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Exam 15: Financial Statement Analysis

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Question 81

Multiple Choice

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The gross margin percentage is equal to:

A) (Net operating income + Selling and administrative expenses) /Sales
B) Net operating income/Sales
C) Cost of goods sold/Sales
D) Cost of goods sold/Net income

E) All of the above
F) A) and D)

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Question 82

Multiple Choice

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Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The average collection period for Year 2 is closest to:

A) 64.0 days
B) 0.9 days
C) 61.3 days
D) 1.1 days

E) C) and D)
F) B) and C)

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Question 83

Multiple Choice

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Selling used equipment at book value for cash will:

The Seabury Corporation has a current ratio of 3.5 and an acid-test ratio of 2.8. The corporation's current assets consist of cash, marketable securities, accounts receivable, and inventories. Inventory equals $49,000. Seabury Corporation's current liabilities must be:

Symons Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share. -The company's dividend payout ratio for Year 2 is closest to:

Smay Corporation has provided the following data: $\begin{array}{ll}&\text { This Year } & \text { Last Year } \\\text {Accounts receivable. }&\$ 107,000 & \$ 108,000 \\\text {Inventory. }&\$ 179,000 & \$ 187,000 \\\text {Sales on account. }&\$ 654,000 & \\\text {Cost of goods sold }&\$ 461,000 &\end{array}$ The accounts receivable turnover for this year is closest to:

The formula for the return on equity is: Return on equity = Net income ÷ Average total stockholders' equity.

Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The current ratio at the end of Year 2 is closest to:

Windham Corporation has current assets of $400,000 and current liabilities of $500,000. Windham Corporation's current ratio would be increased by:

Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. -The company's accounts receivable turnover for Year 2 is closest to:

Burdick Corporation has provided the following financial data from its balance sheet: Sales (all on account) in Year 2 amounted to $1,410,000 and the cost of goods sold was $860,000. -The company's total asset turnover for Year 2 is closest to:

Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The company's acid-test (quick) ratio is closest to:

Grosvenor Corporation's most recent income statement appears below: The gross margin percentage is closest to:

Data from Fontecchio Corporation's most recent balance sheet appear below: $\begin{array}{lr}\text {Cash. }&\$18,000\\\text {Marketable securities }&\$24,000\\\text {Accounts receivable. }&\$39,000\\\text {Short-term notes receivable. }&\$0\\\text {Inventory. }&\$60,000\\\text {Prepaid expenses }&\$14,000\\\text {Current liabilities. }&\$120,000\\\end{array}$ The corporation's acid-test ratio is closest to:

Sapien Corporation has provided the following data for the most recent year: The company's gross margin percentage is closest to:

Louie Corporation has provided the following data: $\begin{array} { l r l } & { \text { Year 2 } } & \text { Year 1 } \\\text { Accounts receivable} & \$ 269,000 & \$ 290,000 \\\text { Inventory } & \$ 190,000 & \$ 160,000 \\\text { Sales, on account }& \$ 1,340,000 & \\\text { Cost of goods sold } & \$ 860,000 &\end{array}$ The company's operating cycle for Year 2 is closest to:

Valdovinos Corporation has provided the following data: The company's net profit margin percentage is closest to:

The formula for the times interest earned ratio is: Times interest earned = Earnings before interest expense and income taxes ÷ Interest expense.

If a retailer sells a product whose contribution margin equals the gross margin percentage, the gross margin percentage will be unaffected by the transaction.

Remley Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $3,000. The market price of common stock at the end of Year 2 was $2.70 per share. Required: a. What is the company's times interest earned for Year 2? b. What is the company's debt-to-equity ratio at the end of Year 2? c. What is the company's equity multiplier at the end of Year 2? d. What is the company's earnings per share for Year 2? e. What is the company's price-earnings ratio for Year 2? f. What is the company's dividend payout ratio for Year 2? g. What is the company's dividend yield ratio for Year 2? h. What is the company's book value per share at the end of Year 2?