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Exam 13: Analyzing and Interpreting Financial Statements

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Question 111

Multiple Choice

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

A) Liquidity and efficiency.
B) Solvency.
C) Profitability.
D) Market prospects.
E) Creditworthiness.

F) None of the above
G) B) and C)

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Question 112

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Evaluation of company performance does not include analysis of (1)past and current performance,(2)current financial position,and (3)future performance and risk.

A) True
B) False

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Question 113

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Ratios must refer to economically important relationships,such as a sale price compared to its cost.

Vertical analysis is a tool to evaluate individual financial statement items or groups of items in terms of a specific base amount.

When a negative amount is in the base period and a positive amount is in the analysis period (or vice versa),a meaningful percent change cannot be calculated.

The market price of Horokhiv Corporation's common stock at the start of 2016 was $47.50 and it declared and paid cash dividends of $3.28 per share.The Dividend yield ratio is:

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

A financial statement analysis report does not include:

The comparative balance sheet for Silverlight Co.is shown below.Express the balance sheet in common-size percentages.

Selected current year company information follows: Net income $~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\$$ 15,953 Net sales $~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$ 712,855 Total liabilities, begirning-year $~~~~~~~~~~~~~~~~~~~~~~$ 83,932 Total liabilities, end-of-year $~~~~~~~~~~~~~~~~~~~~~~~~~~$ 103,20 Total stockholders' equity, begirnirg-year $~~~~~~~~~$ 198,935 Total stockholders' equity, end-of-year $~~~~~~~~~~~~~$ 121,85 The return on total assets is:

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

A ratio expresses a mathematical relation between two quantities and can be expressed as a percent,rate,or proportion.

Capital structure refers to a company's long-run financial viability and its ability to cover long-term obligations.

The income level most likely to continue into the future and is commonly used in PE ratios and other market-based measures of performance is the ________.

Three of the most common tools of financial analysis are (1)________,(2)________,and (3)________.

Intra-company analysis compares a company's current performance to its own prior performance.

Net sales divided by average total assets is the:

Suppliers use financial statement information in establishing credit terms.

Financial analysis only refers to the communication of relevant financial information to decision makers.

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