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Exam 13: Analyzing Financial Statements

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Question 91

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Net income divided by average total assets is equal to the:

A) Profit margin
B) Total asset turnover
C) Return on total assets
D) Days' income in assets
E) Current ratio

F) B) and D)
G) C) and D)

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Question 92

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Describe the purpose of vertical financial statement analysis and how it is applied.

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Vertical financial statement analysis is...

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Question 93

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The greater the times interest earned ratio, the greater the risk a company is exposed to.

Use the balance sheets of Sando shown below to calculate the following ratios for 2010 (round to the hundredths): (a) Current ratio. (b) Acid-test ratio. (c) Debt ratio. (d) Equity ratio.

The current year-end balance sheet data for a company are shown below: Calculate this company's: (1) Working capital. (2) Acid-test ratio.

The ability to provide financial rewards sufficient to attract and retain financing is called:

Describe ratio analysis including its purpose, application and interpretation.

The ability to meet short-term obligations and to efficiently generate revenues is called:

Which of the following items is not likely to be considered an extraordinary item?

Based on the data given below, which of the following statements is true?

A company had a market price of $83.12 per share, earnings per share of $4.87 and dividends per share of $5.40. Its price-earnings ratio is equal to:

A company's sales in 2009 were $280,000 and its sales in 2010 were $341,600. Using 2009 as the base year, what is the sales trend percent for 2010?

A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales is equal to the:

Profitability is the company's ability to generate future revenues and meet long-term financial obligations.

Explain the composition of retained earnings and identify the special items that are reported in it.

Describe the purpose of horizontal financial statement analysis and how it is applied.

The current ratio is calculated as current liabilities divided by current assets.

The return on total assets ratio is a profitability measure.

Express the following balance sheets for Alberts Company in common-size percents.

The return on total equity measures a company's success in reaching the goal of earning net income for its owners.