Answer all Questions 5-8

ACTIVITY 107 TEST YOUR UNDERSTANDING - CIRCUIT CITY Purpose: - Analyze the income statement, the balance sheet, and the statement of cash flows. Circuit City (CCYTQ) STATEMENT OF CASH FLOWS (\$ in millions) Q5 Compute the ratios requested in the chart below. For ratio formulas and explanation refer to Appendix B-Ratios. * Industry: Electronics Stores-Industry ratio averages from money.msn.com For each ratio, (a) circle the stronger ratio, (b) cross out any ratio that is weaker than the industry norm, and (c) comment on the results. Q6 The income statement and related ratios indicate (strengthening / steady / weakening) earnings potential. Why? List observations that support your conclusion and explain why. STATEMENT OF CASH FLOWS Q7 The primary source of cash was operating activities during Year(7/6/5/4). Investing activities provided a source of cash during Year (7/6/5/4), indicating ... A net cash outflow for capital stock occurred during Year (7/6 / 5 / 4), meaning more capital stock was (issued / repurchased). Repurchased common stock is referred to as (common / preferred / treasury) stock. Treasury stock (increases / decreases) total stockholders' equity on the balance sheet and decreases total shares outstanding, which is (favorable / unfavorable) for shareholders because earnings per share (increases / decreases). Q8 Compute the ratios requested in the chart below. For ratio formulas and explanation refer to Appendix B-Ratios. For each ratio, (a) circle the company ratio indicating the strongest cash position and (b) comment on the results