$\begin{array}{c} \text { Assets }\\ \begin{array}{lr} \text { Cash and short-term investments } & \$ 30,000 \\ \text { Accounts receivable net } & 20,000 \\ \text { Inventory } & 15,000 \\ \text { Property, plant, and equipment } & \underline {185,000} \\ \text { Total assets } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Liabilities and Stockholders' Equity }\\ \begin{array}{lr} \text { Current liablities } & \$ 45,000 \\ \text { Long-term liabilities } & 70,000 \\ \text { Stockholders' equity \_Common } & \underline {135,000} \\ \text { Total liabilities and stockholders' equity } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Income Statement}\\ \begin{array}{lll} \text { Sales } \\ \text { Cost of goods sold } \\ \text { Gross margin } \\ \text { Operating expense: } \\ \text { Interest expense } \\ \text { Net income } \end{array} \begin{array}{lll} \$ 85,000 \\ 45,000 \\ \hline \$ 40,000 \\ 15,000 \\ 5,000 \\ \hline \$ 20,000 \\ \hline \end{array} \end{array}$ $\begin{array}{l} \begin{array}{lll} \text { Number of shares of common stock outstanding}\\ \text { Market price of common stock}\\ \text { Total dividends paid}\\ \text { Cash provided by operations}\\ \end{array} \begin{array}{lll} 6,000 \\ \$ 20 \\ \$ 9,000 \\ \$ 30,000 \end{array} \end{array}$ -What is the dividend yield for Diane Company?

A) 7.5% B) 0.75% C) 13.3% D) 1.3% A) 7.5% B) 0.75% C) 13.3% D) 1.3%

Revenue and expense data for Bluestem Company are as follows: $\begin{array}{lrr} &\text { Year 2}&\text { Year 1}\\ \text { Administrative expenses } & \$ \overline{37,000} & \overline{\$ 20,000} \\ \text { Cost of goods sold } & 350,000 & 320,000 \\ \text { Income tax } & 40,000 & 32,000 \\ \text { Sales } & 800,000 & 700,000 \\ \text { Selling expenses } & 150,000 & 110,000 \end{array}$ a Prepare a comparative income statement,with vertical analysis,stating each item for both years as a percent of sales. b Comment upon significant changes disclosed by the comparative income statement. Round percentages to one decimal place.

a b There was a 1.9% decrease in the

The following data are taken from the financial statements: $\begin{array}{lrr} & { \text { Current }}& { \text {Preceding}}\\ & \underline { \text { Year }}& \underline { \text { Year }}\\ \text { Average accounts receivable net } & \$ 123,000 & \$ 95,000 \\ \text { Accounts receivable net, end of year } & 129,012 & 87,516 \\ \text { Sales on account } & 950,000 & 825,000 \end{array}$ a. Assuming that credit terms on all sales are n/45, determine for each year 1 the accounts receivable turnover and 2 the number of days' sales in receivables. Round intermediate calculations to whole numbers and final answers to two decimal places. b. Comment on any significant trends revealed by the data.

a b. Although sales increased during

$\begin{array}{c} \text { Assets }\\ \begin{array}{lr} \text { Cash and short-term investments } & \$ 30,000 \\ \text { Accounts receivable net } & 20,000 \\ \text { Inventory } & 15,000 \\ \text { Property, plant, and equipment } & \underline {185,000} \\ \text { Total assets } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Liabilities and Stockholders' Equity }\\ \begin{array}{lr} \text { Current liablities } & \$ 45,000 \\ \text { Long-term liabilities } & 70,000 \\ \text { Stockholders' equity \_Common } & \underline {135,000} \\ \text { Total liabilities and stockholders' equity } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Income Statement}\\ \begin{array}{lll} \text { Sales } \\ \text { Cost of goods sold } \\ \text { Gross margin } \\ \text { Operating expense: } \\ \text { Interest expense } \\ \text { Net income } \end{array} \begin{array}{lll} \$ 85,000 \\ 45,000 \\ \hline \$ 40,000 \\ 15,000 \\ 5,000 \\ \hline \$ 20,000 \\ \hline \end{array} \end{array}$ $\begin{array}{l} \begin{array}{lll} \text { Number of shares of common stock outstanding}\\ \text { Market price of common stock}\\ \text { Total dividends paid}\\ \text { Cash provided by operations}\\ \end{array} \begin{array}{lll} 6,000 \\ \$ 20 \\ \$ 9,000 \\ \$ 30,000 \end{array} \end{array}$ -What are the dividends per common share for Diane Company?

