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131 .Match each of the following terms with the appropriate definitions. 1. Solvency Examination of financial data across time. _

2. Horizontal analysis 3. Liquidity and efficiency 4. Profitabilit y __ 5. Comparat _

ive financial statement

The application of analytical tools to general-purpose financial statements and related data for making business __ decisions.

6. Vertical
analysis The availability of resources to meet short-term obligations and to efficiently generate revenues. A statement with data for two or more successive _ accounting periods placed in side-by-side columns, often with __ __ _ _ changes shown in dollar amounts and percents. _ A company's ability to provide financial rewards sufficient to attract and retain capital. _

A statement where each amount is expressed as a percent of a base amount to reveal the relative importance of each __ __ _ _ financial statement item.

7. Market prospects

The comparison of a company's financial condition and performance to a base amount.

8. Commonsize financial statement

A company's ability to generate positive market expectations.

9. Equity ratio

A company's ability to generate future revenues and meet long-term obligations.

__ _ _

10. Financial statement analysis

The portion of total assets provided by equity, computed as

__ _ total equity divided by total assets. _

132.Match each of the following terms with the appropriate formulas. Return on common stockholders' 1.

2. 3. 4.

equity Days' sales uncollected ___ ____ Debt ratio ____ Times interest earned ___ _ Dividend yield ___

5. 6. 7. 8. 9.

_ Gross margin ratio ___ _ Inventory turnover ___ Total asset turnover _ ___ _ Profit margin ratio ___ _ Days' sales in inventory ___

10.

133.Identify the financial analysis building block most appropriately associated with each ratio listed below by placing the letter of the building block a through d beside each ratio 1 through 10. Each building block may be used more than once.

1. Solvency 2. Solvency 3. Market Prospects 4. Liquidity and Efficiency 5. Liquidity and Efficiency 6. Market Prospects 7. Solvency 8. Liquidity and Efficiency 9. Profitability 10.
Turnover ____

Equity Ratio ____ Dividend Yield ____ Accounts Receivable Turnover ____ Days' Sales in Inventory ____ Return on Total Assets ____ Price Earnings Ratio ____ Debt Ratio ____ Times Interest Earned ____ Basic Earnings per Share ____ Profitability Inventory

134.Explain the purpose of financial statement analysis for both external and internal users.

135.Identify and explain the four building blocks of financial statement analysis.

136.What are the standards for comparisons in financial analysis? Give an example of each.

137.Identify and describe three common tools of financial statement analysis.

138.What is the purpose of a good financial statement analysis report? What are the key components?

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

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

141 .Describe ratio analysis including its purpose, application, and interpretation.

142.A company's sales in Year 1 were $280,000, and its sales in Year 2 were $341,600. Using Year 1 as the base year, what is the sales trend percent for Year 2?

143. Calculate the percent increase or decrease for each of the following financial statement

items:

144.Comparative statements for Kool Corporation are shown

below: Calculate trend percentages for all income statement amounts shown and comment on the results. Use 2010 as the base year. Comment on the results.

145. Calculate the percent increases for each of the following selected balance sheet

items.

146.For the following financial statement items, calculate trend percents using 2009 as the base

year:

147.Express the following income statement information in common-size percents and in trend percents using

2011 as the base year.

148.The comparative balance sheet for Golden Co. is shown below. Express the balance sheet in common-

size percents.

149.Express the following balance sheets for Alberts Company in common-size

percents.

150.Express the following income statement information in common-size percents (round to nearest whole

percent). Comment on the results.

151 .Use the balance sheets of Sando shown below to calculate the following ratios for 2012 (round to the hundredths):

(a) Current ratio. (b) Acid-test ratio. (c) Debt ratio. (d) Equity ratio .

152.The following information is available for the McCartney

Corporation: Calculate the company's inventory turnover and its days' sales in inventory.

153. The following current year information is available from a manufacturing

company: Calculate the company's accounts receivable turnover and its days' sales uncollected.

154.Information from a manufacturing company's current year income statement is as follows. Calculate the
company's (a) profit margin ratio, (b) gross margin ratio, and (c) times interest

earned.

