Exhibit 19-2 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c} \text { STAR CORPORATION INCOME STATEMENT} \\ \text {FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS') } \\ \begin{array}{lr} \text { Net Sales } &\quad\quad\quad\quad\quad\quad\quad \$ 1075 \\ \text { Cost of Goods Sold } & \underline {706 }\\ \text { Gross Profit Margin } & 369 \\ \text { Depreciation } & 30 \\ \text { Operating Expense } & 109 \\ \text { Administrative Expense } & \underline {129} \\ \text { Operating Profit } &101\\ \text { Interest }\\ \text {Profit Before Taxes}&\frac{29}{72} \\ \text { Taxes } \\ \text {Net Income }&\$\frac{21}{51} \\ \end{array}\end{array}$ $\begin{array}{c} \text { STAR CORPORATION BALANCE SHEET } \\ \text { FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS) } \\ \begin{array}{lll} \text { ASSETS }\\ \hline\text { Cash } & \$ 69 \\ \text { Accounts receivables } & 233 \\ \text { Inventory } & \underline { 348} \\ \text { Total current assets } &650 \\ \text { Net fixed assets } & \underline { 886} \\ \\ \\ \\ \\ \text { Total assets }& \$ 1536\\ \end{array} \begin{array}{lll} \text { LIABILITIES }\\ \hline\text { Notes payable } & \$ 231 \\ \text { Accounts payable } & 146 \\ \text { Accruals } & \underline { 31} \\ \text { Total current liabilities } & 408 \\ \text { Long term debt } & 318\\ \text { Common stock ( } \$ 1.50 \text { par) } & 111\\ \text { Paid in surplus } & 190 \\ \text { Retained earnings } & \underline { 509} \\ \text { Total liabilities and } & \\ \quad \text { Stockholders' equity } & \$ 1536 \end{array} \end{array}$ -Refer to Exhibit 19-2. What was the financial leverage multiplier used in the Star system?

A) 0.852 B) 1.896 C) 1.996 D) 2.054 E) 2.998 A) 0.852 B) 1.896 C) 1.996 D) 2.054 E) 2.998

Exhibit 19-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) Zeco Company has the following financial statements for year ending 12/31/2009. $\begin{array}{lr} \text { Sales } & 1,000,000 \\ \text { Cost of Goods Sold } & \underline{750,000 }\\ \text { Gross Profit } & 250,000 \\ \text { Depreciation } & 100,000 \\ \text { Operating Expenses } & 70,000 \\ \text { Administration Exp. } & \underline{65,000} \\ \text { Operating Profit } & 15,000 \\ \text { Interest Expense }\\ \\ \text { Profit Before Taxes } & \underline{8,000} \\ \text { Taxes } & 7,000 \\ \\ & \underline{2,800} \\ \text { Net Income }& 4,200 \\ \text { Dividends } & 3,200 \\ \end{array}$ $\begin{array}{c} \begin{array}{lll} \text { Assets }\\ \hline \text { Cash } & 50,000 \\ \text { Accounts Receivable } & 250,000 \\ \text { Inventory } & \underline { 325,000} \\ \quad \text { Total Current Assets } & 825,000 \\ \text { Net Fixed Assets } & \underline { 450,000} \\ \text { Total Assets } & 1,275,000\\ \\ \end{array} \begin{array}{lll} \text { Liablities }\\ \hline \text { Notes Payable } & 250,000 \\ \text { Accounts Payable } & \underline { 350,000} \\ \text { Total Current Liab. } & 800,000 \\ \text { Long Term Debt } & 225,000 \\ \text { Common Stock } & 200,000 \\ \text { Retained Earnings } & \underline { 50,000 }\\ \text { Total Liab. \& Earnings } & 1,275,000 \end{array} \end{array}$ The Zeco Company's industry averages are as follows: Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/ Equity = 1.5 -Refer to Exhibit 19-8. Based on this information what are the strengths and concerns of Zeco Company?

