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Exam 13: Analysis of Financial Statements

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Question 81

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The ability to generate positive market expectations is called:

A) Liquidity and efficiency.
B) Liquidity and solvency.
C) Profitability.
D) Market prospects.
E) Creditworthiness.

F) A) and D)
G) A) and C)

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Question 82

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Profitability is the ability to generate future revenues and meet long-term obligations.

A) True
B) False

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Question 83

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When an item has a value in the base period and zero in the analysis period,the decrease is 100 percent.

An advantage of common-size statements is that they show patterns in data across periods.

Identify and describe three common tools of financial statement analysis.

A corporation reported cash of $27,000,total assets of $461,000,and total equity of $157,895 on its balance sheet.Its common-size percent for cash equals:

Refer to the following selected financial information from Texas Electronics. -Compute the company's days' sales in inventory for Year 2.(Use 365 days a year.)

A business segment is a part of a company that is separated by its (1)________ or (2)________.

The comparison of a company's financial condition and performance to a base amount is known as:

Selected balances from a company's financial statements are shown below.Calculate the following ratios for Year 2: (a)accounts receivable turnover (b)inventory turnover (c)days' sales uncollected (d)days' sales in inventory (d)profit margin. (e)return on total assets.

________ applies analytical tools to general-purpose financial statements and related data for making business decisions.

The gross margin ratio,return on total assets,and basic earnings per share are all ________ ratios.

The four building blocks of financial analysis are (1)________,(2)________,(3)________ and (4)________.

The building blocks of financial statement analysis include (1)liquidity,(2)salability,(3)solvency,and (4)fair presentation.

The building blocks of financial statement analysis include (1)liquidity,(2)solvency,(3)profitability,and (4)market prospects.

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Financial reporting includes not only general purpose financial statements,but also information from SEC filings,press releases,shareholders' meetings,forecasts,management letters,and auditor's reports.

The debt ratio,the equity ratio,debt-to-equity ratio,and times interest earned are all ________ ratios.

A company reports basic earnings per share of $3.50,cash dividends per share of $1.25,and a market price per share of $64.75.The company's dividend yield equals:

The return on total assets can be calculated as profit margin times total asset turnover.