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Exam 11: Financial Statement Analysis

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Question 1

True/False

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The dividend yield ratio shows the percentage of a stock's market value returned as dividends to shareholders each accounting period.

A) True
B) False

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Question 2

Multiple Choice

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The form of analysis that looks at trend percentages over a representative period is known as:

A) trend analysis, which is considered a form of horizontal analysis
B) trend analysis, which is considered a form of vertical analysis
C) ratio analysis
D) economic value added analysis

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

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Question 3

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Trent Corporation has total current assets equal to $50,000 and working capital of $20,000.Fleming Company has the same amount of working capital,but it has total current assets of $300,000.The company with the better working capital position is:

Assume you are using net sales as the base in vertical analysis.Cost of goods sold in 2016 is 67%,and is 70% in 2017.This would always indicate that:

Vertical analysis looks at:

Following is the income statement for Lovesick Lake Group Inc.,for the year ended December 31,2017: Expenses: Required: a.Prepare a vertical analysis of the income statement showing appropriate percentages for each item listed above.Round percentages to one-tenth percent. b.What additional information would you need to determine whether these percentages are good or bad?

Which of the following would be most likely to reveal that cost of goods sold is 125% of the amount shown for a base year?

Define the following two ratios and briefly discuss the information provided by them: a.debt ratio b.times-interest-earned ratio

Prepare a horizontal analysis for 2017 using the information provided by Rat Rack Incorporated below.What do these numbers tell you about Rat Rack's 2017 year? Using 2015 as the base year for Rat Rack prepare the trend percentages for the three year period 2015-2016.What do these trend percentages indicate about Rat Rack?

Earnings per common share measures the market value of one common share.

Use the following data to prepare a common-size comparative income statement for Old Mill Corporation on December 31,2017.Round percentages to one-tenth percent. Expenses:

Assume a company has a current ratio of 1.5 and working capital equal to $25,000.If the company's current liabilities are equal to $50,000,its total current assets are:

The following data are taken from the financial statements of Big Cedar Company: 70% of sales are on account.Terms for all credit sales are 2/10,n/30. Instructions

The percentage change in financial statement balances is computed by dividing the dollar amount of the change from the base (earlier)period to the later period by the base-period amount.

The current ratio and the acid-test ratio measure a company's ability to pay current liabilities.State how each ratio is calculated and what it does to help in financial statement analysis.

The following data represent selected information from the comparative income statement and balance sheet for Hot Rolled Corporation for the years ended December 31,2017 and 2016: •10,000 shares of common shares have been issued and outstanding since the company was established.They had a market value of $90 per share on December 31,2016,and they were selling for $91.50 on December 31,2017. Refer to the table above.For the year ending on December 31,2016,Hot Rolled Corporation's rate of return on net sales was:

When performing vertical analysis on a balance,the current liabilities are compared typically to total liabilities.

A company reported $75,000 of income for 2015,$80,000 for 2016,and $90,000 for 2017.The percentage change in net income from 2016 to 2017 was:

The following balance sheet dated December 31,2017,is available for Catchacoma Inc. Assets Liabilities and shareholders' equity Additional information: ∙ Net income for 2017 was $160,000. ∙ Dividends paid during 2017 amounted to $2 per share. ∙ No additional shares of stock were issued during the year. ∙ The shares were issued for $5 each ∙ The price/earnings ratio was 20. Calculate for the year ended December 31,2017: a.current ratio b.acid-test ratio c.debt ratio d.market price per share e.dividend yield

Prepare a vertical analysis for Young's Point Corporation's balance sheet to determine the component percentages of its assets,liabilities,and shareholders' equity.Round percentages to the nearest one-tenth percent. Assets Liabilities Shareholders' equity