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Exam 12: Financial Statement Analysis

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Question 81

Multiple Choice

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An extraordinary item must meet which of the following criteria?

A) Unusual in nature.
B) Infrequent in occurrence.
C) Unusual in nature and infrequent in occurrence.
D) Unusual in nature or infrequent in occurrence.

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

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Question 82

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TPX Company's 2013 average days in inventory is:

A) 121.7 days.
B) 70.2 days.
C) 110.6 days.
D) 101.4 days.

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

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Question 83

Multiple Choice

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Listed below are eight terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the number designating the term in the space provided. -     A profit or loss unusual in nature and infrequent in occurrence. 

HHF's debt to equity ratio is:

The sale or disposal of a significant component of a company's operations is referred to as:

Which of the following is a positive sign that a company is selling its inventory quickly?

To be an extraordinary item, an event that produces a gain or loss must be either unusual in nature or infrequent in occurrence.

The following income statement and balance sheets for Laser World are provided: $\begin{array} { | l r | } \hline { \begin{array} { c } \text { Laser World } \\\text { Income Statement } \\\text { For the year-ended December 31 , 2012}\end{array} } \\\hline \text { Sales revenue } & \$ 2,200,000 \\\text { Cost of goods sold } & 1,500,000 \\\text { Gross profit } & 700,000 \\\text { Expenses: } & \\\text { Operating expenses } & 350,000 \\\text { Depreciation expense } & 70,000 \\\text { Loss on sale of land } & 5,000 \\\text { Interest expense } & 25,000 \\\text { Income tax expense } & 60,000 \\\text { Total expenses } & 510,000 \\\hline \text { Net income } & \$ 190,000 \\\hline\end{array}$ Earnings per share for the year-ended December 31, 2012, is $1.90. The closing stock price on December 31, 2012, is $30.40. Calculate the following profitability ratios for 2012: $\begin{array}{ll}\text { 1. Gross profit ratio } & \text { 4. Asset turnover } \\\text { 2. Return on assets } & \text { 5. Return on equity } \\\text { 3. Profit margin } & \text { 6. Price-earnings ratio }\end{array}$

Stealth Company's 2013 profit margin is:

TPX Company's 2013 average collection period is:

The acid-test ratio is most similar to the:

When using a company's current earnings to estimate future earnings performance, investors normally should exclude discontinued operations and extraordinary items.