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Exam 9: Analyzing Financial Statements

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Question 101

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Snow Sales Ltd.'s net sales were $856,600.Its cost of goods sold was $226,810.Its profit was $33,750.Its gross profit ratio was

A) 73.5%
B) 3.9%
C) 14.9%
D) 35%
E) 285.7%

F) A) and C)
G) All of the above

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Question 102

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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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Year 1 $395,000/$125,000 = 3.2...

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Question 103

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Criptonite Corporation paid a cash dividend of $0.58 per share.It had 650,000 shares outstanding.Its earnings per share were $4.85 and the market price was $19.50 per share.Calculate the dividend yield.

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

Identify the tools of financial statement analysis.

Sleep Sack had net sales of $650,500,its cost of goods sold was $357,000,and its profit was $13,750.The gross margin ratio was 45.1%.

For the following items,calculate trend percentages using 2018 as the base year.(round to nearest percentage): Azuno Co. Compar ative Income Statement For the Years Ended December 31, $\begin{array}{|l|r|r|r|r|r|}\hline & \mathbf{2 0 2 2} & \mathbf{2 0 2 1} & \mathbf{2 0 2 0} & \mathbf{2 0 1 9} & \mathbf{2 0 1 8} \\\hline \text { Sales } & \$ 1,495,000 & \$ 1,234,700 & \$ 1,267,500 & \$ 999,500 & \$ 982,350 \\\hline \text { Cost of goods sold } & 556,000 & 580,000 & 450,000 & 402,000 & 329,000 \\\hline \text { Gross profit } & \$ 939,000 & \$ 654,700 & \$ 817,000 & \$ 597,500 & \$ 653,350 \\\hline\end{array}$

The following is selected information for the Translation Corp: Calculate the following (round to the second decimal): (a)Profit margin.(b)Total asset turnover.(c)Return on total assets.

Z-Caliber had income before interest and income tax expense of $125,000.Its interest expense was $65,000.Calculate the times interest earned ratio.

Dairy King has total assets of $325 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

Return on total assets is a profitability measure.

All companies desire a low return on total assets.

Marquis and Bloom Company are similar firms that operate in the same industry.The following data on each company is below: Required: Compare the liquidity positions of both companies.Include a discussion on the relative ability of both companies to meet current obligations and to use current assets efficiently.

Polka Dot Inc.has 300,000 shares authorized,190,000 shares issued,and 15,000 treasury shares.It paid $0.34 per share in cash dividends.The market price is $18.97 per share.Calculate (1)the total dividends paid and (2)the dividend yield.

West Coast Kids had cost of goods sold of $3,000 million,ending inventory of $1,500 million,and average inventory of $1,000 million.The merchandise turnover is

Profit margin measures the relationship of debt to assets.

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.

CrossSport had average total assets of $697,000.Its gross sales were $3,090,000 and its net sales were $2,000,000.CrossSport's total asset turnover was

Levaseur Corp had profit of $65,000,net sales of $287,900,and average total assets of $140,650.Calculate the profit margin,total asset turnover,and return on total assets.

Eoos had $1,189,000 in profit for the year.There were 150,000 common shares outstanding.The market price per share was $23.27.Calculate the price-earnings ratio.