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Exam 17: Analysis of Financial Statements

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Question 41

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Express the following balance sheets for Alberts Company in common-size percents.

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Question 42

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Annual cash dividends per share divided by market price per share is the:

A) Price-earnings ratio.
B) Price-dividends ratio.
C) Profit margin.
D) Dividend yield ratio.
E) Earnings per share.

F) C) and E)
G) C) and D)

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Question 43

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Use the following selected information from Farris, LLC to determine the Year 2 and Year 1 trend percents for net sales using Year 1 as the base.

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

The comparison of a company's financial condition and performance across time is known as:

Identify and describe three common tools of financial statement analysis.

Calculate the percent increase or decrease for each of the following financial statement items:

Profitability is the ability to generate positive market expectations.

The ability to generate positive market expectations is called:

The comparative balance sheet for Golden Co. is shown below. Express the balance sheet in common-size percents.

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

The return on common stockholder's equity measures a company's success in reaching the goal of earning net income for its owners.

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

Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

Refer to the following selected financial information from Fennie's, LLC. Compute the company's days' sales in inventory for Year 2.

An advantage of common-size statements is that they reflect the dollar magnitude (size) of the different companies under analysis.

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

The debt ratio, the equity ratio, pledged assets to secured liabilities, and times interest earned are all ___________________ ratios.

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

Standards for comparison are necessary when making judgments about a company's performance.