Chapter 17 Acct 2

Compute the dollar change for accounts payable using the following information. Use year 1 as the base year. Accounts Payable balance on Year 1 is $75,000 and on Year 2 is $65,000.

$(10,000)

Total Assets for a company are $700,000; Accounts Payable is $75,000; Bonds Payable is $225,000; Common Stock is $300,000 and Retained Earnings is $100,000. The common-size percent for Accounts Payable is:

10.7%

Rose Company reported net income of $24,000, net sales of $400,000, and average assets of $600,000. What is the profit margin ratio?

6%

Net sales are $525,000, beginning accounts receivable are $15,000 and ending accounts receivable are $20,000. The accounts receivable turnover is _____ times.

30

Financial statement analysis applies _____ tools to financial statements for decision-making.

Analytical

A certain company has an acid test ratio of 0.97. This implies which of the following.

Current liabilities are greater than the quick assets of the company.

General-purpose financial statements include all of the following except: -general ledger accounts -balance sheet -statement of stockholders' equity -income statement -statement of cash flows -notes to the financial statements

General ledger accounts

This section of an analysis report has forecasts, estimates, interpretations, and conclusions drawing on all sections of the report.

Inferences

Apple Company compares its first quarter sales revenue for the current year with its previous year's first quarter sales revenue. This is an example of what type of comparison?

Intracompany

Which of the following is not a solvency ratio? -Price earnings ratio -Equity ratio -Debt ratio -Debt-to-equity ratio -Times interest earned ratio

Price earnings ratio

A tool used to evaluate individual financial statement items or a group of items is called:

Vertical analysis

Comparison of a company's financial condition and performance to a base amount is an example of what type of analysis?

Vertical analysis

This building block reveals a company's ability to generate future revenues and meet long-term obligations.

Solvency

What measure reflects the difference between current assets and current liabilities?

Working Capital

Comparative financial statements show:

changes in relative importance of each financial statement item.

A pie chart graphic of a common-size income statement will show:

each cost as a component of net sales.

Profitability Measures a company's ability to:

earn an adequate return

All of the following are one of the building blocks of financial statement analysis except: -solvency -profitability -marketing prospects -liquidity -efficiency

marketing prospects

Liquidity is the availability of resources to pay ______ - term cash requirements

short

A company's sales in year 1 were $300,000, year 2 were $351,000, and year 3 were $400,000. Using year 2 as a base year, the sales percent for year 3 is ___.

113.96%

A company's net sales assets in year 1 were $300,000 and were $400,000 in year 5. The company's total assets were $350,000 in year 1 and were $370,000 in year 5. What is the percent change in net sales and total assets over this period?

33.33% and 5.71%

A company has earnings per share of $10 and the market price per common share is $50. What is this company's price-earnings ratio?

5

Horizontal analysis is the review of financial statement data across time and the term horizontal comes from the _____ movement of our eyes as we review comparative financial statements:

left-to-right

Compute the percent change for accounts payable using the following information. Use year 1 as the base year. Accounts Payable balance on Year 1 is $75,000 and on Year 2 is $65,000.

-13.33%

A company has total assets of $150,000; total liabilities of $50,000 and total equity of $100,000. What is this company's debt-to-equity ratio?

0.5

Financial statement analysis provides information to internal users to improve:

Efficiency and Effectiveness