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Exam 4: Financial Statement Analysis

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Question 41

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What are the components of working capital?

A) current revenues and current expenses
B) operating assets and operating expenses
C) current assets and current liabilities
D) current assets and long-term borrowings

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Question 42

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Given the following information, what is the return on equity?

A) 0.301 %
B) 3.31%
C) 30.1%
D) 331%

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Question 43

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-Cost of sales: _________________

If a company had a total assets turnover ratio of 2.1 times this year and 2.9 last year, does the ratio seem to be getting better or worse, and why?

-Calculate the return on total assets ratio for both years: Ratios ____________ _____________

The times-interest-earned ratio is calculated by dividing profit before taxes + finance costs by finance costs.

-The quick ratio is: _________________

Company A shows revenue of $2,500 and company B shows revenue of $2,250. How is revenue shown on a vertical analysis of the statement of income?

___________________________ ratios gauge the way investors react to a company's market performance.

Match the words with the term. -market-value ratio

-The return on equity ratio is:_________________

Asset-management ratios help managers assess the level of profitability of a business.

Match the words with the term. -efficiency measures

Vertical analysis is a method that reduces all numbers on the statement of income to a percentage of revenue.

Given the following information, what is the company's current ratio?

Which of these situations will a bank as lender avoid?

Efficiency has to do with the ability for a company to generate profit for the year relative to revenue.

-Calculate the return on revenue ratio for both years: Ratios ____________ _____________

-The return on revenue ratio is: _________________

-Inventories:_________________