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Exam 15: Financial Statement Analysis

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Question 41

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The following data are taken from the financial statements:

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Question 42

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The following information is available for Dorman Company: Which of the following statements is correct?

A) The dividend yield is 8.0%, which is of interest to investors seeking an increase in market price of their stocks.
B) The dividend yield is 8.0%, which is of special interest to investors seeking to earn revenue on their investments.
C) The dividend yield is 12.5%, which is of interest to bondholders.
D) The dividend yield is 12.5% which is an important measure of solvency.

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

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Question 43

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The following items were taken from the financial statements of Stanton, Inc., over a three-year period: Compute the following for each of the above time periods.

Those unusual items reported as deductions from income from continuing operations should be listed net of the related income tax.

Horizontal analysis of comparative financial statements includes the

The denominator of the rate of return on total assets ratio is the average total assets.

Ratios and various other analytical measures are a substitute for sound judgment, nor do they provide definitive guides for action.

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

The number of times interest expense is earned is computed as

A company reports the following: Determine the (a) accounts receivable turnover, and (b) number of days' sales in receivables. Round your answer to one decimal place.

Hsu Company reported the following on its income statement: $\begin{array}{ll}\$ 420,000 & \text { Income before income taxes } \\120,000 & \text { Income tax expense } \\\$ 300,000 & \text { Net income }\end{array}$ An analysis of the income statement revealed that interest expense was $80,000. Hsu Company's times interest earned was

The numerator used to calculate accounts receivable turnover is

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.

$\begin{array}{ll}\$ 30,000 & \text { Accounts payable } \\65,000&\text { Accounts receivable } \\7,000 & \text { Acculud liabilities } \\20,000 & \text { Cash } \\40,000 & \text { Intangible assets } \\72,000 & \text { Inventory } \\100,000 & \text { Long-term investments } \\75,000 & \text { Long-term liabilities } \\36,000 & \text { Marketable securities } \\20,000 & \text { Notes payable (short-term) } \\625,000 & \text { Property, plant, and equipment } \\2,000 & \text { Prepaid expenses }\end{array}$ Based on the above data, what is the amount of working capital?

If a company has issued only one class of stock, the earnings per share are determined by dividing net income plus interest expense by the number of shares outstanding.

The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

The following data were extracted from the income statement of Maine Solutions, Inc. Required:

In a common-sized income statement, each item is expressed as a percentage of net income.

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.