A) Zeco needs to lower its leverage and improve profitability and efficiency. B) Zeco needs to increase its leverage and improve efficiency. C) Zeco needs to lower its leverage and improve efficiency. D) Zeco needs to lower its leverage and improve profitability. E) Zeco needs to increase its leverage and improve profitability. A) Zeco needs to lower its leverage and improve profitability and efficiency. B) Zeco needs to increase its leverage and improve efficiency. C) Zeco needs to lower its leverage and improve efficiency. D) Zeco needs to lower its leverage and improve profitability. E) Zeco needs to increase its leverage and improve profitability.

Exhibit 19-2 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c} \text { STAR CORPORATION INCOME STATEMENT} \\ \text {FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS') } \\ \begin{array}{lr} \text { Net Sales } &\quad\quad\quad\quad\quad\quad\quad \$ 1075 \\ \text { Cost of Goods Sold } & \underline {706 }\\ \text { Gross Profit Margin } & 369 \\ \text { Depreciation } & 30 \\ \text { Operating Expense } & 109 \\ \text { Administrative Expense } & \underline {129} \\ \text { Operating Profit } &101\\ \text { Interest }\\ \text {Profit Before Taxes}&\frac{29}{72} \\ \text { Taxes } \\ \text {Net Income }&\$\frac{21}{51} \\ \end{array}\end{array}$ $\begin{array}{c} \text { STAR CORPORATION BALANCE SHEET } \\ \text { FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS) } \\ \begin{array}{lll} \text { ASSETS }\\ \hline\text { Cash } & \$ 69 \\ \text { Accounts receivables } & 233 \\ \text { Inventory } & \underline { 348} \\ \text { Total current assets } &650 \\ \text { Net fixed assets } & \underline { 886} \\ \\ \\ \\ \\ \text { Total assets }& \$ 1536\\ \end{array} \begin{array}{lll} \text { LIABILITIES }\\ \hline\text { Notes payable } & \$ 231 \\ \text { Accounts payable } & 146 \\ \text { Accruals } & \underline { 31} \\ \text { Total current liabilities } & 408 \\ \text { Long term debt } & 318\\ \text { Common stock ( } \$ 1.50 \text { par) } & 111\\ \text { Paid in surplus } & 190 \\ \text { Retained earnings } & \underline { 509} \\ \text { Total liabilities and } & \\ \quad \text { Stockholders' equity } & \$ 1536 \end{array} \end{array}$ -Refer to Exhibit 19-2. What was Star's return on equity in 2009?

A) 5.8% B) 6.3% C) 6.8% D) 7.2% E) 8.1% A) 5.8% B) 6.3% C) 6.8% D) 7.2% E) 8.1%

Exhibit 19-7 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information for the Nelson Corporation. $\begin{array}{lcc} & 2008 & 2009 \\ \hline \text { Net Income } & \$ 1500 & \$ 2000 \\ \text { Depreciation } & \$ 200 & \$ 475 \\ \text { Total Current Assets } & \$ 700 & \$ 900 \\ \text { Total Current Liabilities } & \$ 500 & \$ 800 \end{array}$ During 2009 Nelson Corp. made capital expenditures totaling $500 and disposed property worth $800. -Refer to Exhibit 19-7. The firm's cash flow from operating activities for the year 2009 is

A) $2200 B) $2575 C) $2325 D) $2875 E) $1900 A) $2200 B) $2575 C) $2325 D) $2875 E) $1900

Exhibit 19-4 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information about MaxCorp. $\begin{array}{lr} \text { Net sales } & 5000 \\ \text { Total Assets } & 3000 \\ \text { Depreciation } & 260 \\ \text { Net Income } & 600 \\ \text { Long term Debt } & 2000 \\ \text { Equity } & 2160 \\ \text { Dividends } & 160 \end{array}$ -Refer to Exhibit 19-4. Calculate the sustainable growth rate.

