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Exam 14: Financial Statement Analysis

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Question 41

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Assume the following sales data for a company: ​ What is the percentage increase in sales from the preceding year to the current year?

A) 100%
B) 25%
C) 125%
D) 75%

E) B) and C)
F) A) and D)

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Question 42

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Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.

A) True
B) False

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Question 43

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When you are interpreting financial ratios,it is useful to compare a company's ratios to the same ratios from a prior period or to the ratios of another company in the same industry.

A company reports the following: ​ Determine the asset turnover ratio.Round your answer to one decimal place.

Which of the following items appear on the corporate income statement before income from continuing operations?

Short-term creditors are typically most interested in analyzing a company's

From the following data for Norton Company for the year ended December 31,prepare a multiple-step income statement.Include the earnings per share presentation on the income statement. ​

In the vertical analysis of a balance sheet,the base for current liabilities is total liabilities.

Based on the data for Harding Company,what is the quick ratio,rounded to one decimal point?

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year,there has been an acceleration in the collection of receivables.

The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because of

Assume the following sales data for a company: ​ What is the percentage increase in sales from the preceding year to the current year?

Vertical analysis refers to comparing the financial statements of a single company over several years.

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

A company reports the following: ​ The company's earnings per share on common stock is

The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.

Current position analysis is used by short-term creditors to assess how quickly they will be repaid.

Prepare an income statement using the following data for New Orleans Adventures for the year ended December 31:

Using vertical analysis of the income statement,a company's net income as a percentage of sales is 15%; therefore,the cost of goods sold as a percentage of sales must be 85%.

An analysis in which all the components of an income statement are expressed as a percentage of sales is a