Question 1

The following information refers to Annie's Attic and competitors in the antiques business.

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The answer of The following information refers to Annie's Attic...

Question 2

Using the following information,calculate the gross profit ratio for each of the following situations:

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Question 3

Outdoors Unlimited had net sales of $285,000 for Year 1,and $575,000 for Year 2.The year-end balances of accounts receivable were $49,000 for Year 1,and $85,000 for Year 2.Calculate the days' sales uncollected at the end of each year and describe any changes in the apparent liquidity of the company's receivables.

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The answer of Outdoors Unlimited had net sales of $285,000...

Question 4

The following information is for Z-Mart and its competition Diablo.
  Instructions: (1)Calculate the dollar amount of gross margin and the gross margin ratio for each company for both years.(2)Which company had the more favourable ratio each year? (3)Which company had the more favourable trend over the 2-year period?

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The answer of The following information is for Z-Mart and...

Question 5

Alchmevo reported the following information for December 31.
  (1)Explain the purpose of the acid-test ratio.
(2)Calculate the acid-test ratio and the current ratio.
(3)What do your calculations in #2 above reveal about Alchmevo? If you were a bank manager and Alchmevo came to you for a long-term loan,what other information might you suggest we gather before we

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The answer of Alchmevo reported the following information for December...

Question 6

X-Caliber had income before interest and income tax expense of $225,000 in Year 1,and $200,000 in Year 2.Its interest expense was $45,000 for both years.Calculate the times interest earned ratio for both years,and comment on the company's level of risk.

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The answer of X-Caliber had income before interest and income...

Question 7

The following information for Z-Mart is for the month of November:
  Instructions: Calculate Z-Mart's gross margin ratio.

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The answer of The following information for Z-Mart is for...

Question 8

A list of terms and definitions of key financial analysis concepts are below.Match the names to the definitions by placing the appropriate letter in the space provided.
TERMS
 $\begin{array}{|l|l|}
\hline \text { A. Horizontal Analysis } & \text { F. Liquidity } \
\hline \text { B. Return on equity } & \text { G. Common size statements } \
\hline \text { C. Price/earnings ratio } & \text { H. Trend analysis } \
\hline \text { D. Debt/equity ratio } & \text { I. Ratio Analysis } \
\hline \text { E. Return on total assets } & \text { J. Solvency } \
\hline
\end{array}$ DEFINITIONS

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The answer of A list of terms and definitions of...

Question 9

Xtreme Sports had gross sales of $485,000 in Year 1 and $555,000 in Year 2.Its net sales were $475,300 for Year 1 and $541,500 for Year 2.Its average assets were $400,000 for Year 1 and $410,000 for Year 2.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

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The answer of Xtreme Sports had gross sales of $485,000...

Question 10

SportsWorld had income before interest and income tax expense of $395,000 in Year 1 and $427,000 in Year 2.Its interest expense was $125,000 for both years.Calculate the times interest earned ratio for both years and comment on the company's level of risk.

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The answer of SportsWorld had income before interest and income...

Question 11

Annie's Attic reported the following data:
  Instructions: (1)Calculate the days' sales in inventory for each year.(2)Comment on the trend in inventory management.

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The answer of Annie's Attic reported the following data:
 ...

Question 12

Trekking Company reported the following data:
 $$\begin{array} { | l | r | r | r | } 
\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\hline \text { Cost of goods sold } & \$ 347,600 & \$ 379,650 & \$ 443,900 \
\hline \text { Average irvertory } & \$ 85,000 & \$ 91,050 & \$ 98,350 \
\hline
\end{array}$$

Accepted Answer

The answer of Trekking Company reported the following data:
 \[\begin{array}...

Question 13

a.What is meant by the term leverage,and how is leverage used to increase return to shareholders? b.If leverage does increase the returns to shareholders why don't all firms structure themselves to have a significantly high percentage of financing from debt and significantly less from shareholders?

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The answer of a.What is meant by the term leverage,and...

Question 14

The following information pertains to Z-Mart,its competition,and the industry standards.
  The industry standard for the current ratio is 1.8 to 1,and for the acid-test ratio,1 to 1.Instructions: (1)Calculate the current ratio and quick ratio for each firm.(2)Rank the firms in decreasing order of liquidity.(3)Comment on Z-Mart's relative position.

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The answer of The following information pertains to Z-Mart,its competition,and...

Question 15

Sports World had net sales of $230,000 for Year 1 and $276,000 for Year 2.Its average total assets for Year 1 were $150,000 and $180,000 for Year 2.Calculate the total asset turnover for each year and comment on the firm's efficiency in the use of its assets.

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The answer of Sports World had net sales of $230,000...

Question 16

TechCom had net sales of $315,000 and average accounts receivable of $75,600.Its competitor,ZCom,had net sales of $299,000 and average accounts receivable of $81,350.Calculate the accounts receivable turnover for both companies.Which company is doing a better job of managing its accounts receivable?

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The answer of TechCom had net sales of $315,000 and...

Question 17

Harmony Inc.had profit of $225,300 in Year 1 and $320,900 in Year 2.The company had average total assets of $1,230,000 in Year 1 and $1,550,000 in Year 2.Calculate the return on total assets for Year 1 and Year 2.Comment on the results.

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The answer of Harmony Inc.had profit of $225,300 in Year...

Question 18

The following is from the financial statements of Exquisite Ensembles:
 $$\begin{array} { | l | r | r | r | } 
\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\hline \text { Net sales } & \$ 1,260,000 & \$ 1,020,000 & \$ 850,000 \
\hline \text { Accourts receivable (Dec 31) } & 92,800 & 88,000 & 84,200 \
\hline
\end{array}$$ Find the number of days,on average,it takes to collect accounts receivable and provide a possible explanation for any change.

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The answer of The following is from the financial statements...

Question 19

Halifax Company had profit of $37,843 in Year 1 and $43,876 in Year 2.Its net sales were $319,483 in Year 1 and $305,415 in Year 2.Its average total assets in Year 1 were $334,890 and $356,132 in Year 2.Calculate the profit margin,total asset turnover,and return on total assets for both years.Comment on the results.
Profit margin,Year 1: $37,843/$319,483 = 11.8%
Profit margin,Year 2: $43,876/$305,415 = 14.4%
Total asset turnover,Year 1: $319,483/$334,890 = .954
Total asset turnover,Year 2: $305,415/$356,132 = .858
Return on total assets,Year 1: $37,843/$334,890 = 11.3%
Return on total assets,Year 2: $43,876/$356,132 = 12.3%

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The answer of Halifax Company had profit of $37,843 in...

Question 20

Micron Company had profit for Year 1 of $47,950 and $53,425 in Year 2.The company had net sales of $363,250 in Year 1 and $392,750 in Year 2.The company's average total assets in Year 1 were $942,550 and $877,560 in Year 2.Calculate Micron's profit margin,total asset turnover,and return on total assets for Year 1 and Year 2.Comment on the results.
Profit margin,Year 1: $47,950/$363,250 = 13.2%
Profit margin,Year 2: $53,245/$392,750 = 13.6%
Total asset turnover,Year 1: $363,250/$942,550 = .385
Total asset turnover,Year 2: $392,750/$877,560 = .448
Return on total assets,Year 1: $47,950/942,550 = 5.1%
Return on total assets,Year 2: $53,245/$877,560 = 6.1%

Accepted Answer

The answer of Micron Company had profit for Year 1...

Quiz 9: Analyzing Financial Statements