A) 27.8% B) 30.4% C) 20.4% D) 24.8% E) 17.8% A) 27.8% B) 30.4% C) 20.4% D) 24.8% E) 17.8%

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c} \text { BMC CORPORATION INCOME STATEMENT } \\ \text {FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS') } \\ \begin{array}{lr} \text { Net Sales } &\quad\quad\quad\quad\quad\quad\quad \$ 1025 \\ \text { Cost of Goods Sold } & \underline {682 }\\ \text { Gross Profit Margin } & 343 \\ \text { Depreciation } & 31 \\ \text { Operating Expense } & 103 \\ \text { Administrative Expense } & \underline {127} \\ \text { Operating Profit } & 82\\ \text { Interest }\\ \text {Profit Before Taxes}&\frac{27}{55} \\ \text { Taxes } \\ \text {Net Income }&\$\frac{17}{38} \\ \end{array}\end{array}$ $\begin{array}{c} \text { BMC CORPORATION BALANCE SHEET } \\ \text { FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS) } \\ \begin{array}{lll} \text { ASSETS }\\ \hline\text { Cash } & \$ 61 \\ \text { Accounts receivables } & 286 \\ \text { Inventory } & \underline { 354} \\ \text { Total current assets } & 701 \\ \text { Net fixed assets } & \underline { 802} \\ \\ \\ \\ \\ \text { Total assets }& \$ 1503\\ \end{array} \begin{array}{lll} \text { LIABILITIES }\\ \hline\text { Notes payable } & \$ 223 \\ \text { Accounts payable } & 152 \\ \text { Accruals } & \underline { 32} \\ \text { Total current liabilities } & 407 \\ \text { Long term debt } & 306 \\ \text { Common stock ( } \$ 1.50 \text { par) } & 102 \\ \text { Paid in surplus } & 226 \\ \text { Retained earnings } & \underline { 462} \\ \text { Total liabilities and } & \\ \quad \text { Stockholders' equity } & \$ 1503 \end{array} \end{array}$ -Refer to Exhibit 19-1. What was BMC's total asset turnover for 2009?

A) 0.23 B) 1.28 C) 1.46 D) 0.87 E) 0.68 A) 0.23 B) 1.28 C) 1.46 D) 0.87 E) 0.68

Exhibit 19-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) Zeco Company has the following financial statements for year ending 12/31/2009. $\begin{array}{lr} \text { Sales } & 1,000,000 \\ \text { Cost of Goods Sold } & \underline{750,000 }\\ \text { Gross Profit } & 250,000 \\ \text { Depreciation } & 100,000 \\ \text { Operating Expenses } & 70,000 \\ \text { Administration Exp. } & \underline{65,000} \\ \text { Operating Profit } & 15,000 \\ \text { Interest Expense }\\ \\ \text { Profit Before Taxes } & \underline{8,000} \\ \text { Taxes } & 7,000 \\ \\ & \underline{2,800} \\ \text { Net Income }& 4,200 \\ \text { Dividends } & 3,200 \\ \end{array}$ $\begin{array}{c} \begin{array}{lll} \text { Assets }\\ \hline \text { Cash } & 50,000 \\ \text { Accounts Receivable } & 250,000 \\ \text { Inventory } & \underline { 325,000} \\ \quad \text { Total Current Assets } & 825,000 \\ \text { Net Fixed Assets } & \underline { 450,000} \\ \text { Total Assets } & 1,275,000\\ \\ \end{array} \begin{array}{lll} \text { Liablities }\\ \hline \text { Notes Payable } & 250,000 \\ \text { Accounts Payable } & \underline { 350,000} \\ \text { Total Current Liab. } & 800,000 \\ \text { Long Term Debt } & 225,000 \\ \text { Common Stock } & 200,000 \\ \text { Retained Earnings } & \underline { 50,000 }\\ \text { Total Liab. \& Earnings } & 1,275,000 \end{array} \end{array}$ The Zeco Company's industry averages are as follows: Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/ Equity = 1.5 -Refer to Exhibit 19-8. Calculate the return on equity (ROE) for Zeco Company and the Industry. $\begin{array}{lcc} & \text { Zeco } & \text { Industry Average } \\ \hline \text { I. } & 1.52 \% & 0.55 \% \\ \text { II. } & 1.68 \% & 5.40 \% \\ \text { III. } & 2.10 \% & 1.80 \% \\ \text { IV. } & 6.00 \% & 5.40 \% \\ \text { V. } & 8.40 \% & 9.32 \% \end{array}$

