Financial Statement Analysis

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Financial Statement Analysis Questions and Answers

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Which of the following totals and subtotals are not found on a multiple-step income statement? a. cost of goods sold b. total current assets c. net sales d. total operating expenses e. net income
To assess whether your company could afford to purchase some new equipment immediately, which financial statement should you review?
Discuss what is trend analysis, and how does it differ from the horizontal analysis.
Why is horizontal and vertical analysis important in analyzing the balance sheet and the income statement?
What is the difference between vertical analysis and horizontal analysis?
What is the horizontal analysis of financial statements? How does horizontal analysis differ from vertical analysis?
What is the difference between horizontal and vertical balance sheet?
Which method of developing a pro forma income statement forecasts sales and values for the cost of goods sold, operating expenses, and interest expense that are expressed as a ratio of projected sa...
Two companies competing in the same industry are being evaluated by a bank that can lend money to only one of them. Summary information from the financial statements of the two companies follows: (...
How do you create a common size balance sheet with all assets as a percentage of total assets?
The comparative condensed Income statements of Emley Corporation are shown below. EMLEY CORPORATION Comparative Condensed Income Statements For the Years Ended December 31 2017 2016 Net sales $...
Discuss the pros and cons of these methods of financial statement analysis: ratio analysis, vertical analysis, and horizontal analysis. What do they tell us? Why do we need so many different meth...
Given the following data: Accounts receivable, net $100,000 Current assets $800,000 Total assets $4,000,000 Net Sales $5,000,000 In vertical analysis, Accounts Receivable, the net would be express...
If Wildling Construction's net sales increased from $40,000 to $77,000 and its operating expenses increased from $32,000 to $52,000, the vertical analysis based on net sales would show what for ope...
Mussa Corporation reports the following data: Net sales- $270,000 Cost of goods sold- 170,000 Gross profit- $ 100,000 In vertical analysis, the cost of goods sold percentage is closest to A. 1...
A company put together a preliminary version of its financial statements. Its net income was $300, its depreciation expense was $80, and its cash flow from operations was $190. The accountant found...
Which of the following represents the normal sequence in which the below budgets are prepared? a. Sales Budget, Budgeted Balance Sheet, Budgeted Income Statement. b. Budgeted Balance Sheet, Sales...
Examine how a financial statement reader may assess a company's operating performance and financial position using each of the following analytical techniques: Horizontal analysis Vertical analysis...
What components of a financial statement do you compare when you are to analyze them?
Find an article that discusses techniques used to evaluate a company's financial performance. Describe your findings that can help with business analysis.
X Company shows a balance in Land of $100,000 in 2016 and it was $50,000 in 2015. 1. What is the amount and percentage change between the two years? 2. X Company's Total Assets in 2016 are $800,0...
The balance sheet items of The Original Malt Shop (arranged in alphabetical order) were as follows at the close of business on September 30, 2001: The transactions occurring during the first week o...
Below the balance sheet and income statement for Insights Pty Ltd for the years 2017 and 2018: Balance Sheet 2017 $ mil 2018 $ mil Assets Cash 920 600 Accounts Receivable 1240 990 Inventory 2000...
Comparative balance sheet for the Upside Down, Inc. is shown below: Accounts Title 2016 2015 Assets Cash $441,800 $332,600 Accounts receivable, net 750,750 432,900 Merchandise invemntory 819,000...
The comparative condensed income statements of Emley Corporation are shown below. Comparative Condensed Income Statements For the Years Ended December 31 2017 2016 Net sales $717,400 $654,000 Co...
Here is financial information for Spangles Inc. December 31,2014 December 31,2013 Current assets $109,554 $92,996 Plant assets (net) 402,996 353,554 Current liabilities 101,996 68,554 Long-term li...
THE TJX COMPANIES, INC. Consolidated Statements of Income Fiscal Year Ended ($ thousands) January 27, 2007 Net sales $17,404,637 Cost of sales, including buying and occupancy costs 13,213,703 Sel...
Two popular methods of financial statement analysis are horizontal analysis and vertical analysis. Explain the difference between these two methods.
