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Exam 14: Financial Statement Analysis

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Question 71

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The current ratio is the most widely used ratio to measure a company's ability to pay current liabilities.

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Question 72

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The following information relates to Woolf Unlimited for the past two years. What is the current ratio for the current year?

A) 1.00
B) 13.00
C) 1.75
D) 2.30

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Question 73

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Taylor Company reported the following information for the current year: What would a vertical analysis report with respect to current year selling and general expenses?

The Stemple Corporation data for the current year: What would a horizontal analysis report with respect to net sales revenue?

The formula to compute the current ratio is

Which of the following is the formula to compute day's sales in receivable?

Trend analysis is the same thing as a vertical analysis.

The following information relates to Bennett Corporation. Required: a. What is the acid-test ratio for the current year? b. What is the inventory turnover for the current year? c. What is days' sales in receivables for the current year? d. What is the book value per share of common stock for the current year? e. What is the price-earnings ratio for the current year? f. What is the rate of return on total assets for the current year? g. What is the times-interest-earned ratio for the current year? h. What is the current ratio for the current year?

The Hummel Corporation reported the following income statement and balance sheet amounts and additional information for the end of the current year. Inventory and prepaid expenses account for $28,000 of the current year's current assets. Average inventory for the current year is $12,000. Average net accounts receivable for the current year is $32,000. There are 40,000 shares of common stock outstanding. Total dividends paid during the current year were $60,000. The market price per share of common stock is $25. What is the company's days' sales in receivables for the current year?

Managers use a variety of financial ratios to evaluate a company's performance.

A company reported the following amounts of net income: Which of the following is the percentage change from Year 2 to Year 3?

The following information relates to Woolf Unlimited for the past two years. What is the price-earnings ratio for the current year?

Use the following information about The Conley Company to do a vertical analysis of the income statement for the current year. Fill in the missing components in the table.

A company's ability to pay liabilities with current assets is measured by which of the following ratios?

The formula to compute the acid-test ratio is

Presented are the income statements of Knopf and Simon Publications companies for the current year: Which company has the best inventory turnover rate?

The Stemple Corporation data for the current year: What would a horizontal analysis report with respect to common stock?

Investors and creditors generally evaluate a company by using a single year's data.

The Hummel Corporation reported the following income statement and balance sheet amounts and additional information for the end of the current year. Inventory and prepaid expenses account for $28,000 of the current year's current assets. Average inventory for the current year is $12,000. Average net accounts receivable for the current year is $32,000. There are 40,000 shares of common stock outstanding. Total dividends paid during the current year were $60,000. The market price per share of common stock is $25. What is the company's price-earnings ratio for the current year?

Presented are the income statements of Currence and Stever Publications companies for the current year: Which company has the better relationship between net income and net sales revenue?