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Exam 13: Analysis of Financial Statements

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Question 71

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Evaluation of company performance can include comparison and/or assessment of all but which of the following:

A) Past performance.
B) Current performance.
C) Current financial position.
D) Future performance and risk.
E) External user needs and demands.

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

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Question 72

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A component of operating efficiency and profitability,calculated by expressing net income as a percent of net sales,is the:

A) Acid-test ratio.
B) Merchandise turnover.
C) Price earnings ratio.
D) Accounts receivable turnover.
E) Profit margin ratio.

F) C) and E)
G) B) and E)

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Question 73

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The evaluation of company performance and financial condition focuses solely on past performance.

Three of the most common tools of financial analysis are (1)________, (2)________,and (3)________.

The market price of Horokhiv Corporation's common stock at the start of 2016 was $47.50 and it declared and paid cash dividends of $3.28 per share.The Dividend yield ratio is:

Net sales divided by Average accounts receivable,net is the:

Horizontal analysis:

Which of the following items is typically not included as a separate item after normal revenues and expenses?

Describe the purpose of horizontal financial statement analysis and how it is applied.

A financial statement analysis report does not include:

One purpose of financial statement analysis for internal users is to provide strategic information to improve company efficiency and effectiveness in providing products and services.

When an item has a value in the base period and zero in the analysis period,the decrease is 0 percent.

Match each of the following terms with the appropriate formulas. - $\frac {\text { Ending inventory}} { \text {Cost of goods sold } }$ * 365

Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.

Horizontal analysis is the comparison of a company's financial condition and performance across time.

Information from a manufacturing company's current year income statement follows.Calculate the company's (a)profit margin ratio, (b)gross margin ratio,and (c)times interest earned. $\begin{array}{|l|r|}\hline \text { Sales } & \$ 850,000 \\\hline \text { Cost of goods sold } & 455,000 \\\hline \text { Gross profit } & \$ 395,000 \\\hline \text { Operating expenses } & 260,000 \\\hline \text { Operating income } & \$ 135,00 \\\hline \text { Interest expense } & \$ 32,000 \\\hline \text { Income before taxes } & \$ 103,000 \\\hline \text { Income taxes expense } & 12,400 \\\hline \text { Net income } & \$ 90,600\\\hline \end{array}$

The percent change of a comparative financial statement item is computed by subtracting the base period amount from the analysis period amount,dividing the result by the base period amount and multiplying that result by 100.

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

A high level of expected risk suggests a low price-earnings (PE)ratio.

A good financial statement analysis report usually includes the following six sections: (1)________, (2)________, (3)________, (4)________ (5)________,and (6)________.