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Exam 14: Financial Statement Analysis

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Question 71

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The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

A) True
B) False

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Question 72

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Comparable financial statements are designed to compare the financial statements of two or more corporations.

A) True
B) False

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Question 73

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Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

Current position analysis measures a company's ability to pay its current liabilities.

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

Based on the above data, what is the amount of working capital?

The balance sheet for Seuss Company at the end of the current fiscal year indicated the following: Income before income tax was $1,500,000 and income taxes were $200,000 for the current year.  Cash dividends paid on common stock during the current year totaled $150,000.The common stock sells for $70 per share at the end of the year. Determine each of the following: (a) Number of times interest charges are earned (b) Earnings per share on common stock (c) Price-earnings ratio (d) Dividends per share of common stock (e) Dividend yield Round to one decimal place except earnings per share and dividends per share, which should be rounded to two decimal places.

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

The following information pertains to Dallas Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. What is the rate earned on stockholders' equity?

Using vertical analysis of the income statement, a company's net income as a percentage of sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

What type of analysis is indicated by the following?

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

Based on the following data, what is the accounts receivable turnover?

The numerator of the rate earned on common stockholders' equity ratio is

What information is generally included in the Management Discussion and Analysis (MD&A) section of a corporate annual report?

Brock Company's financial information is listed below. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. What is the current ratio?

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

The following items are reported on a company's balance sheet: Determine: (a) current ratio (b) quick ratio.   Round your answer to one decimal place.

Which of the following should be classified as an extraordinary item on the income statement?

Based on the above data, what is the quick ratio, rounded to one decimal point?