FIN 300 Lecture Notes - Lecture 3: Profit Margin, Financial Statement Analysis, Balance Sheet

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coralsardine472

26 Dec 2016

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A decrease in an asset account means the firm sold some net assets, a source of cash. An increase in a liability account means the firm borrowed more, a source of cash. Decrease on the left hand side or increase on the right hand side. An increase in an asset account means the firm bought some net assets, a use of cash. A decrease in a liability account means the firm paid off more, a use of cash. Increase in the left hand side or decrease on the right hand side. It"s almost impossible to directly compare financial statements for two companies. Balance sheet expresses each item as a percentage of total assets. Income statement expresses each item as a percentage of sales. Common size: standardized financial statement presenting all items in percentage terms. Common base year: standardized financial statement presenting all items relative to a certain base year amount because of differences in size.

Related Questions

1- which one of the following is not included in net workingcapital?

A) account receivable , B) retained earnings, C) cash and cashequivalent , D) prepaid expenses, E) Account payable.

2- Depreciation does which one of the following for a profitablefirm?

A) has no effect on net income, B) decrease net working capital,C) decrease net income, D) increase net income, E) increasetaxes

3- a firm has a current ratio 0.9, given this you know forcertain that the firm.

A) has more current liabilities than it does current assets, B)has positive net working capital, C) has negative net workingcapital D) pays cash for its inventory, E) has more cash thaninventory.

4- all else equal, an increase in which one of the followingwill increase owner's equity?

A) increase in accounts payable, B) decrease in net fixedassets, C) decrease in accounts receivable , D) increase ininventory, E) decrease in net working capital

5- a firm with inventory of $130, total current assets of $511and current liabilities of $412 has a quick ratio (acidtest) of?

6- During the latest year, xyz corporation has total sales of$200,000, net income of $10000 and its year-end total assets were$250,000, the firm's total debt to total assets ratiowas 30%

what is firm's total assets turnover?

7- During the latest year, xyz corporation has total sales of$200,000 net income $20,000, its year-end total assets were230,000, the firm's total debt to total assets ratio was30%,

what is firm's return on assets (ROA)

8- Company x has profits margin of 5%, total assets turnover of1.8 and total debt to total assets ratio of 30%,, what is thecompany's ROE?

greysquirrel390

3. Profit margin and asset turnover can be combined to create

a. return on assets

b return on equity

c. earnings per share

d. price earnings ratio

e. none

4.which of the following increases cash

a. issuance to long term debt

b. acquisition of property plant and equipment

c. payment of divdends

d decrease in short term debt

e. none

11.elsie Jackson is saving for a down payment on a condo. She needs 20,000. How much must she invest in a savings account that pays 5% annually to have the 20,000 in 8years? Round to the nearest dollar.

a. 13,206

b $12,983

c. 13,616

d. 13,537

e. none

13. which of the following increase cash?

a.issuance of long term debt

b. acquisition of property plant and equipment

c. payment of divdends

d. decrease in short term debt

e. none

14. profit margin and asset turnover can be combined to create

a. return on assets

b. return on equity

c. earnings per share

d. price earnings ratio

e. none

17. which of the following ratios is coverage ratio

a. return on assets

b. return on equity

c. earnings per share

d. times interest earned

e. none

24.right-hand entries increase

a. asset accounts

b owners equity accounts

c. liabilities

d. both b and c

e. none

26. a customer pays on an account receivable. The account that should be credited is

a. inventory

b. cash

c. accounts payable

d. accounts receivable

e. none

27. which of the following ratios measures liquidity?

a. current

b. payout

c. gross margin

d. asset turnover

e. none

31.capital stock is a part of which of the following accounts?

a. ownersâ equity

b. liabilities

c. current assets

d. long term assets

e. none

37. Agr corporation signed a two-yr lease for the building that the company occupies. The account that should be debited is

a. prepaid expense

b.cash

c. accounts payable

d. building

e. none

38. left-hand entries DECREASE

a. asset accounts

b. liability accounts

c. ownerâs equity accounts

d. both b and c*

e.none

which of the following increases cash?

Issuance of long-term debt

Acquition of property plant and equipment

C.paymentof divdends

D. decrease in short term debt

none

For each of the transactions below, record whether it would result in an increase or decrease in assets, liabilities, and/ or net assets. An organization:

Earns revenue

Receives a donor pledge

Purchases supplies with cash

Purchases supplies on account

Takes out a loan

Repays loan principal

Receives payment on a pledge

Makes a payment on an amount it owes

Prepays for insurance

Uses prepaid insurance

Uses supplies

Uses a capital asset

Receives cash in advance of providing goods or services goods or services to a client.

Provides goods and services to a client in exchanging for a cash payment that was made in advance.

Employee workers who earn wages

Pays employee wages that have been earned

Deems a portion of a pledge is uncollectible

Pays interest on a loan

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FIN 300 Lecture Notes - Lecture 3: Profit Margin, Financial Statement Analysis, Balance Sheet

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