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Exam 13: Analyzing Financial Statements

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Question 41

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A company has a current ratio of 1.92, total liabilities of $193,849, long-term notes payable of $85,791, a quick ratio of .96. What is the total of the quick assets for the company?

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Question 42

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Internal users of financial information:

A) Are not directly involved in operating a company
B) Are those individuals involved in managing and operating the company
C) Include shareholders and lenders
D) Include directors and customers
E) Include suppliers, regulators and the press

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Question 43

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Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.

What is the purpose of a good financial statement analysis report? What are the key components?

Use the following information from the current year financial statements of a company to calculate the ratios below: (a) Current ratio. (b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.) (c) Days' sales uncollected. (d) Inventory turnover. (Assume the prior year's inventory was $50,200.) (e) Times interest earned ratio. (f) Return on common stockholders' equity. (Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.) (g) Earnings per share (assuming the corporation has a simple capital structure, with only common stock outstanding). (h) Price earnings ratio. (Assume the company's stock is selling for $26 per share.) (i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.)

Identify and explain the four building blocks of financial statement analysis.

Expropriation of property by a foreign government is considered an extraordinary item.

A company's calendar-year financial data are shown below. The company has pledged all of its net plant assets as security for its long-term notes payable: Calculate the following ratios for this company: (a) Equity ratio. (b) Pledged assets to secured liabilities ratio. (c) Times interest earned.

Corona Company's balance sheet accounts follow: What is Corona Company's days' sales uncollected ratio for 2011 assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

The following selected company information was reported: Calculate the following company ratios: (a) Accounts receivable turnover. (b) Inventory turnover. (c) Days' sales uncollected.

Liquidity refers to the availability of resources to meet short-term cash requirements.

A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.

Financial reporting includes not only general purpose financial statements, but also information from SEC filings, press releases, shareholders' meetings, forecasts, management letters, auditor's reports and Webcasts.

Horizontal analysis:

Comparative calendar-year financial data for a company are shown below: Calculate: (1) Accounts receivable turnover for 2010. (2) Days' sales uncollected for 2010. (3) Inventory turnover for 2010. (4) Days' sales in inventory for 2010.

Use the financial data shown below to calculate the following ratios for the current year: (a) Current ratio. (b) Acid-test ratio. (c) Accounts receivable turnover. (d) Days' sales uncollected. (e) Inventory turnover. (f) Days' sales in inventory.

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

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 three most common tools of financial analysis are:

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