Exam 13: Analyzing Financial Statements

Wildlife Co. reported net income of $8.3 million, interest expense of $.5 million and is are in a 30% tax rate bracket. Wildlife's average total assets are $65.8 million and average stockholders' equity is $48.6 million. Wildlife's financial leverage percentage is closest to:

Return on equity (ROE) is a function of three ratios: net profit margin, return on assets, and financial leverage.

The journal entry to record depreciation expense decreases which of the following ratios?

Dividend yield is calculated by dividing dividends per share by earnings per share and measures the current dividend return to investors.

Main Street Company paid out $2.30 in dividends per share of common stock and had earnings per share of $5.00 during 2014. The market price of the stock on December 31, 2014 was $21.00 per share. There were 15,000 shares of stock outstanding for the entire year. The dividend yield as of December 31, 2014 is closest to:

Which of the following statements is false?

Which of the following transactions will increase a current ratio, which is currently 2.5?

MusicPod's earnings per share ratios were $2.47 and $2.07 respectively for 2015 and 2014. MusicPod's stock was trading at $53.00 and $41.50 per share at the end of 2015 and 2014 respectively. The company paid cash dividends per share of $.85 in 2015 and $.63 in 2014. Total stockholders' equity was $13,572 million and $11,896 million in 2015 and 2014 respectively. The common shares outstanding were approximately 1,782,000 in both 2015 and 2014. MusicPod's price/earnings ratio for 2015 is closest to:

Which of the following transactions decreases earnings per share?

The financial leverage percentage is positive when return on assets is greater than return on equity.

Thomas Company had income before interest and taxes of $120,000. Interest expense for the period was $17,000 and income taxes amounted to $28,500. The average stockholders' equity was $680,000. Thomas' return on equity (ROE) is closest to:

Teague Company's working capital was $40,000 and total current liabilities were 1/4 of that amount. What was the current ratio?

Which of the following statements is incorrect about fundamental business strategies?

Which of the following statements is incorrect?

Some analysts do not use the cash ratio because they see it as too stringent a test of liquidity and it is very sensitive to small events.

Which of the following transactions decreases the quality of income ratio?

Which of the following ratios are not affected by issuing long-term bonds payable in exchange for cash?

The debt-to-equity ratio measures which of the following?

The fixed asset turnover ratio increases when net income increases.

MusicPod's earnings per share ratios were $2.47 and $2.07 respectively for 2015 and 2014. MusicPod's stock was trading at $53.00 and $41.50 per share at the end of 2015 and 2014 respectively. The company paid cash dividends per share of $.85 in 2015 and $.63 in 2014. Total stockholders' equity was $13,572 million and $11,896 million in 2015 and 2014 respectively. The common shares outstanding were approximately 1,782,000 during both 2015 and 2014. MusicPod's dividend yield ratio for 2015 is closest to: