1. What kind of financial information is a publicly traded company required to provide to its stockholders? Which financial statement do you think provides the best information for investors?
2. Differentiate (compare) among the information that is provided in each of the following financial statements: (1) balance sheet, (2) income statement, and (3) statement of cash flows.
3. Discuss some of the limitations associated with performing ratio (financial statement) analysis. What is the most important ingredient (input) in completing ratio analysis? Explain why.
4. The most recent balance sheet of Infinity Information Systems (IIS) shows that the company has $35 million of common equity and 7 million shares of common stock outstanding. The company's common stock has a market value equal to $8 per share. IIS's net income was $14 million. What are IIS's (a) P/E ratio and (b) M/B ratio?
5. Horatio's Hot Dogs' current assets equal $260,000. The company's return on assets (ROA) is 4 percent, its net income is $140,000, its long-term debt equals $1,755,000, and 35 percent of its assets are financed with common equity. Horatio's has no preferred stock. Compute the company's current ratio.