balance sheet item in one year to the amount for the same item in a prior year is called: