Cameron Company had 50,000 common shares issued and outstanding during the year just ended.The following information pertains to these shares: $\begin{array}{|l|l|} \hline \text { Price Originally Issued } & \$ 40 \\ \hline \text { Book Value at End of Current Year } & \$ 70 \\ \hline \text { Market Value, Beginning of Current Year } & \$ 85 \\ \hline \text { Market Value, End of Current Year } & \$ 90 \\ \hline \end{array}$ The total dividend on common shares for the year was $400,000.What was Cameron Company's dividend yield ratio for the year?

A) 8.89%. B) 9.41%. C) 11.43%. D) 20.00%. A) 8.89%. B) 9.41%. C) 11.43%. D) 20.00%.

Financial statements for Marcial Company appear below: -Marcial Company's acid-test (quick)ratio at the end of Year 2 was closest to which of the following?

A) 0.25 to 1. B) 0.76 to 1. C) 1.04 to 1. D) 1.32 to 1. A) 0.25 to 1. B) 0.76 to 1. C) 1.04 to 1. D) 1.32 to 1.

Financial statements for Lowe Company appear below: Lowe Company Statement of Financial Position December 31, Year 2 and Year 1 (dollars in thousands) $\begin{array}{|l|r|r|} \hline & \text { Year } 2 & \text { Year 1 } \\ \hline \text { Cash } & \$ 45 & \$ 30 \\ \hline \text { Accounts receivable, net } & \$ 3 & \$ 40 \\ \hline \text { Inventory } & \$ 67 & \$ 60 \\ \hline \text { Long term investments } & \$ 162 & \$ 150 \\\hline \text { Land } & \$ 128 & \$ 100 \\ \hline \text { Building } & 98 & 50 \\ \hline \text { Total Assets } & \$ 538 & \$ 430 \\ \hline & & \\\hline \text { Accounts Payable } & \$ 36 & \$ 40 \\ \hline \text { Notes Payable, Short Term } & \$ 24 & \$ 30 \\ \hline \text { Bonds Payable } & \$ 35 & \$ 50 \\ \hline \text { Mortgage payable } & \$ 100 & -0 \\\hline \text { Preferred Shares, } 12 \% & \$ 100 & \$ 100 \\ \hline \text { Common Shares } & 195 & \$ 170 \\ \hline \text { Retained Earnings } & \$ 48 & \$ 40 \\ \hline \begin{array}{l} \text { Total Liabilities \& } \\ \text { Shareholder's'Equity } \end{array} & \$ 538 & \$ 430 \\ \hline \end{array}$ $\begin{array}{|l|r|}\hline&\begin{array}{r} \text { Lowe Company } \\ \text { Income Statement } \\ \text { For the Year Ended December 31, Year 2} \\ \text { (dollars in thousands) } \end{array}\\ \hline \text { Sales (All on Account) } & \$ 145 \\ \hline \text { Costs of Goods Sold } & \$ 74 \\ \hline \text { Gross Margin } & \$ 71 \\ \hline \text { Operating Expenses (including interest } & \$ 16\\\text { expense of } \$ 5,000) & \\ \hline \text { Net Income before Taxes } & \$ 55 \\ \hline \text { Income Taxes }(40 \%) & \$ 22 \\ \hline \text { Net Income } & \$ 33\\\hline \end{array}$ Total dividends paid during the year were $25,000,of which $12,000 was paid to the preferred shareholders. Required: Calculate the following for Year 2: a)Current ratio. b)Acid-test (quick)ratio. c)Average collection period (age of receivables). d)Inventory turnover. e)Return on total assets. f)Times interest earned. g)Debt-to-equity ratio.

a)Current ratio = Current assets/Current

$\begin{array}{l} \text { Selected data for the MK Company follow: }\\\\ \begin{array} {| l | r | r | } \hline & \text { Current Year } & \text { Prior Year } \\ \hline \begin{array} { l } \text { Preferred Shares, 8\% Par } \\ \text { Value } \$ 50 \end{array} & \$ 250000 & \$ 250000 \\ \hline \begin{array} { l } \text { Common Shares, Per Value } \\ \$ 10 \end{array} & \$ 500000 & \$ 500000 \\ \hline \begin{array} { l } \text { Retained Earnings at End of } \\ \text { Year } \end{array} & \$ 257000 & \$ 240000 \\ \hline \begin{array} { l } \text { Net Income } \\ \end{array} & \$ 102000 & \$ 90000\\ \hline \begin{array} { l } \text { Dividends Paid on Preferred } \\ \text { Shares } \end{array} & \$ 20000 & \$ 20000\\ \hline \begin{array} { l } \text { Dividends Paid on Common } \\ \text { Shares } \end{array} & \$ 65000 & \$ 60000 \\ \hline \begin{array} { l } \text { Qouted Market Price per } \\ \text { Common Share at Year End } \end{array} &\$25&\$20 \\ \hline \end{array} \end{array}$ -What is MK Company's return on common shareholders' equity for the current year,rounded to the nearest tenth of a percent?

A) 8.2%. B) 10.2%. C) 11.0%. D) 13.6%. A) 8.2%. B) 10.2%. C) 11.0%. D) 13.6%.

Exam 14: Financial Statement Analysis

The times interest earned ratio of McHugh Company was 4.5 times.The interest expense for the year was $20,000,and the company's tax rate was 40%.What was the company's net income?

(Multiple Choice)

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Question 61

Lisa Inc.'s balance sheet appears below: The company's sales for the year were $300,000, its cost of goods sold was $220,000, and its net income was $35,000. All sales were on credit. Dividends paid on preferred shares for the year were $5,000. -Lisa Inc.'s acid-test (quick)ratio at December 31,Year 2,was closest to which of the following?

(Multiple Choice)

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Question 62

Marcy Corporation's current ratio is currently 1.75 to 1.The firm's current ratio cannot fall below 1.5 to 1 without violating agreements with its bondholders.If current liabilities are presently $250 million,what is the maximum new short-term debt that can be issued to finance an equivalent amount of inventory expansion?

(Multiple Choice)

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Question 63

Financial statements for Narita Company appear below: $Financial statements for Narita Company appear below: \begin{array}{|l|r|}\hline & \begin{array}{r} \text { Larned Company } \\ \text { Income Statement } \end{array} \\ & \text { For the Year Ended December 31, Year } 2\\ & \text { (dollars in thousands) } \\ \hline \text { Sales (All on Account) } & \$ 2570 \\ \hline \text { Costs of Goods Sold } & \$ 1790 \\ \hline \text { Gross Margin } & \$ 780 \\ \hline \text { Operating Expenses } & \$ 310 \\\hline \text { Net Operating Income } & \$ 470 \\ \hline \text { Interest Expense } & \$ 30 \\ \hline \text { Net Income before Taxes } & \$ 440 \\ \hline \text { Income Taxes (30\%) } & \$ 132 \\ \hline \text { Net Income } & \$ 308 \\ \hline \end{array} -Narita Company's debt-to-equity ratio at the end of Year 2 was closest to which of the following?$ Larned Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (All on Account) \ 2570 Costs of Goods Sold \ 1790 Gross Margin \ 780 Operating Expenses \ 310 Net Operating Income \ 470 Interest Expense \ 30 Net Income before Taxes \ 440 Income Taxes (30\%) \ 132 Net Income \ 308 -Narita Company's debt-to-equity ratio at the end of Year 2 was closest to which of the following?

(Multiple Choice)

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Question 64

Financial statements for Orantes Company appear below: $Financial statements for Orantes Company appear below: \begin{array}{|l|r|} \hline&\text { Orange Company } \\ &\text { Income Statement } \\ &\text { For the Year Ended December 31, Year } \\ &2\\ &\text { (dollars in thousands) }\\ \hline\text { Sales (All on Account) } & \$ 2510 \\ \hline \text { Costs of Goods Sold } & \$ 1750 \\ \hline \text { Gross Margin } & \$ 760 \\ \hline \text { Operating Expenses } & \$ 300 \\ \hline \text { Net Operating Income } & \$ 460 \\ \hline \text { Interest Expense } & \$ 30 \\ \hline \text { Net Income before Taxes } & \$ 430 \\ \hline \text { Income Taxes (30\%) } & \$ 129 \\ \hline \text { Net Income } & \$ 301\\ \hline \end{array} Total dividends during Year 2 were \$ 181,000 , of which \$ 12,000 were preferred dividends. The market price of a common share on December 31, Year 2 was \$ 280 . -Orantes Company's return on total assets for Year 2 was closest to which of the following?$ Orange Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (All on Account) \ 2510 Costs of Goods Sold \ 1750 Gross Margin \ 760 Operating Expenses \ 300 Net Operating Income \ 460 Interest Expense \ 30 Net Income before Taxes \ 430 Income Taxes (30\%) \ 129 Net Income \ 301 Total dividends during Year 2 were $\$ 181,000$ , of which $\$ 12,000$ were preferred dividends. The market price of a common share on December 31, Year 2 was $\$ 280$ . -Orantes Company's return on total assets for Year 2 was closest to which of the following?

(Multiple Choice)

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Question 65

Dratif Company's working capital is $33,000,and its current liabilities are $80,000.The company's current ratio is closest to which of the following?

(Multiple Choice)

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Question 66

Cameron Company had 50,000 common shares issued and outstanding during the year just ended.The following information pertains to these shares: Price Originally Issued \ 40 Book Value at End of Current Year \ 70 Market Value, Beginning of Current Year \ 85 Market Value, End of Current Year \ 90 The total dividend on common shares for the year was $400,000.What was Cameron Company's dividend yield ratio for the year?

(Multiple Choice)

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Question 67

Financial statements for Quade Company appear below: $Financial statements for Quade Company appear below: \begin{array}{|l|r|}\hline&\begin{array}{r} \text { Quade Company } \\ \text { Income Statement }\\\text { For the Year Ended December 31, Year 2} \\ \text { (dollars in thousands) } \end{array} \\ \hline \text { Sales (All on Account) } & \$ 2400 \\ \hline \text { Costs of Goods Sold } & \$ 1680 \\ \hline \text { Gross Margin } & \$ 720 \\ \hline \text { Operating Expenses } & \$ 280 \\ \hline \text { Net Operating Income } & \$ 440 \\ \hline \text { Interest Expense } & \$ 40 \\ \hline \text { Net Income before Taxes } & \$ 400 \\ \hline \text { Income Taxes (30\%) } & \$ 120 \\ \hline \text { Net Income } & \$ 280\\\hline \end{array} Total dividends paid during Year 2 were $210,000,of which $18,000 were preferred dividends.The market price of a common share on December 31,Year 2 was $230. Required: Calculate the following for Year 2: a)Earnings per share. b)Price-earnings ratio. c)Dividend yield ratio. d)Return on total assets. e)Return on common shareholders' equity. f)Book value per share.$ Quade Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (All on Account) \ 2400 Costs of Goods Sold \ 1680 Gross Margin \ 720 Operating Expenses \ 280 Net Operating Income \ 440 Interest Expense \ 40 Net Income before Taxes \ 400 Income Taxes (30\%) \ 120 Net Income \ 280 Total dividends paid during Year 2 were $210,000,of which $18,000 were preferred dividends.The market price of a common share on December 31,Year 2 was $230. Required: Calculate the following for Year 2: a)Earnings per share. b)Price-earnings ratio. c)Dividend yield ratio. d)Return on total assets. e)Return on common shareholders' equity. f)Book value per share.

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Question 68

Financial statements for Marcial Company appear below: 11ee3cef_af3d_14b8_8c2a_ab0280ef355e_TB1327_11 -Marcial Company's acid-test (quick)ratio at the end of Year 2 was closest to which of the following?

(Multiple Choice)

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Question 69

Eral Company has $17,000 in cash,$3,000 in marketablesecurities,$36,000 in current receivables,$24,000 in inventories,and $45,000 in current liabilities.The company's acid-test (quick)ratio is closest to which of the following?

(Multiple Choice)

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Question 70

Financial statements for Lowe Company appear below: Lowe Company Statement of Financial Position December 31, Year 2 and Year 1 (dollars in thousands) Year 2 Year 1 Cash \ 45 \ 30 Accounts receivable, net \ 3 \ 40 Inventory \ 67 \ 60 Long term investments \ 162 \ 150 Land \ 128 \ 100 Building 98 50 Total Assets \ 538 \ 430 Accounts Payable \ 36 \ 40 Notes Payable, Short Term \ 24 \ 30 Bonds Payable \ 35 \ 50 Mortgage payable \ 100 -0 Preferred Shares, 12\% \ 100 \ 100 Common Shares 195 \ 170 Retained Earnings \ 48 \ 40 Total Liabilities \& Shareholder's'Equity \ 538 \ 430 Lowe Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (All on Account) \ 145 Costs of Goods Sold \ 74 Gross Margin \ 71 Operating Expenses (including interest \ 16 expense of \ 5,000) Net Income before Taxes \ 55 Income Taxes (40\%) \ 22 Net Income \ 33 Total dividends paid during the year were $25,000,of which $12,000 was paid to the preferred shareholders. Required: Calculate the following for Year 2: a)Current ratio. b)Acid-test (quick)ratio. c)Average collection period (age of receivables). d)Inventory turnover. e)Return on total assets. f)Times interest earned. g)Debt-to-equity ratio.

(Essay)

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Question 71

Crasler Company's net income last year was $100,000.The company paid dividends on preferred shares of $20,000,and its average common shareholders' equity was $580,000.The company's return on common shareholders' equity for the year was closest to which of the following?

(Multiple Choice)

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Question 72

The gross margin percentageis most likely to be used to assess which of the following?

(Multiple Choice)

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Question 73

When calculating the acid-test ratio,prepaid expenses are ignored.

(True/False)

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Question 74

Martin Company reported an extraordinary after-tax loss of $180,000,resulting from an earthquake.What must have been the before-tax loss if Martin's marginal income tax rate was 40%?

(Multiple Choice)

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Question 75

Brachlan Company's net income last year was $80,000,and its interest expense was $20,000.Total assets at the beginning of the year were $660,000,and total assets at the end of the year were $620,000.The company's income tax rate was 30%.The company's return on total assets for the year was closest to which of the following?

(Multiple Choice)

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Question 76

Desktop Co.presently has a current ratio of 1.2 to 1 and an acid-test ratio of 0.8 to 1.What will be effect of prepaying next year's office rent of $50,000?

(Multiple Choice)

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Question 77

Earnings per common share will immediately increase as a result of which of the following?

(Multiple Choice)

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Question 78

Financial statements for Larosa Company appear below: $Financial statements for Larosa Company appear below: \begin{array}{|l|r|}\hline & \begin{array}{r} \text { Larned Company } \\ \text { Income Statement }\\\text { For the Year Ended December 31, Year 2 }\\\text { (dollars in thousands) } \end{array} \\ \\hline \text { Sales (All on Account) } & \$ 1870 \\ \hline \text { Costs of Goods Sold } & \$ 1300 \\ \hline \text { Gross Margin } & \$ 570 \\ \hline \text { Operating Expenses } & \$ 220 \\ \hline \text { Net Operating Income } & \$ 350 \\ \hline \text { Interest Expense } & \$ 40 \\ \hline \text { Net Income before Taxes } & \$ 310 \\ \hline \text { Income Taxes }(30 \%) & \$ 93 \\ \hline \text { Net Income } & \$ 217 \\ \hline \end{array} Total dividends during Year 2 were \$ 47,000 , of which \$ 10,000 were preferred dividends. The market price of a common share on December 31 , Year 2 was \$ 70 . -Larosa Company's dividend payout ratio for Year 2 was closest to which of the following?$ Larned Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) hline Sales (All on Account) \ 1870 Costs of Goods Sold \ 1300 Gross Margin \ 570 Operating Expenses \ 220 Net Operating Income \ 350 Interest Expense \ 40 Net Income before Taxes \ 310 Income Taxes (30\%) \ 93 Net Income \ 217 Total dividends during Year 2 were $\$ 47,000$ , of which $\$ 10,000$ were preferred dividends. The market price of a common share on December 31 , Year 2 was $\$ 70$ . -Larosa Company's dividend payout ratio for Year 2 was closest to which of the following?

(Multiple Choice)

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Question 79

Selected data for the MK Company follow: Current Year Prior Year Preferred Shares, 8\% Par Value \ 50 \ 250000 \ 250000 Common Shares, Per Value \ 10 \ 500000 \ 500000 Retained Earnings at End of Year \ 257000 \ 240000 Net Income \ 102000 \ 90000 Dividends Paid on Preferred Shares \ 20000 \ 20000 Dividends Paid on Common Shares \ 65000 \ 60000 Qouted Market Price per Common Share at Year End \2 5 \2 0 -What is MK Company's return on common shareholders' equity for the current year,rounded to the nearest tenth of a percent?

(Multiple Choice)

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Question 80

Showing 61 - 80 of 203

The times interest earned ratio of McHugh Company was 4.5 times.The interest expense for the year was $20,000,and the company's tax rate was 40%.What was the company's net income?

Dratif Company's working capital is $33,000,and its current liabilities are $80,000.The company's current ratio is closest to which of the following?

Financial statements for Marcial Company appear below: 11ee3cef_af3d_14b8_8c2a_ab0280ef355e_TB1327_11 -Marcial Company's acid-test (quick)ratio at the end of Year 2 was closest to which of the following?

Eral Company has $17,000 in cash,$3,000 in marketablesecurities,$36,000 in current receivables,$24,000 in inventories,and $45,000 in current liabilities.The company's acid-test (quick)ratio is closest to which of the following?

Crasler Company's net income last year was $100,000.The company paid dividends on preferred shares of $20,000,and its average common shareholders' equity was $580,000.The company's return on common shareholders' equity for the year was closest to which of the following?

The gross margin percentageis most likely to be used to assess which of the following?

When calculating the acid-test ratio,prepaid expenses are ignored.

Martin Company reported an extraordinary after-tax loss of $180,000,resulting from an earthquake.What must have been the before-tax loss if Martin's marginal income tax rate was 40%?

Desktop Co.presently has a current ratio of 1.2 to 1 and an acid-test ratio of 0.8 to 1.What will be effect of prepaying next year's office rent of $50,000?

Earnings per common share will immediately increase as a result of which of the following?

Managerial Accounting and the Business Environment

Cost Terms,concepts,and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Variable Costing: A Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

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