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Exam 23: Financial Statement Analyses

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Question 31

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Vertical analysis of income statement data most often involves a comparison of each income statement item with

A) net sales.
B) gross profit on sales.
C) net income before taxes.
D) net income after taxes.

E) All of the above
F) B) and C)

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Question 32

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In vertical analysis of the balance sheet,each item is expressed as a percentage of

A) current liabilities.
B) current assets.
C) long-term liabilities.
D) total assets or of total liabilities and stockholders' equity.

E) None of the above
F) B) and D)

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Question 33

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The rate of return on net sales is a basic measure of operating efficiency and ___________________.

When horizontal analysis is performed,no percentage change is computed for a given item if there is no balance for that item in the base year.

Using the information given,analyze the profitability ratios of Sybaritic Corporation for 2017.

The price-earnings ratio compares the present market value of a corporation's common stock with the earnings per share of that stock.

A company reported an expense of $30,000 for the current year that was $6,000 higher than the previous year.The increase from last year to this year was ____________________ percent.

Selected financial ratios for Opus Company and its industry averages are given.What does the information suggest about Opus?

A company reported net income of $120,000.It paid a cash dividend of $20,000 to preferred stockholders and a cash dividend to common shareholders of $40,000.If the company has 20,000 shares of common stock outstanding,earnings per share would be ______________.

The ability of a company to pay its debts when due is known as liquidity.

Ratios are meaningful only when used to compare performance with rates of prior years and with the industry averages.

Using the information given,analyze the liquidity of Sybaritic Corporation for the year 2017.

Using the information given below,calculate the gross profit percentage based on net sales.What conclusions can be made about this company based on this trend analysis?

Using the information shown,prepare a horizontal analysis.Carry all calculations to two decimal places and then round to one decimal place.

The number of times bond interest earned ratio provides bondholders and stockholders with information related to a company's ability to pay required bond interest payments from its earnings.

Ratios can be classified into all of the following categories except:

Using the information shown,prepare a vertical analysis of all asset items.Carry all calculations to two decimal places and then round to one decimal place.(Leave all percentages unadjusted. )

On a comparative income statement that shows horizontal analysis,the percentage of change in each category is based on gross sales for that year.

Common-size statements present comparative data side by side with items expressed as percentages.

The rate of return on total assets measures how effectively management has used the assets of the company.