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Exam 12: Financial Statement Analysis

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Question 41

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On a common-size balance sheet,common stock is shown as a percentage of

A) Total liabilities.
B) Total assets.
C) Current liabilities.
D) Total stockholders' equity.

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

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Question 42

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The percentage change,as shown in horizontal analysis,is calculated as: current year account balance - previous year account balance ÷current year account balance

A) True
B) False

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Question 43

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Another form of horizontal analysis is called trend analysis.

The 2013 and 2014 balance sheets for Ottoman Manufacturing Company appear below along with selected financial information: a.Calculate the acid-test ratio for 2014. b.Calculate the working capital for 2014. c.Calculate earnings per share for 2014.

The price/earnings ratio indicates

Barber Industries reported net income of $32,000,earnings per share of $1.20 and paid dividends of $0.30 per share.What is the dividend payout ratio?

Which of the following is an advantage of a company using equity rather than debt to finance a project?

On a common-size balance sheet,notes receivable is shown as a percentage of

The following financial statement items are shown for J&T Manufacturing. Calculate the common-size percentage for Gross Margin.

Common-size statements are especially helpful in comparing companies of different size.

The formula for the return on common stockholders' equity is

A helpful approach to examine changes in the relative size of account balances within a single statement is referred to as horizontal analysis.

The following financial statement items are shown for J&T Manufacturing. Calculate the common-size percentage for inventory.

Foreman Outfitters,a retail store of camping supplies,has sales of $300,000 and cost of goods sold of $210,000.Beginning inventory was $20,000 and ending inventory was $12,000.What is the company's average days to sell inventory?

The 2013 and 2014 partial balance sheets for Ottoman Industries are shown below. Calculate Ottoman's working capital for 2014.

The quality of assets is assessed through

Rather than looking only at the balances reported on the financial statements,it is helpful to look at the changes in the account balances over time.This is called

Which of the following is the formula for calculating the percentage in trend analysis?

Inventory turnover measures how many times,on average,a company's inventory is sold during the year.

Three measures of liquidity are working capital,current ratio,and acid-test ratio.What do each of these measure,and how are they each calculated?