Consider the following data: Using a horizontal analysis, which of the following is correct? a) The consultation services showed an increase in revenue of 25%. b) The design services showed a decre...
Three-Eyed Raven Ltd. reported the following at December 31, 2016 (in thousands): 2016 2015 From the comparative balance sheet: Property and equipment, net. $11,150 $9,590 Long-term notes payabl...
Explain the differences between horizontal and vertical analysis of financial statements.
Financial statement analysis generally focuses on five main aspects of the business's financial health. What are they?
Make a vertical analysis report of the income statement for Kapral's Cigars shown below. 2015 Net Sales $7,000 Cost of Goods Sold 3,800 Gross Profit $3,200 Operating Expenses: Selling Expenses $9...
Selected data from the financial statements of Bloom's Garden Centre is provided below. 2014 2013 Accounts receivable $70,000 $46,000 Inventory 10,000 17,000 Total assets 470,000 360,000 Net sales...
Walton Company reported the following operating results for two consecutive years. Required: Compute each income statement component for each of the two years as a percent of sales WALTON COMPAN...
A balance sheet which reports percentages of total assets instead of dollar amounts is referred to as a _____-_____ balance sheet.
Blossom Company reports the following information (in millions) during a recent year: net sales, $11,510.0; net earnings, $295.0; total assets, ending, $4,800.0; and total assets, beginning, $5,370...
What is the key information that is included in the balance sheet that investors and creditors would be interested in reviewing?
Answer true or false: Vertical analysis is the analysis of a financial statement that reveals the relationship of each statement item to a specified base.
Define the book value and explain its use in financial / corporate analysis.
Suppose you have some extra money that you would like to invest. What financial statement(s) would you use to help you make your choice?
What base amount is used for horizontal analysis of both income statement and balance sheets? Give an example.
Jordan Company reported the following operating results for two consecutive years. Required: Compute each income statement component for each of the two years as a percent of sales. JORDAN COMPA...
Atlantis Inc. provides the following historical data: 2016 2015 2014 2013 2012 2011 Net sales $4,970 $4,500 $3,980 $3,270 $4,750 $4,400 Prepare the trend analysis report, use 2011 as the base year.
Comparative statement data for P Company and Q Company--competitors-appear on the following page. All balance sheet data are as of December 31. 2002 and December 31, 2001. P Company Q Company 20...
Methods of financial statements analysis are most effectively applied together in a reiterative (rather than sequential) process. True False
Zemanowski Company reports the following sales? figures(in millions): Year Net Sales 2013 $103 2014 $106 2015 $109 2016 $111 2017 $115 2018 $120 What is the trend percentage in 2015 if 2013 is the...
Explain how to express each balance sheet amount as a percentage of total assets.
Total Operational Expenses for business was 202,858 in 2003, 413,308 in 2004, and 548,579 in 2005. This is a 270% increase in expenses in a two year period. How did they calculate the percentage of...
Consider the following information: Calculate the percentage increase or decrease in cost of sales from Year 1 to Year 2.
How do Carnival's managers use financial statements to evaluate performance? How might these evaluations affect business policies or strategies?
Define and describe horizontal and vertical trend analysis.
During the period 2010 through 2014 the company has expanded their product line and opened new stores. This caused the increase in sales during this period. An analysis of the information shows the...
The comparative temporary investments and inventory balances of a company follow. Current Year Previous Year Accounts payable $58,630 $53,300 Long-term debt 48,253 66,100 Based on this information...
Each line item is expressed as a percentage of some base year level when doing an analysis. A. Discounted cash flows B. Ratio analysis C. Horizontal analysis D. Vertical analysis
Which of the following statements regarding liquidity and profitability is not true? a. If a business is unable to pay its debts as they come due, it is operating unprofitably. b. A business may...
Vertical analysis helps detect changes in a company's performance over several periods and highlighting trends. True False
True or False: Horizontal analysis is the calculation of dollar changes or percentages changes in the comparative statement items or total. Us of this analysis helps detect changes in a company's...
Answer true or false: Liquidity ratios show a company's capacity to pay maturing current liabilities.
Vertical analysis of comparative income statements would show cost of goods sold as a percentage of a) total assets. b) merchandise inventory. c) net sales. d) net income.
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