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Exam 17: Financial Statement Analysis

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Question 1

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Prepare an Income Statement using the following data for Young Adventures for the year ended December 31, 2012:

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Question 2

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

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B) False

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Question 3

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Leveraging implies that a company

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.

The following data are taken from the financial statements:

A company reports the following: Determine the company's earnings per share on common stock.

Which of the following should be reported net of the related income tax effect on the income statement?

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

The purpose of an audit is to

The following data are taken from the financial statements:

A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability. The amount of working capital immediately after payment is

The Cash and Accounts Receivable for a company are provided below: Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

A company reports the following: Determine the (a) inventory turnover, and (b) number of days' sales in inventory. Round your answer to one decimal place.

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

The following information was taken from the financial statement of Fox Resources for December 31 of the current fiscal year: The net income was $600,000 and the declared dividends on the common stock were $125,000 for the current year. The market price of the common stock is $20 per share. Required: Calculate for the common stock: (1) earnings per share (2) the price-earnings ratio (3) the dividends per share and the dividend yield. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

The following data are taken from the balance sheet at the end of the current year. Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Present figures used in your computations. Round ratios to the nearest tenth.

An extraordinary item results from

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