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Exam 12: Financial Statement Analysis

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Question 71

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The following income statement and balance sheets for Laser World are provided: Earnings per share for the year-ended December 31,2015,is $1.90.The closing stock price on December 31,2015,is $30.40. Calculate the following profitability ratios for 2015:

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Question 72

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We use horizontal analysis to analyze trends in financial statement data,such as the dollar amount of change and the percentage change,for one company over time.

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Question 73

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Paul Pierce Enterprises reports net income of $800,000,average total assets of $2,400,000,and average total liabilities of $400,000.Calculate the return on assets and return on equity ratios.

Popson Inc.incurred a material loss,which was not unusual in character,but was clearly an infrequent occurrence.This loss should be reported as:

Which of the following is a conservative accounting practice?

Use the following information to answer the next three questions: A partial balance sheet ($s in thousands) for Captain D's Sportswear is shown below. -The acid-test ratio is:

A low receivables turnover ratio is a positive sign that a company can quickly turn its receivables into cash.

The acid-test ratio is always smaller than the current ratio.

Which of the following is NOT an example of applying conservatism in accounting?

Assuming an acid-test ratio of 1.0,how will the purchase of inventory with cash affect the ratio?

Nerf Mania reports net income of $500,000,net sales of $4,000,000,and average assets of $2,000,000.The return on assets is:

When using vertical analysis,we express income statement accounts as a percentage of

A larger estimation of the allowance for uncollectible accounts,the write-down of overvalued inventory and the use of a shorter useful life for depreciation are all examples of conservative accounting.

Extraordinary items:

The average days in inventory converts the inventory turnover ratio into days.

Use of a longer useful life for depreciation is an example of conservative accounting.

Richard's Sporting Goods reports net income of $100,000,net sales of $500,000,and average assets of $1,000,000.The return on assets is:

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

Perform a vertical analysis on the following information: