Financial Statement Analysis: The Big Picture

What is the primary goal of analyzing sustainable income for a company like Google, as mentioned in Chapter 13?

According to Chapter 13, what are the two components that constitute the income (or loss) from discontinued operations?

What is comprehensive income, as described in the textbook?

If a company changes its inventory costing method from LIFO to FIFO, how should this change in accounting principle be reported?

Which of the following is an example of a technique that improves the quality of earnings?

What does horizontal analysis, also known as trend analysis, primarily accomplish?

Using the data for Chicago Cereal Company in Illustration 13-9, what was the percentage change in total assets from 2018 to 2019?

What is the base amount for vertical analysis of an income statement?

Using the data for Chicago Cereal Company in Illustration 13-12, what was the profit margin (net income as a percentage of net sales) for 2019?

What does the price-earnings (P-E) ratio reflect, according to the textbook?

Which of the following ratios is NOT a measure of a company's liquidity?

Plano Corporation reported net sales of $400,000 and had average assets of $600,000 for 2019. What is its asset turnover ratio?

What is the formula for calculating Free Cash Flow?

Using the data for Chicago Cereal Company in Appendix 13A, what was the debt to assets ratio for 2019?

According to Illustration 13A-15, which component is NOT directly part of the calculation for Return on Assets?

If a company's return on common stockholders' equity is significantly higher than its return on assets, what is the most likely explanation?

Cool Stools Corporation has income before taxes of $400,000 and a loss on discontinued operations of $100,000. If the income tax rate is 25 percent on all items, what is the income from continuing operations?

Which analysis technique would be most useful for comparing the financial statements of Chicago Cereal Company and the much larger Giant Mills, Inc.?

Adams Corporation reported net sales of $300,000, $330,000, and $360,000 in 2017, 2018, and 2019, respectively. If 2017 is the base year, what percentage do 2019 sales represent of the base?

In vertical analysis of a balance sheet, what is typically used as the base amount?

If a company's gross profit rate remained constant but its profit margin decreased, what is the most likely cause?

What does a high-quality of earnings indicate about a company?

A company has net income of $24,000, net sales of $400,000, and average assets of $600,000. What is its profit margin?

Using the data for Chicago Cereal Company in Appendix 13A, what was the times interest earned ratio for 2019?

What does a very high payout ratio generally suggest about a company?

Which three types of comparisons are mentioned in the textbook to improve the decision usefulness of financial information?

Pace Corporation reported a loss from operation of plastics division of $42,000, net of $18,000 income tax savings. What was the pre-tax loss from the operation?

The practice of offering deep discounts to encourage customers to buy early, which boosts current period earnings, is known as:

In the summary of liquidity ratios in Illustration 13-17, which ratio is calculated by dividing 365 days by the inventory turnover?

Using the data for John Cully Company from the DO IT! 3 box on page 647, what was the profit margin for 2019?

Using the data for John Cully Company from the DO IT! 3 box on page 647, what was the return on common stockholders’ equity for 2019?

Which of the three main analysis tools would involve calculating the percentage of cost of goods sold to net sales for a single year?

An unrealized loss on available-for-sale securities would be reported in which section of a combined statement of comprehensive income?

Which ratio measures the number of times, on average, a company collects its receivables during a period?

Using the data from Illustration 13A-13, what are the three components that make up Return on Common Stockholders' Equity?

If a company has a low inventory turnover relative to its industry, what might this indicate?

Using the data for John Cully Company from the DO IT! 3 box on page 647, what was the debt to assets ratio for 2019?

The return on assets ratio is a function of which two other ratios?

What is the primary difference between sustainable income and actual net income?

Using the data from Illustration 13A-1 for Chicago Cereal Company, calculate the working capital for 2019.

If a company’s P-E ratio is significantly lower than its competitors, what might this suggest to an investor?

Using the data for Chicago Cereal in Illustration 13A-22, what was the payout ratio for 2019?

An unrealized gain on available-for-sale securities of $100,000 is subject to a 30 percent tax rate. How would this be reported on a statement of comprehensive income?

What is the primary reason for calculating the average collection period?

Using the data for John Cully Company from the DO IT! 3 box on page 647, what was the current ratio for 2019?

Which ratio provides insight into a company's ability to withstand losses without impairing the interests of its creditors?

If a company has stable earnings, such as a public utility, it would generally be expected to have a:

Using the data from the 'DO IT! 2' box on page 643 for Rosepatch Company, what was the amount of increase in total assets during 2019?

The calculation of earnings per share for a company with both common and preferred stock requires:

If a company has a debt to assets ratio of 60 percent, what does this imply?