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Exam 13: Analyzing Financial Statements

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Question 51

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Explain the purpose of financial statement analysis for both external and internal users.

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The purpose of financial statement analy...

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Question 52

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Information from a manufacturing company's current year income statement follows for the current year: Calculate the company's times interest earned.

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$80,000/$3...

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Question 53

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Explain where each of the following items should appear in the financial statements of a corporation: (1) The accounting department discovered that an entry was made last year to Prepaid Insurance instead of to Insurance Expense. The after-tax effect of the charge to Prepaid Insurance was $11,000. (2) One of the company's plants was destroyed by an earthquake. The area has never reported an earthquake. The amount of the loss, net of tax, was $850,000.

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

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

A financial statement analysis report should include a brief table of contents to help users focus on those areas most relevant to their decisions.

Ratios analysis eliminates all of the differences of GAAP versus IFRS financial reporting.

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

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

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

Dividing accounts receivable by net sales and multiplying the result by 365 is equal to the:

The comparative balance sheet for Golden Co. is shown below. Express these amounts in a comparative, common-size balance sheet.

Comparative financial statements in which each amount is expressed as a percentage of a base amount and in which the base amount is expressed as 100%, are called:

Simple Simon's balance sheet and income statement accounts follow: What is Simple Simon's gross margin ratio for 2010?

Extraordinary items:

Corona Company's balance sheet accounts follow: What is Corona Company's debt to equity ratio for 2010?

Profitability is the ability to generate positive market expectations.

A company has a profit margin of 5%. If net income is equal to $83,000 and average total assets is equal to $45,000, how much are net sales?

A company had a return on common stockholders' equity of 22%. Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000. Compute the amount of the preferred dividends declared.

Financial reporting refers to: