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Exam 15: Financial Statement Analysis

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Question 71

Multiple Choice

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The number of times interest expense is earned is computed as

A) net income plus interest expense,divided by interest expense
B) income before income tax plus interest expense,divided by interest expense
C) net income divided by interest expense
D) income before income tax divided by interest expense

E) A) and B)
F) A) and C)

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Question 72

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Assume the following sales data for a company: What is the percentage increase in sales from 2014 to 2015?

A) 100%
B) 65%
C) 165%
D) 60.1%

E) A) and D)
F) B) and C)

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Question 73

Multiple Choice

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The following information pertains to Auburn Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. Assets Liabilities and Stockholders' Equity Income Statement What is the rate earned on stockholders' equity? Round answer to a single decimal point.

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year,there has been an acceleration in the collection of receivables.

Factors which reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability.

Under which of the following cases may a percentage change be computed?

The following information pertains to Carlton Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. Assets Liabilities and Stockholders' Equity Income Statement What are the dividends per common share for this company?

A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability.The amount of working capital immediately after payment is

Which of the following is considered an unusual item affecting the prior period's income statement?

The relationship of each asset item as a percent of total assets is an example of vertical analysis.

Revenue and expense data for Young Technologies are as follows: $\begin{array}{|l|l|l|}\hline &2012 & 2011 \\\hline \text { Sales } & \$ 500,000 & \$ 440,000 \\\hline \text { Cost of goods sold } & 325,000 & 242,000 \\\hline \text { Selling expense } & 70,000 & 79,200 \\\hline \text { Administrative expenses } & 75,000 & 70,400 \\\hline \text { Income tax expense } & 10,500 & 16,400 \\\hline\end{array}$ Required:

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as

The following items were taken from the financial statements of Stanton,Inc. ,over a three-year period: Compute the following for each of the above time periods. Round percentage to one decimal place.

Unusual items affecting the prior period's income statement consist of errors and change in accounting principles.

Horizontal analysis is a technique for evaluating financial statement data

The following items are reported on a company's balance sheet: Required: Determine (1)the current ratio and (2)the quick ratio.Round to one decimal place.

An extraordinary item must be either unusual in nature or infrequent in occurrence.

A company reports the following: Determine the (a)inventory turnover,and (b)number of days' sales in inventory.Round your answer to one decimal place.

A company reports the following: Determine the company's earnings per share on common stock.

The following selected data were taken from the financial statements of the Berrol Group for December 31,2012,2011,and 2010: The 2012 net income was $242,000 and the 2011 net income was $308,000.No dividends on common stock were declared between 2010 and 2012. Required: (1)Determine the rate earned on total assets,the rate earned on stockholders' equity,and the rate earned on common stockholders' equity for the years 2012 and 2011.Round to one decimal place. (2)What conclusion can be drawn from these data as to the company's profitability?