A) $20.00 B) $3.00 C) $0.67 D) $1.50 A) $20.00 B) $3.00 C) $0.67 D) $1.50

The following information was taken from Slater Company's balance sheet: $\begin{array}{|l|r|} \hline \text { Fixed assets net } & \$ 1,250,000 \\ \hline \text { Long-term liabilities } & 500,000 \\ \hline \text { Total liabilities } & 672,000 \\ \hline \text { Total stockholders' equity } & 1,680,000 \\ \hline \end{array}$ Determine the company's a ratio of fixed assets to long-term liabilities,and b ratio of liabilities to stockholders' equity.Round your answer to one decimal place.

a. @#LAT-DLM& Ratio of tixed assets to long-term l

$\begin{array}{c} \text { Assets }\\ \begin{array}{lr} \text { Cash and short-term investments } & \$ 30,000 \\ \text { Accounts receivable net } & 20,000 \\ \text { Inventory } & 15,000 \\ \text { Property, plant, and equipment } & \underline {185,000} \\ \text { Total assets } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Liabilities and Stockholders' Equity }\\ \begin{array}{lr} \text { Current liablities } & \$ 45,000 \\ \text { Long-term liabilities } & 70,000 \\ \text { Stockholders' equity \_Common } & \underline {135,000} \\ \text { Total liabilities and stockholders' equity } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Income Statement}\\ \begin{array}{lll} \text { Sales } \\ \text { Cost of goods sold } \\ \text { Gross margin } \\ \text { Operating expense: } \\ \text { Interest expense } \\ \text { Net income } \end{array} \begin{array}{lll} \$ 85,000 \\ 45,000 \\ \hline \$ 40,000 \\ 15,000 \\ 5,000 \\ \hline \$ 20,000 \\ \hline \end{array} \end{array}$ $\begin{array}{l} \begin{array}{lll} \text { Number of shares of common stock outstanding}\\ \text { Market price of common stock}\\ \text { Total dividends paid}\\ \text { Cash provided by operations}\\ \end{array} \begin{array}{lll} 6,000 \\ \$ 20 \\ \$ 9,000 \\ \$ 30,000 \end{array} \end{array}$ -What is the rate earned on total assets for Diane Company?

A) 10.0% B) 8.0% C) 0.10% D) 1.0% A) 10.0% B) 8.0% C) 0.10% D) 1.0%

$\begin{array}{c} \text { Assets }\\ \begin{array}{lr} \text { Cash and short-term investments } & \$ 30,000 \\ \text { Accounts receivable net } & 20,000 \\ \text { Inventory } & 15,000 \\ \text { Property, plant, and equipment } & \underline {185,000} \\ \text { Total assets } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Liabilities and Stockholders' Equity }\\ \begin{array}{lr} \text { Current liablities } & \$ 45,000 \\ \text { Long-term liabilities } & 70,000 \\ \text { Stockholders' equity \_Common } & \underline {135,000} \\ \text { Total liabilities and stockholders' equity } & \underline {\$ 250,000} \\ \end{array}\end{array}$ $\begin{array}{c} \text { Income Statement}\\ \begin{array}{lll} \text { Sales } \\ \text { Cost of goods sold } \\ \text { Gross margin } \\ \text { Operating expense: } \\ \text { Interest expense } \\ \text { Net income } \end{array} \begin{array}{lll} \$ 85,000 \\ 45,000 \\ \hline \$ 40,000 \\ 15,000 \\ 5,000 \\ \hline \$ 20,000 \\ \hline \end{array} \end{array}$ $\begin{array}{l} \begin{array}{lll} \text { Number of shares of common stock outstanding}\\ \text { Market price of common stock}\\ \text { Total dividends paid}\\ \text { Cash provided by operations}\\ \end{array} \begin{array}{lll} 6,000 \\ \$ 20 \\ \$ 9,000 \\ \$ 30,000 \end{array} \end{array}$ -What is the price earnings ratio for Diane Company?

A) 8.0 times B) 2.5 times C) 4.0 times D) 6.0 times A) 8.0 times B) 2.5 times C) 4.0 times D) 6.0 times

Exam 15: Financial Statement Analysis

Assets Cash and short-term investments \ 30,000 Accounts receivable net 20,000 Inventory 15,000 Property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liablities \ 45,000 Long-term liabilities 70,000 Stockholders' equity \_Common Total liabilities and stockholders' equity Income Statement Sales Cost of goods sold Gross margin Operating expense: Interest expense Net income \ 85,000 45,000 \ 40,000 15,000 5,000 \ 20,000 Number of shares of common stock outstanding Market price of common stock Total dividends paid Cash provided by operations 6,000 \ 20 \ 9,000 \ 30,000 -What is the dividend yield for Diane Company?

(Multiple Choice)

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Question 141

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $250,000 and interest expense is $20,000 for Year 2,and the market price of common shares is $30,what is the price-earnings ratio on common stock for Year 2? Round intermediate calculation to two decimal places and final answers to one decimal place.

(Multiple Choice)

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Question 142

When a corporation discontinues a segment of its operations at a loss,the loss should be reported as a separate item before income from continuing operations on the income statement.

(True/False)

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Question 143

Revenue and expense data for Bluestem Company are as follows: Year 2 Year 1 Administrative expenses \ Cost of goods sold 350,000 320,000 Income tax 40,000 32,000 Sales 800,000 700,000 Selling expenses 150,000 110,000 a Prepare a comparative income statement,with vertical analysis,stating each item for both years as a percent of sales. b Comment upon significant changes disclosed by the comparative income statement. Round percentages to one decimal place.

