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Exam 28: Financial Analysis of Performance

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Question 81

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Form 10-Q refers to the annual report filed with the SEC.

A) True
B) False

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Question 82

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Executive officers' compensation is typically comprised of all of the following except

A) incentive bonuses.
B) declared dividends.
C) stock option awards.
D) annual base salaries.

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

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Question 83

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Interim financial statements are subjected to a full audit by an independent auditor.

Horizontal analysis will reveal the percentage of net sales consumed by salaries expense.

In a common-size income statement,net income is represented by 100 percent.

One of the main parts of an annual report of a publicly held corporation is the five- to ten-year projection.

The following selected amounts were extracted from the financial statements of Flamingo Corporation. $\begin{array}{lrrrr} & \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\text { Net sales }& \$ 175,000 & \$ 170,000 & \$ 165,000 & \$ 150,000 \\\text { Cost of goods sold } & 109,000 & 104,500 & 100,500 & 93,000 \\ \text { Gross margin }&66,000 & 65,500 & 64,500 & 57,000\end{array}$ Prepare a trend analysis for net sales,cost of goods sold,and gross margin.(Round answers to the nearest tenth of 1 percent.)Use Year 1 as the base year.

Return on assets is most closely related to

Using the following information from an annual report,prepare a vertical analysis of the consolidated balance sheet at June 30,20xx.(Round percentage answers to one decimal place.)

Contrast the circumstances where horizontal analysis would be an effective analysis tool with those where common-sized analysis would be more useful.

Liquidity is the ability to earn a satisfactory net income.

Liquidity ratios are an indication of a company's

A change in the company's auditors must be reported to the SEC within a few days of the change.

Common-size statements are useful in assessing the changes in the composition of statements over time.

Ratio analysis is useful only if the ratio states a meaningful relationship between two numbers.

Prepare a trend analysis of the following data,using Year 1 as the base year.Place your answers in the chart provided.Comment on the trend. $\begin{array} {| l r r r |} \hline& \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\text { Net sales } & \mathbf { 3 2 4 , 0 0 0 } & \mathbf { \$ 3 0 , 0 0 0 } & \mathbf { 3 0 0 , 0 0 0 } \\\text { Net incame } & 33,000 & 31,800 & 30,000\\\hline\end{array}$ $\begin{array} { | l | c | c | c | } \hline & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\text { Net sales }\\\text { Net income } & & & \\\hline\end{array}$

The number of days' sales uncollected is determined by dividing

Which of the following describes the asset turnover ratio?

Holiday Corporation provided these figures for the year ended December 31,20xx: Cost of goods sold,$516,117; change in inventory,$67,483 decrease; average accounts payable,$52,529. What is the company's payables turnover? Round your answer to one decimal place.

In a common-size balance sheet for a retail store,the 100 percent amount is for