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Exam 16: How to Read, Analyze, and Interpret Financial Reports

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Question 21

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A current ratio is calculated by current assets times current liabilities.

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Question 22

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The acid test ratio does not include:

A) Cash
B) Accounts receivable
C) Supplies
D) Inventory
E) None of these

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Question 23

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Net income is equal to gross profit minus operating expenses.

Retained earnings is the same as cash.

A ratio of 4:5:2 means that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

Cost of merchandise sold equals beginning inventory:

Cash is recorded on the income statement.

Trend analysis expresses each number as a percent of the base year.

Al Ring received a memo requesting that he complete a trend analysis of the following, using 2010 as the base year. (Round each percent to nearest whole percent.) Can you help Al with this request? *For simplicity, operating expenses have been omitted.

The asset turnover from the following is (round to nearest tenth) :

Complete the horizontal analysis below:

From the following, prepare a balance sheet for Roe Co. as of December 31, 2015.

Mel King has asked you to prepare a classified balance sheet for Pad Co. as of December 31, 2014. Ending merchandise inventory was $1,800:

Complete:

Assets, liabilities, capital, and revenues are listed on the balance sheet.

Which of the following is not a current asset?

Solve for (A) current ratio, (B) acid test (quick), (C) average day's collection, (D) asset turnover, and (E) profit margin on sales. Round to nearest hundredth or hundredth percent as needed.

The income statement shows the financial condition of a business over a period of time.

A balance sheet shows the financial condition of a business at a particular date.

In analyzing the income statement of Bob Company, cost of goods sold decreased from 2013 to 2014 by 8.2%. The cost of goods sold was $19,000 in 2014. The cost of goods sold to the nearest cent in 2013 was: