F03 Assignment 8

Assignment 08

F03 Financial Statement Analysis

Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading.  Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar.  Sources must be cited in APA format.  Your response should be four (4) pages in length; refer to the “Assignment Format” page for specific format requirements.

1. Use the following data to answer questions      a-e.

Lazy O Corporation

Selected Financial Data

Current assets $65,000

Current liabilities 60,000

Accounts receivable 15,000

Inventories 20,000

Accounts payable 40,000

Net sales 365,000

Cost of goods sold 280,000

a. Lazy O’s current ratio is:

a. 2.1 to 1

b. 0.1 to 1

c. 0.9 to 1

d. 1.1 to 1

b. Lazy O’s quick ratio is:

a. 0.87 to 1

b. 0.75 to 1

c. 1.1 to 1

d. 0.9 to 1

c. Lazy O’s average collection period is:

a. 15 days

b. 24 days

c. 9 days

d. 4 days

d. Lazy O’s inventory turnover is:

a. 7 times

b. 9 times

c. 14 times

d. 18 times

e. Lazy O’s net trade cycle is:

a. 5 days

b. (11 days)

c. 35 days

d. 20 days

2. Using the following information for Cedric Inc. calculate earnings per share, the price-to earnings ratio, dividend payout and dividend yield for the firm. Analyze these market ratios.

2009 2008

Net income $31 million $30 million

Shares of common stock outstanding 24 million 22 million

Dividends per share $ 0.55 $ 0.50

Market price per share $12 $16

3. Describe the steps of conducting a financial statement analysis.