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Exam 13: Interpreting Financial Statements

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Question 91

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

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Question 92

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Horizontal analysis:

A) Is a method used to evaluate changes in financial data across time.
B) Is also called vertical analysis.
C) Is the presentation of financial ratios.
D) Is a tool used to evaluate financial statement items relative to industry statistics.
E) Evaluates financial data across industries.

F) All of the above
G) None of the above

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Question 93

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

Financial reporting refers to:

A company's balance sheet and income statement accounts follow: What is the company's return on common stockholders' equity ratio for 2013?

Liquidity and efficiency are measures of a company's ability to meet short-term obligations.

The current ratio and acid-test ratio are used to reflect the ____________ of a business.

A company had a profit margin of 5%. If net income equaled $83,000 and average total assets equaled $45,000, how much were net sales?

David and Tom Gardner created The Motley Fool to help investors. What do David and Tom believe is their mission?

A company's balance sheet and income statement accounts follow: What is the company's profit margin ratio for 2014?

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

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

Trend analysis is also called:

Information from a manufacturing company's current year income statement follows: $\begin{array}{|l|r|}\hline \text { Sales } & \$ 800,000 \\\hline \text { Cost of goods sold } & 455,000 \\\hline \text { Gross profit } & \$ 345,000 \\\hline \text { Operating expenses } & 265,000 \\\hline \text { Operating income } & \$ 80,000 \\\hline \text { Interest expense } & 32,000 \\\hline \text { Income before taxes } & \$ 48,000 \\\hline \text { Income taxes expense } & 12,400 \\\hline \text { Net income } & \$ 35,600 \\\hline\end{array}$ Calculate the company's times interest earned.

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.

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

Corona Company's balance sheet accounts follow: What is Corona Company's inventory turnover ratio for 2014, assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?

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

The ability to generate positive market expectations is called:

Selected balances from a company's financial statements are shown below: $\begin{array}{|l|c|c|c|} \hline& \begin{array}{c}\text { Dec. 31, } \\2013\end{array} & \begin{array}{c}\text { Dec. 31, } \\2014\end{array} & \begin{array}{c}\text { For the } \\\text { Year 2014 }\end{array} \\\hline \text { Merchandise inventory } & \$ 15,000 & \$ 20,000 & \\\hline \text { Accounts payable } & 32,000 & 26,000 \\\hline \text { Salaries payable } & 4,400 & 3,000 \\\hline \text { Accounts receivable } & 24,000 & 21,000 \\\hline \text { Total assets } & 234,000 & 286,000 \\\hline \text { Sales (all on credit) } & & & \$ 312,000 \\\hline \text { Cost of goods sold } & & & 165,600 \\\hline \text { Salaries expense } & & & 48,000 \\\hline \text { Other expenses } & & & 75,000 \\\hline \text { Net income } & & & 24,000\\\hline\end{array}$ Use the information above to calculate the following current year ratios: (a) 2014 inventory turnover. (b) Days' sales uncollected at Dec. 31, 2014. (c) 2014 profit margin. (d) 2011 return on total assets.