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Exam 13: Analysis of Financial Statements

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Question 81

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Calculate the percent increases for each of the following selected balance sheet items. $\begin{array}{c}\begin{array}{|l|}\hline \\\hline \text {Cash}\\\hline \text {Accounts receivable}\\\hline \text {Merchandise inventory}\\\hline \text {Plant assets}\\\hline \text {Bonds payable}\\\hline \text {Equity}\\\hline \end{array}\begin{array}{r|}\hline2018 \\\hline \$ \quad 569 \\\hline 2,234 \\1,062 \\\hline 2,432 \\\hline 1,164 \\\hline 2,777\\\hline \end{array}\begin{array}{r|}\hline2017 \\\hline \$ \quad 448 \\\hline 2,337 \\1,071 \\\hline 2,138 \\\hline 1,666 \\\hline 2,894\\\hline \end{array}\end{array}$

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\[\begin{array} { l | l | l | l | c | } ...

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Question 82

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Ash Company reported sales of $400,000 for Year 1, $450,000 for Year 2, and $500,000 for Year 3. Using Year 1 as the base year, what is the revenue trend percent for Years 2 and 3?

A) 80% for Year 2 and 90% for Year 3.
B) 88% for Year 2 and 80% for Year 3.
C) 88% for Year 2 and 90% for Year 3.
D) 112.5% for Year 2 and 125% for Year 3.
E) 125% for Year 2 and 112.5% for Year 3.

F) A) and B)
G) A) and C)

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Question 83

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A corporation reports the following year-end balance sheet data. The company's working capital equals: $\begin{array} { l r l r } \text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \\\text { Accounts receivable } & 55,000 & \text { Lore-tern liabilities } & 35,000 \\\text { Irventory } & 60,000 & \text { Corrnon stock } & 100,000 \\\text {Equipment} & \underline{145,000 }& \text { Retained earnings } & \underline{90,000} \\\text {Total assets}&\underline{ \$ 300,000 }& \text { Total liabilities ard equity } & \underline{\$ 300,000}\end{array}$

Desjardin Landscaping's income statement reports net income of $75,300, which includes deductions for interest expense of $11,500 and income taxes of $34,900. Its times interest earned is:

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:

A corporation reports the following year-end balance sheet data. Calculate the following ratios: (a) working capital (b) acid-test ratio (c) current ratio (d) debt ratio (e) equity ratio (f) debt-to-equity ratio Cash……………………….. $ 50,000 Current liabilities $ 64,000 Accounts receivable………. 35,000 Long-term liabilities………. 72,000 Inventory………………….. 60,000 Common stock…………….. 100,000 Equipment………………… 140,000 Retained earnings…………. 49,000 Total assets……………….. $285,000 Total liabilities and equity $285,000

A good financial statement analysis report usually includes the following six sections: (1) ________, (2) ________, (3) ________, (4) ________ (5) ________, and (6) ________.

Net income divided by average total assets is:

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

The building blocks of financial statement analysis do not include:

A financial statement analysis report does not include:

Guidelines (rules-of-thumb) are general standards of comparison developed from:

The following selected financial information for a company was reported for the current year end. Calculate the following company ratios: (a) Accounts receivable turnover. (b) Inventory turnover. (c) Days' sales uncollected Accounts receivable, beginning-year……………. $170,000 Accounts receivable, year-end…………………… 190,000 Merchandise inventory, beginning-year…………. 80,000 Merchandise inventory, year-end………………… 60,000 Cost of goods sold………………………………... 580,000 Credit sales………………………………………... 1,000,000

Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory. The acid-test (quick) ratio is:

A corporation reports the following year-end balance sheet data. The company's debt ratio equals: $\begin{array} { | l | r| r| r | } \hline \text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \\\hline \text { Accounts receivable } & 55,000 & \text { Long-term liabilities } & 35,000 \\\hline \text { nnventory } & 60,000 & \text { Common stock } & 100,000 \\\hline \text { Equipment } & \underline { 145,000 } & \text { Retained earnings } & \underline { 90,000 } \\\hline \text { Total assets } &\underline{\$ 300,000 }& \text { Total liabilities and equity } & \underline{\$ 300,000} \\\hline\end{array}$

The return on total assets ratio is a profitability measure.

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 trend percentages for cost of goods sold using 2016 as the base. $\begin{array} { | l | r | r| } \hline & { 2017 } & { \mathbf { 2 0 1 6 } } \\\hline \text { Net sales } & \$ 276,200 & \$ 231,400 \\\hline \text { Cost of goods sold } & 151,900 & 129,590 \\\hline \text { Operating expenses } & 55,240 & 53,240 \\\hline \text { Net earnings } & 27,82 \mathrm {~d} & 19,820 \\\hline\end{array}$

Comparative statements for Warmer Corporation are shown below: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text {Warmer Corporation}$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text {Comparative Income Statements}$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text {For the years ended December 31}$ $\begin{array}{|l|r|r|r|}\hline \text { Sales } & {2018} & {2017} &{2016} \\\hline \text { Cost of goods sold } & \$ 14,800 & \$ 13,229 & \$ 13,994 \\\hline \text { Gross profit } & 8,224 & 8,661 & 8,375 \\\hline \text { Operating expenses } & 6,571 & 4,568 & 5,619 \\\hline \text { Operating income } & 3,664 & 3,576 & 3,487 \\\hline\end{array}$ Calculate trend percentages for all income statement amounts shown and comment on the results. Use 2016 as the base year. Comment on the results.

Refer to the following selected financial information from Frankle Corp. Compute the company's current ratio. $\begin{array} { | l | r | } \hline & \\\hline \text { Current assets } & 306,450 \\\hline \text { Plant assets } & 388,000 \\\hline \text { Current Liabilities } & 107,800 \\\hline \text { Net sales } & 676,000 \\\hline \text { Net Income } & 75,000 \\\hline\end{array}$

A good financial statement analysis report often includes the following sections: executive summary, analysis overview, evidential matter, assumptions, key factors, and inferences.