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Exam 12: Financial Statement Analysis

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Question 31

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The quick ratio differs from the current ratio in that it

A) represents the amount of cash on hand instead of the total current assets.
B) excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible collection problems.
C) is a stricter measure of a company's ability to pay its current obligations.
D) signals the need to liquidate short-term investments when it drops below 2.0.

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

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Question 32

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Match the term with its correct definition. -Form that companies must file with the SEC to announce major events that are important to investors and creditors.

A) Form 8-K
B) Form 10-K
C) Form 10-Q
D) Forms S1 and S2
E) MD&A

F) C) and D)
G) A) and B)

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Question 33

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Management's Discussion and Analysis is a key part of the 10-K because it provides investors with information management believes necessary to understand the company and forecast future performance.

Common size financial statements exclude the dollar amount as a relevant variable in the analysis, which makes comparison of one period with the next more meaningful.

For each of the following sentences, select the phrase or group of words that best completes the statement. -Cash flows from operations

Which of the following combinations of ratios will best analyze a company's income statement performance?

The auditor's opinions regarding effectiveness of a public company's internal controls and appropriateness of its financial statements are found within the Form 10-K on

Which of the following ratios is least useful in evaluating a company's ability to pay its current obligations when they come due?

The least liquid of all assets is cash.

Which of the following statements is true regarding the relationship of the current ratio and the acid test ratio?

Comparing two companies in the same industry should cause no problem since both companies are required to use the same accounting principles.

Rhodes Bakery The balance sheet taken from the company's 2020 10-K is provided below: -Refer to Rhodes Bakery. Calculate the following stockholder ratios for 2020 and 2019: Earnings per Share, Return on Common Equity, Dividend Yield, Dividend Payout, Total Payout, and Stock Repurchase Payout Ratios. Round your answers to two decimal places, then comment on the company's stockholder performance. Additional information is available below: The company had no preferred stock throughout the period 2018 through 2020. At December 31, 2018, total stockholders' equity was $287,500.

Royal Dunes Company is a retailer of specialty beachwear. During 2020, the company expanded its retail business by adding 30 new retail stores. The following information is obtained from the comparative financial statements included in the company's 2020 Form 10-K (all amounts in $ thousands). Using the information provided, address the following questions for both 2020 and 2019: A)What is the debt-to-equity ratio? B)What is the times interest earned ratio? C)What is the long-term debt-to-equity ratio, assuming that there is no current portion of long-term debt? D)What is the long-term debt-to-total assets ratio, assuming that there is no current portion of long-term debt? E)What is the debt-to-total assets ratio? F)Comment briefly on the company's debt management position.

Which of the following is considered a measure of short-term liquidity?

For each of the following sentences, select the phrase or group of words that best completes the statement. -An income statement measure of the ability of a company to make its interest payments.

Match the term with its correct definition. -Form that includes unaudited financial statements and provides a continuing view of the corporation's financial position during the year since it must be filed for each of the first three fiscal quarters of the corporation's fiscal year.

The operating cycle of a retail company is the length of time between the

Below is some information taken from the income statements of RPG and RPM Co. ​ A)Using time series (or trend) analysis, comment on the trend of RPG's cost of goods sold and gross profit. B)Using cross sectional analysis, compare RPG's gross profit to that of RPM.

Rhodes Bakery The balance sheet taken from the company's 2020 10-K is provided below: -Refer to Rhodes Bakery. Calculate the following asset efficiency ratios for 2020 and 2019: Accounts Receivable Turnover Ratio, Inventory Turnover Ratio, and Asset Turnover Ratio. Also determine the Operating Cycle. Round your answers to two decimal places. Comment on the company's asset efficiency ratios. A portion of the company's income statements are shown below. At December 31, 2018, Accounts Receivable, Inventories, and Total Assets were $18,500, $6,500, and $325,000, respectively.

The best source of information about a particular company is Standard & Poor's industry guide.