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Exam 23: Financial Statement Analysis

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Question 51

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-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.

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Question 52

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-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.)

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Question 53

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

Since each firm is a unique entity, comparison of data for the firm with industry averages is of no use in financial analysis.

-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.)

A firm has current liabilities of $60,000, stockholders' equity of $180,000 and total assets of $300,000. The percentage of total liabilities to total assets is

Using the comparative income statement given below, prepare a horizontal analysis of all items. Carry all calculations to two decimal places and then round to one decimal place.

The following financial information was taken from a firm's accounting records on December 31, 2013. Use this information to determine the items below. $\begin{array}{ll}\text { Cash } & \$ 55,000 \\\text { Accounts Receivable (Net) } & 140,000 \\\text { Merchandise Inventory } & 265,000 \\\text { Property, Plant, and Equipment (Net) } & 500,000 \\\text { Total Assets } & 960,000 \\\text { Accounts Payable } & 120,000 \\\text { Bonds Payable, 2020 } & 400,000 \\\text { Total Liabilities } & 520,000\end{array}$ (1) Working capital. (2) Current ratio. (3) Acid-test ratio. (4) Ratio of stockholders' equity to total liabilities.

Low inventory turnover compared with the industry average might reflect

The following financial information was taken from a firm's accounting records on December 31, 2013. Use this information to determine the items below. $\begin{array} { l r } \text { Accounts Payable } & \$ 140,000 \\\text { Bonds Payable, 2020 } & 100,000 \\\text { Common Stock ( } \$ 25 \text { par value) } & 200,000 \\\text { Retained Earnings } & 230,000\end{array}$ Market price of the common stock on December 31 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.

Financial statements presented side-by-side for two or more periods are called ____________________ statements.

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

Using the comparative income statement given below, prepare a vertical analysis of all items. Carry all calculations to two decimal places and then round to one decimal place. (Leave all vertical analysis percentages unadjusted in this problem.)

The current ratio is a measure of _____________________; that is, the ability of a company to pay its currently maturing debts.

If long-term liabilities are $75,000 and total assets are $525,000, what percentage of total assets are long-term liabilities?

A company reported net income of $120,000. It paid a cash dividend of $20,000 to preferred stockholders and a cash dividend to common shareholders of $40,000. If the company has 20,000 shares of common stock outstanding, earnings per share would be ______________.

The rate of return on total assets measures how effectively management has used the assets of the company.

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.)

Selected financial ratios for Opus Company and its industry averages are given. What does the information suggest about Opus? $\begin{array}{lcc} & \text { Opus Company } & \text { Industry Average } \\\text { Inventory turnover } & 1.8 & 2.0 \\\text { Accounts receivable turnover } & 1.95 & 2.3 \\\text { Rate of return on total assets } & 15.6 & 16.5 \\\text { Rate of return on net sales } & 2.4 & 2.2\end{array}$

A firm has liabilities of $60,000 and stockholders' equity of $180,000. The percentage of total liabilities to total assets is