A) I B) II C) III D) IV E) V A) I B) II C) III D) IV E) V

Exhibit 19-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information about Albermarle Corp. $\begin{array}{lr} \text { Income Statement Data } &\\ \text { Sales } &542 \\ \text { Operating Income } &38 \\ \text { Depreciation } &3 \\ \text { Interest Expense } &3 \\ \text {Pretax Income } &32 \\ \text {Income Taxes } &13 \\ \text { Net Income after tax } &19\\ \\ \text { Balance Sheet Data } &\\ \text { Fixed Assets } &41\\ \text { Total Assets } &245\\ \text {Working Capital } &123\\ \text { Total Debt } &16\\ \text { Equity } &159\\ \end{array}$ -Refer to Exhibit 19-5. Calculate the asset turnover ratio.

A) 2.2 B) 5.6 C) 4.2 D) 2.9 E) 3.9 A) 2.2 B) 5.6 C) 4.2 D) 2.9 E) 3.9

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c} \text { BMC CORPORATION INCOME STATEMENT } \\ \text {FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS') } \\ \begin{array}{lr} \text { Net Sales } &\quad\quad\quad\quad\quad\quad\quad \$ 1025 \\ \text { Cost of Goods Sold } & \underline {682 }\\ \text { Gross Profit Margin } & 343 \\ \text { Depreciation } & 31 \\ \text { Operating Expense } & 103 \\ \text { Administrative Expense } & \underline {127} \\ \text { Operating Profit } & 82\\ \text { Interest }\\ \text {Profit Before Taxes}&\frac{27}{55} \\ \text { Taxes } \\ \text {Net Income }&\$\frac{17}{38} \\ \end{array}\end{array}$ $\begin{array}{c} \text { BMC CORPORATION BALANCE SHEET } \\ \text { FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS) } \\ \begin{array}{lll} \text { ASSETS }\\ \hline\text { Cash } & \$ 61 \\ \text { Accounts receivables } & 286 \\ \text { Inventory } & \underline { 354} \\ \text { Total current assets } & 701 \\ \text { Net fixed assets } & \underline { 802} \\ \\ \\ \\ \\ \text { Total assets }& \$ 1503\\ \end{array} \begin{array}{lll} \text { LIABILITIES }\\ \hline\text { Notes payable } & \$ 223 \\ \text { Accounts payable } & 152 \\ \text { Accruals } & \underline { 32} \\ \text { Total current liabilities } & 407 \\ \text { Long term debt } & 306 \\ \text { Common stock ( } \$ 1.50 \text { par) } & 102 \\ \text { Paid in surplus } & 226 \\ \text { Retained earnings } & \underline { 462} \\ \text { Total liabilities and } & \\ \quad \text { Stockholders' equity } & \$ 1503 \end{array} \end{array}$ -Refer to Exhibit 19-1. What was BMC's fixed asset turnover ratio?