155.A company reported net income of $78,000 and had 15,000 common shares outstanding throughout the current year. At year-end, the price per share of the company's stock was $49.40. What is the company's year-end priceearnings ratio?

1 56.A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000. What is the company's return on common stockholders' equity?

157.Use the financial data shown below to calculate the following ratios for the current year:

(a) (b) (c) (d)

Current ratio. Acid-test ratio. Accounts receivable turnover. Days' sales uncollected.

(e)

Inventory turnover.

158.A company's calendar-year financial data are shown below. The company had total assets of $339,000 and total equity of $144,400 for the prior year. No additional shares of common stock were issued during the year. The December 31 market price per share is $49.50. Cash dividends of $19,500 were paid during the year. Calculate the following ratios for the company:

(a) profit margin ratio. (b) gross margin ratio. (c) return on total assets. (d) return on common stockholders' equity. (e) book value per common share. (f) basic earnings per share. (g) price earnings ratio.

(h)

dividend yield.

159.A company's calendar-year financial data are shown below. The company had total assets of $339,000 and total equity of $144,400 for the prior year. No additional shares of common stock were issued during the year. The December 31 market price per share is $49.50. Cash dividends of $19,500 were paid during the year. Calculate the following ratios for the company:

(a) (b) (c) (d)

debt ratio equity ratio debt-to-equity ratio times interest earned

(e)

total asset turnover

160.Comparative calendar-year financial data for a company are shown below. Calculate the following ratios for the company for 2012:

(a) accounts receivable turnover (b) day's sales uncollected (c) inventory turnover

(d)

days' sales in inventory

161. Comparative calendar year financial data for a company are shown below. Calculate the following ratios for 2012: (a) return on total assets.

(b) return on common stockholders' equity.

162.The current year-end balance sheet data for a company are shown below. Calculate the company's:

(a) working capital. (b) current ratio.

(c) acid-test ratio.

163. The comparative income statements for Golden Company are shown below. Calculate the following ratios for 2012:

(a) profit margin. (b) gross margin.

(c)

times interest earned.

164.A corporation reports the following year-end balance sheet data. Calculate the following ratios:

(a) working capital (b) acid-test ratio (c) curre nt ratio (d) debt ratio (e) equity ratio

(f)

debt-to-equity ratio

165.Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012:

(a) accounts receivable turnover (b) inventory turnover (c) days' sales uncollected (d) days' sales in inventory
(d) profit margin.

(e)

return on total assets.

166.The following selected financial information for a company was reported for the current year end. Calculate the following company ratios:

(a) Accounts receivable turnover. (b) Inventory turnover.

(c) Days' sales uncollected.

167. Selected current year end financial information for a company is presented below. Calculate the following company ratios:

(a) Profit margin. (b) Total asset turnover. (c) Return on total assets. (d) Return on common stockholders' equity (assume the company has no preferred

stock).

1 68.Use the following information from the current year financial statements of a company to calculate the ratios below:

(a) Current ratio. (b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.) (c) Days' sales uncollected. (d) Inventory turnover. (Assume the prior year's inventory was $50,200.) (e) Times interest earned ratio. (f) Return on common stockholders' equity. (Assume the prior year's common stock balance was $480,000
and the retained earnings balance was $128,000.) (g) Earnings per share (assuming the corporation has a simple capital structure, with only common stock outstanding). (h) Price earnings ratio. (Assume the company's stock is selling for $26 per share.) (i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.)

169.Financial information for Omega Corporation is presented below. Calculate the following ratios for 2012:

(a) (b) (c) (d)

Inventory turnover. Accounts receivable turnover. Return on total assets. Times interest earned.

(e)

Total asset turnover.

170.The following summaries from the income statements and balance sheets of Neeko, Inc. and Saxony, Inc. are presented below. (1) For both companies for 2012, compute the

(a) Current ratio (b) Acid-test ratio (c) Accounts receivable turnover (d) Inventory turnover (e) Days' sales in inventory (f) Days' sales uncollected
Which company do you consider to be the better short-term credit risk? Explain. (2) For both companies for 2012, compute the Profit margin ratio Return on total assets Return on common stockholders' equity Which company do you consider to have better profitability ratios?

(a) (b) (c)