(Essay)

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Question 144

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

(True/False)

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Question 145

Which of the following should be classified as an extraordinary item on the income statement?

(Multiple Choice)

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Question 146

The following data are taken from the financial statements: Current Preceding Average accounts receivable net \ 123,000 \ 95,000 Accounts receivable net, end of year 129,012 87,516 Sales on account 950,000 825,000 a. Assuming that credit terms on all sales are n/45, determine for each year 1 the accounts receivable turnover and 2 the number of days' sales in receivables. Round intermediate calculations to whole numbers and final answers to two decimal places. b. Comment on any significant trends revealed by the data.

(Essay)

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Question 147

The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

(True/False)

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Question 148

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

(True/False)

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Question 149

A company reports the following: Determine the number of times interest charges are earned.Round your answer to one decimal place.

(Essay)

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Question 150

Assets Cash and short-term investments \ 30,000 Accounts receivable net 20,000 Inventory 15,000 Property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liablities \ 45,000 Long-term liabilities 70,000 Stockholders' equity \_Common Total liabilities and stockholders' equity Income Statement Sales Cost of goods sold Gross margin Operating expense: Interest expense Net income \ 85,000 45,000 \ 40,000 15,000 5,000 \ 20,000 Number of shares of common stock outstanding Market price of common stock Total dividends paid Cash provided by operations 6,000 \ 20 \ 9,000 \ 30,000 -What are the dividends per common share for Diane Company?

(Multiple Choice)

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Question 151

Which of the following would appear as an extraordinary item on the income statement?

(Multiple Choice)

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Question 152

The following information was taken from Slater Company's balance sheet: Fixed assets net \ 1,250,000 Long-term liabilities 500,000 Total liabilities 672,000 Total stockholders' equity 1,680,000 Determine the company's a ratio of fixed assets to long-term liabilities,and b ratio of liabilities to stockholders' equity.Round your answer to one decimal place.

(Essay)

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Question 153

The following information is available for Meyer Company: Which of the following statements is correct?

(Multiple Choice)

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Question 154

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

(True/False)

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Question 155

Assets Cash and short-term investments \ 30,000 Accounts receivable net 20,000 Inventory 15,000 Property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liablities \ 45,000 Long-term liabilities 70,000 Stockholders' equity \_Common Total liabilities and stockholders' equity Income Statement Sales Cost of goods sold Gross margin Operating expense: Interest expense Net income \ 85,000 45,000 \ 40,000 15,000 5,000 \ 20,000 Number of shares of common stock outstanding Market price of common stock Total dividends paid Cash provided by operations 6,000 \ 20 \ 9,000 \ 30,000 -What is the rate earned on total assets for Diane Company?

(Multiple Choice)

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Question 156

Assets Cash and short-term investments \ 30,000 Accounts receivable net 20,000 Inventory 15,000 Property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liablities \ 45,000 Long-term liabilities 70,000 Stockholders' equity \_Common Total liabilities and stockholders' equity Income Statement Sales Cost of goods sold Gross margin Operating expense: Interest expense Net income \ 85,000 45,000 \ 40,000 15,000 5,000 \ 20,000 Number of shares of common stock outstanding Market price of common stock Total dividends paid Cash provided by operations 6,000 \ 20 \ 9,000 \ 30,000 -What is the price earnings ratio for Diane Company?

(Multiple Choice)

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Question 157

Comparable financial statements are designed to compare the financial statements of two or more corporations.

(True/False)

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Question 158

Vertical analysis refers to comparing the financial statements of a single company over several years.

(True/False)

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Question 159

The balance sheet for Seuss Company at the end of the current fiscal year indicated the following: Bonds payable, 10\% 20-year term \ 5,000,000 Preferred 10\% stock, \ 100 par 1,000,000 Common stock, \ 10 par 2,000,000 Income before income tax was $1,500,000 and income taxes were $200,000 for the current year.Cash dividends paid on common stock during the current year totaled $150,000.The common stock sells for $70 per share at the end of the year. Determine each of the following: a. Number of times interest charges are earned b. Earnings per share on common stock c .Price-earnings ratio d. Dividends per share of common stock e. Dividend yield Round to one decimal place except earnings per share and dividends per share,which should be rounded to two decimal places.

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Question 160

When a corporation discontinues a segment of its operations at a loss,the loss should be reported as a separate item before income from continuing operations on the income statement.

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

Which of the following should be classified as an extraordinary item on the income statement?

The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

A company reports the following: Determine the number of times interest charges are earned.Round your answer to one decimal place.

Which of the following would appear as an extraordinary item on the income statement?

The following information is available for Meyer Company: Which of the following statements is correct?

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

Comparable financial statements are designed to compare the financial statements of two or more corporations.

Vertical analysis refers to comparing the financial statements of a single company over several years.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

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