A) 0.680 B) 0.780 C) 1.278 D) 1.874 E) 8.220 A) 0.680 B) 0.780 C) 1.278 D) 1.874 E) 8.220

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c} \text { BMC CORPORATION INCOME STATEMENT } \\ \text {FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS') } \\ \begin{array}{lr} \text { Net Sales } &\quad\quad\quad\quad\quad\quad\quad \$ 1025 \\ \text { Cost of Goods Sold } & \underline {682 }\\ \text { Gross Profit Margin } & 343 \\ \text { Depreciation } & 31 \\ \text { Operating Expense } & 103 \\ \text { Administrative Expense } & \underline {127} \\ \text { Operating Profit } & 82\\ \text { Interest }\\ \text {Profit Before Taxes}&\frac{27}{55} \\ \text { Taxes } \\ \text {Net Income }&\$\frac{17}{38} \\ \end{array}\end{array}$ $\begin{array}{c} \text { BMC CORPORATION BALANCE SHEET } \\ \text { FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS) } \\ \begin{array}{lll} \text { ASSETS }\\ \hline\text { Cash } & \$ 61 \\ \text { Accounts receivables } & 286 \\ \text { Inventory } & \underline { 354} \\ \text { Total current assets } & 701 \\ \text { Net fixed assets } & \underline { 802} \\ \\ \\ \\ \\ \text { Total assets }& \$ 1503\\ \end{array} \begin{array}{lll} \text { LIABILITIES }\\ \hline\text { Notes payable } & \$ 223 \\ \text { Accounts payable } & 152 \\ \text { Accruals } & \underline { 32} \\ \text { Total current liabilities } & 407 \\ \text { Long term debt } & 306 \\ \text { Common stock ( } \$ 1.50 \text { par) } & 102 \\ \text { Paid in surplus } & 226 \\ \text { Retained earnings } & \underline { 462} \\ \text { Total liabilities and } & \\ \quad \text { Stockholders' equity } & \$ 1503 \end{array} \end{array}$ -Refer to Exhibit 19-1. What is BMC's traditional cash flow?

A) 69 B) 86 C) 38 D) 55 E) 701 A) 69 B) 86 C) 38 D) 55 E) 701

Exhibit 19-6 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information for the Klandy Corporation. $\begin{array}{lcc} & 2008 & 2009 \\ \hline \text { Net Income } & \$ 1200 & \$ 1500 \\ \text { Depreciation } & \$ 200 & \$ 300 \\ \text { Total Current Assets } & \$ 700 & \$ 900 \\ \text { Total Current Liabilities } & \$ 500 & \$ 800 \end{array}$ During 2009 Klandy Corp. made capital expenditures totaling $500 and disposed property worth $400. -Refer to Exhibit 19-6. What is the firm's cash flow from operating activities for the year 2009?

A) $2100 B) $1900 C) $1800 D) $1700 E) $1600 A) $2100 B) $1900 C) $1800 D) $1700 E) $1600

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c} \text { BMC CORPORATION INCOME STATEMENT } \\ \text {FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS') } \\ \begin{array}{lr} \text { Net Sales } &\quad\quad\quad\quad\quad\quad\quad \$ 1025 \\ \text { Cost of Goods Sold } & \underline {682 }\\ \text { Gross Profit Margin } & 343 \\ \text { Depreciation } & 31 \\ \text { Operating Expense } & 103 \\ \text { Administrative Expense } & \underline {127} \\ \text { Operating Profit } & 82\\ \text { Interest }\\ \text {Profit Before Taxes}&\frac{27}{55} \\ \text { Taxes } \\ \text {Net Income }&\$\frac{17}{38} \\ \end{array}\end{array}$ $\begin{array}{c} \text { BMC CORPORATION BALANCE SHEET } \\ \text { FISCAL YEAR ENDING 12/31/2009 } \\ \text { (DOLLARS IN THOUSANDS) } \\ \begin{array}{lll} \text { ASSETS }\\ \hline\text { Cash } & \$ 61 \\ \text { Accounts receivables } & 286 \\ \text { Inventory } & \underline { 354} \\ \text { Total current assets } & 701 \\ \text { Net fixed assets } & \underline { 802} \\ \\ \\ \\ \\ \text { Total assets }& \$ 1503\\ \end{array} \begin{array}{lll} \text { LIABILITIES }\\ \hline\text { Notes payable } & \$ 223 \\ \text { Accounts payable } & 152 \\ \text { Accruals } & \underline { 32} \\ \text { Total current liabilities } & 407 \\ \text { Long term debt } & 306 \\ \text { Common stock ( } \$ 1.50 \text { par) } & 102 \\ \text { Paid in surplus } & 226 \\ \text { Retained earnings } & \underline { 462} \\ \text { Total liabilities and } & \\ \quad \text { Stockholders' equity } & \$ 1503 \end{array} \end{array}$ -Refer to Exhibit 19-1. What was BMC's interest coverage for 2009?

