Question 1

The statement of financial position for Farley Corporation at the end of the current year indicates the following:  Income before income taxes was $1,120,000 and income taxes expense for the current year amounted to $336,000. Cash dividends paid on ordinary shares were $300,000, and the ordinary shares were selling for $45 per share at the end of the year. There were no ownership changes during the year.
Instructions
Determine each of the following:
(a) times interest earned.
(b) earnings per share.
(c) price-earnings ratio.

Accepted Answer

The answer of The statement of financial position for Farley...

Question 2

The comparative statements of financial position of Haley Company appears below:  Instructions
(a) Using horizontal analysis, show the percentage change for each statement of financial position item using 2013 as a base year.
(b) Using vertical analysis, prepare a common size comparative statement of financial position.

Accepted Answer

The answer of The comparative statements of financial position of...

Question 3

Selected financial statement data for Holmes Company are presented below.  Total assets at the beginning of the year were $750,000; total ordinary shareholders' equity was $550,000 at the beginning of the period.
Instructions
Compute each of the following:
(a) Asset turnover
(b) Profit margin
(c) Return on assets
(d) Return on ordinary shareholders' equity

Accepted Answer

The answer of Selected financial statement data for Holmes Company...

Question 4

Operating data for Manning Corporation are presented below.  Instructions
Prepare a schedule showing a vertical analysis for 2014.

Accepted Answer

The answer of Operating data for Manning Corporation are presented...

Question 5

Flynn Corporation had net income of $6,000,000 in 2012. Using 2012 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014.
Instructions
Compute the net income reported by Flynn Corporation for 2013 and 2014.

Accepted Answer

The answer of Flynn Corporation had net income of $6,000,000...

Question 6

Selected information from the comparative financial statements of Fryman Company for the year ended December 31, appears below:  Instructions
Answer the following questions relating to the year ended December 31, 2014. Show computations.
1. Inventory turnover for 2014 is __________.
2. Times interest earned in 2014 is __________.
3. The debt to total assets ratio for 2014 is __________.
4. Accounts receivable turnover for 2014 is __________.
5. Return on assets for 2014 is __________.

Accepted Answer

The answer of Selected information from the comparative financial statements...

Question 7

The comparative condensed income statements of Moran Corporation are shown below.  Instructions
(a) Prepare a horizontal analysis of the income statement data for Moran Corporation using 2013 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Moran Corporation in columnar form for both years.

Accepted Answer

The answer of The comparative condensed income statements of Moran...

Question 8

The following items were taken from the financial statements of Ritz, Inc., over a four-year period:  Instructions
Using horizontal analysis and 2012 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favorable or unfavorable for each item.

Accepted Answer

The answer of The following items were taken from the...

Question 9

Selected data from Oates Company are presented below:  Instructions
Calculate the profitability ratios that can be computed from the above information.

Accepted Answer

The answer of Selected data from Oates Company are presented...

Question 10

The following ratios have been computed for Morgan Company for 2014.  Morgan Company's 2014 financial statements with missing information follow:  Instructions
Use the above ratios and information from the Morgan Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.

Accepted Answer

The answer of The following ratios have been computed for...

Question 11

The following information (in 000) was taken from the financial statements of Lei Company:  Instructions
(a) Compute the net sales for each year.
(b) Compute the cost of goods sold in dollars and as a percentage of net sales for each year.
(c) Compute operating expenses in dollars and as a percentage of net sales for each year. (Income taxes are not operating expenses).

Accepted Answer

The answer of The following information (in 000) was taken...

Question 12

The following data are taken from the financial statements of Doyle Company:  Instructions
(a) Compute the accounts receivable turnover and the average collection period for both years.
(b) What conclusion can an analyst draw about the management of the accounts receivable?

Accepted Answer

The answer of The following data are taken from the...

Question 13

State the effect of the following transactions on the current ratio. Use increase, decrease, or no effect for your answer.
(a) Collection of an accounts receivable.
(b) Declaration of cash dividends.
(c) Additional shares are sold for cash.
(d) Short-term investments are purchased for cash.
(e) Equipment is purchased for cash.
(f) Inventory purchases are made for cash.
(g) Accounts payable are paid.

Accepted Answer

The answer of State the effect of the following transactions...

Question 14

Selected data for Nancy's Store appear below.  Instructions
Compute the following for 2014:
(a) Profit margin.
(b) Inventory turnover.
(c) Accounts receivable turnover.

Accepted Answer

The answer of Selected data for Nancy's Store appear below....

Question 15

The comparative condensed statements of financial position of Bailey Corporation are presented below.  Instructions
(a) Prepare a horizontal analysis of the statements of financial position data for Bailey Corporation using 2013 as a base.
(b) Prepare a vertical analysis of the statements of financial position data for Bailey Corporation in columnar form for 2014.

Accepted Answer

The answer of The comparative condensed statements of financial position...

Question 16

Selected financial statement data for Morton Company are presented below.  During 2014, net sales were ¥810,000, and cost of goods sold was ¥615,000.
Instructions
Compute the following ratios at December 31, 2014:
(a) Current.
(b) Acid-test.
(c) Accounts receivable turnover.
(d) Inventory turnover.

Accepted Answer

The answer of Selected financial statement data for Morton Company...

Question 17

Using the following selected items from the comparative statements of financial position of Anders Company, illustrate horizontal and vertical analysis.

Accepted Answer

The answer of Using the following selected items from the...

Question 18

The financial statements of Grogan Company appear below:   Additional information: 
a. Cash dividends of $23,000 were declared and paid in 2014.
b. Weighted-average number of ordinary shares outstanding during 2014 was 30,000 shares.
c. Market value of ordinary shares on December 31, 2014, was $21 per share.
Instructions
Using the financial statements and additional information, compute the following ratios for Grogan Company for 2014. Show all computations.

Accepted Answer

The answer of The financial statements of Grogan Company appear...

Question 19

Winter Corporation has issued ordinary shares only. The company has been successful and the gross profit is 20% of sales. The information shown below was taken from the company's financial statements.  Instructions
Compute the following:
(a) Accounts receivable turnover and the average collection period.
(b) Inventory turnover and the days in inventory.
(c) Return on ordinary shareholders' equity.

Accepted Answer

The answer of Winter Corporation has issued ordinary shares only....

Question 20

Boyle Corporation had the following comparative current assets and current liabilities:  During 2014, credit sales and cost of goods sold were $600,000 and $350,000, respectively.
Instructions
Compute the following liquidity measures for 2014:
1. Current ratio.
2. Working capital.
3. Acid-test ratio.
4. Accounts receivable turnover.
5. Inventory turnover.

Accepted Answer

The answer of Boyle Corporation had the following comparative current...

Quiz 14: Financial Statement Analysis

Operating data for Manning Corporation are presented below. Instructions Prepare a schedule showing a vertical analysis for 2014.

Flynn Corporation had net income of $6,000,000 in 2012. Using 2012 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014. Instructions Compute the net income reported by Flynn Corporation for 2013 and 2014.

Selected data from Oates Company are presented below: Instructions Calculate the profitability ratios that can be computed from the above information.

The following data are taken from the financial statements of Doyle Company: Instructions (a) Compute the accounts receivable turnover and the average collection period for both years. (b) What conclusion can an analyst draw about the management of the accounts receivable?

Selected data for Nancy's Store appear below. Instructions Compute the following for 2014: (a) Profit margin. (b) Inventory turnover. (c) Accounts receivable turnover.

Using the following selected items from the comparative statements of financial position of Anders Company, illustrate horizontal and vertical analysis.