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Exam 14: Financial Statement Analysis

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Question 81

Multiple Choice

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Assume the following sales data for a company: $\begin{array} { l r } 2017 & \$ 945,000 \\2016 & 877,500 \\2015 & 675,000\end{array}$ If 2015 is the base year, what is the percentage increase in sales from 2015 to 2016?

A) 76.9%
B) 30%
C) 40%
D) 71.4%

E) A) and D)
F) A) and C)

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Question 82

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The acid-test (quick) ratio

A) is used to quickly determine a company's solvency and long-term debt paying ability.
B) relates cash, short-term investments, and net receivables to current liabilities.
C) is calculated by taking one item from the income statement and one item from the balance sheet.
D) is the same as the current ratio except it is rounded to the nearest whole percent.

E) B) and D)
F) A) and B)

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Question 83

Multiple Choice

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The acid-test ratio is also known as the

A liquidity ratio measures the

Comparisons of financial data made within a company are called

Net income does not appear in the numerator of the

Which of the following is not a profitability ratio?

Meaningful analysis of financial statements will include either horizontal or vertical analysis, but not both.

Lake Company reported the following on its income statement: $\begin{array}{lr}\text { Income before income taxes } & \$ 600,000 \\\text { Income tax expense } & 150,000 \\\text { Net income } & \$ 450,000\end{array}$ An analysis of the income statement revealed that interest expense was $60,000. Lake Company's times interest earned was

Vertical analysis is also known as

Net sales are $8,000,000, beginning total assets are $2,500,000, and the asset turnover is 4.0 times. What is the ending total asset balance?

Fess Hardware Store had net credit sales of $8,500,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $760,000, respectively. The accounts receivable turnover was

What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?

The current assets of Myers Company are $250,000. The current liabilities are $100,000. The current ratio expressed as a proportion is

The following financial statement information is available for James Corporation: $\begin{array}{lrr}&2017&2016\\\text { Net sales } & \$ 780,000 & \$ 697,000 \\\text { Cost of goods sold } & 406,000 & 377,000 \\\text { Net income } & 120,000 & 80,000 \\\text { Tax expense } & 48,000 & 29,000 \\\text { Interest expense } & 14,000 & 14,000\end{array}$ The profit margin for 2017 is

Ale Corporation had net income of $240,000 and paid dividends to common stockholders of $40,000 in 2017. The weighted average number of shares outstanding in 2017 was 60,000 shares. Ale Corporation's common stock is selling for $76 per share on the New York Stock Exchange. Ale Corporation's price-earnings ratio is

A ratio calculated in the analysis of financial statements

Times interest earned is also called the

Assume the following cost of goods sold data for a company: $\begin{array} { r r } 2017 & \$ 1,704,000 \\2016 & 1,400,000 \\2015 & 1,200,000\end{array}$ If 2015 is the base year, what is the percentage increase in cost of goods sold from 2015 to 2017?

Which one of the following is primarily interested in the liquidity of a company?