A) 6.82 B) 3.04 C) 2.74 D) 2.04 E) 1.41 A) 6.82 B) 3.04 C) 2.74 D) 2.04 E) 1.41

Exam 19: Analysis of Financial Statements

Exhibit 19-2 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS') Net Sales \ 1075 Cost of Goods Sold Gross Profit Margin 369 Depreciation 30 Operating Expense 109 Administrative Expense Operating Profit 101 Interest Profit Before Taxes Taxes Net Income frac 21 51 STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS) ASSETS Cash \ 69 Accounts receivables 233 Inventory Total current assets 650 Net fixed assets Total assets \ 1536 LIABILITIES Notes payable \ 231 Accounts payable 146 Accruals Total current liabilities 408 Long term debt 318 Common stock ( \ 1.50 par) 111 Paid in surplus 190 Retained earnings Total liabilities and Stockholders' equity \ 1536 -Refer to Exhibit 19-2. What was the financial leverage multiplier used in the Star system?

(Multiple Choice)

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Question 41

Exhibit 19-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) Zeco Company has the following financial statements for year ending 12/31/2009. Sales 1,000,000 Cost of Goods Sold Gross Profit 250,000 Depreciation 100,000 Operating Expenses 70,000 Administration Exp. Operating Profit 15,000 Interest Expense Profit Before Taxes Taxes 7,000 Net Income 4,200 Dividends 3,200 Assets Cash 50,000 Accounts Receivable 250,000 Inventory Total Current Assets 825,000 Net Fixed Assets Total Assets 1,275,000 Liablities Notes Payable 250,000 Accounts Payable Total Current Liab. 800,000 Long Term Debt 225,000 Common Stock 200,000 Retained Earnings Total Liab. \& Earnings 1,275,000 The Zeco Company's industry averages are as follows: Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/ Equity = 1.5 -Refer to Exhibit 19-8. Based on this information what are the strengths and concerns of Zeco Company?

(Multiple Choice)

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Question 42

Determinants of market liquidity include all except the

(Multiple Choice)

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Question 43

Exhibit 19-2 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS') Net Sales \ 1075 Cost of Goods Sold Gross Profit Margin 369 Depreciation 30 Operating Expense 109 Administrative Expense Operating Profit 101 Interest Profit Before Taxes Taxes Net Income frac 21 51 STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS) ASSETS Cash \ 69 Accounts receivables 233 Inventory Total current assets 650 Net fixed assets Total assets \ 1536 LIABILITIES Notes payable \ 231 Accounts payable 146 Accruals Total current liabilities 408 Long term debt 318 Common stock ( \ 1.50 par) 111 Paid in surplus 190 Retained earnings Total liabilities and Stockholders' equity \ 1536 -Refer to Exhibit 19-2. What was Star's return on equity in 2009?

(Multiple Choice)

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Question 44

Exhibit 19-7 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information for the Nelson Corporation. 2008 2009 Net Income \ 1500 \ 2000 Depreciation \ 200 \ 475 Total Current Assets \ 700 \ 900 Total Current Liabilities \ 500 \ 800 During 2009 Nelson Corp. made capital expenditures totaling $500 and disposed property worth $800. -Refer to Exhibit 19-7. The firm's cash flow from operating activities for the year 2009 is

(Multiple Choice)

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Question 45

Exhibit 19-4 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information about MaxCorp. Net sales 5000 Total Assets 3000 Depreciation 260 Net Income 600 Long term Debt 2000 Equity 2160 Dividends 160 -Refer to Exhibit 19-4. Calculate the sustainable growth rate.

(Multiple Choice)

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Question 46

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS') Net Sales \ 1025 Cost of Goods Sold Gross Profit Margin 343 Depreciation 31 Operating Expense 103 Administrative Expense Operating Profit 82 Interest Profit Before Taxes Taxes Net Income frac 17 38 BMC CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS) ASSETS Cash \ 61 Accounts receivables 286 Inventory Total current assets 701 Net fixed assets Total assets \ 1503 LIABILITIES Notes payable \ 223 Accounts payable 152 Accruals Total current liabilities 407 Long term debt 306 Common stock ( \ 1.50 par) 102 Paid in surplus 226 Retained earnings Total liabilities and Stockholders' equity \ 1503 -Refer to Exhibit 19-1. What was BMC's total asset turnover for 2009?

(Multiple Choice)

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Question 47

Exhibit 19-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) Zeco Company has the following financial statements for year ending 12/31/2009. Sales 1,000,000 Cost of Goods Sold Gross Profit 250,000 Depreciation 100,000 Operating Expenses 70,000 Administration Exp. Operating Profit 15,000 Interest Expense Profit Before Taxes Taxes 7,000 Net Income 4,200 Dividends 3,200 Assets Cash 50,000 Accounts Receivable 250,000 Inventory Total Current Assets 825,000 Net Fixed Assets Total Assets 1,275,000 Liablities Notes Payable 250,000 Accounts Payable Total Current Liab. 800,000 Long Term Debt 225,000 Common Stock 200,000 Retained Earnings Total Liab. \& Earnings 1,275,000 The Zeco Company's industry averages are as follows: Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/ Equity = 1.5 -Refer to Exhibit 19-8. Calculate the return on equity (ROE) for Zeco Company and the Industry. Zeco Industry Average I. 1.52\% 0.55\% II. 1.68\% 5.40\% III. 2.10\% 1.80\% IV. 6.00\% 5.40\% V. 8.40\% 9.32\%

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Question 48

Exhibit 19-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information about Albermarle Corp. Income Statement Data Sales 542 Operating Income 38 Depreciation 3 Interest Expense 3 Pretax Income 32 Income Taxes 13 Net Income after tax 19 Balance Sheet Data Fixed Assets 41 Total Assets 245 Working Capital 123 Total Debt 16 Equity 159 -Refer to Exhibit 19-5. Calculate the asset turnover ratio.

(Multiple Choice)

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Question 49

In common size analysis all assets and liabilities on the balance sheet are divided by total sales.

(True/False)

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Question 50

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS') Net Sales \ 1025 Cost of Goods Sold Gross Profit Margin 343 Depreciation 31 Operating Expense 103 Administrative Expense Operating Profit 82 Interest Profit Before Taxes Taxes Net Income frac 17 38 BMC CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS) ASSETS Cash \ 61 Accounts receivables 286 Inventory Total current assets 701 Net fixed assets Total assets \ 1503 LIABILITIES Notes payable \ 223 Accounts payable 152 Accruals Total current liabilities 407 Long term debt 306 Common stock ( \ 1.50 par) 102 Paid in surplus 226 Retained earnings Total liabilities and Stockholders' equity \ 1503 -Refer to Exhibit 19-1. What was BMC's fixed asset turnover ratio?

(Multiple Choice)

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Question 51

A common-size balance sheet expresses all balance sheet items

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Question 52

The market liquidity of a security can be measured using

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Question 53

The current ratio, receivables turnover and total asset turnover are measures of internal liquidity.

(True/False)

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Question 54

Traditional cash flow and Free cash flow are equivalent concepts.

(True/False)

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(91)

Question 55

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS') Net Sales \ 1025 Cost of Goods Sold Gross Profit Margin 343 Depreciation 31 Operating Expense 103 Administrative Expense Operating Profit 82 Interest Profit Before Taxes Taxes Net Income frac 17 38 BMC CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS) ASSETS Cash \ 61 Accounts receivables 286 Inventory Total current assets 701 Net fixed assets Total assets \ 1503 LIABILITIES Notes payable \ 223 Accounts payable 152 Accruals Total current liabilities 407 Long term debt 306 Common stock ( \ 1.50 par) 102 Paid in surplus 226 Retained earnings Total liabilities and Stockholders' equity \ 1503 -Refer to Exhibit 19-1. What is BMC's traditional cash flow?

(Multiple Choice)

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(79)

Question 56

Exhibit 19-6 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) You are provided with the following information for the Klandy Corporation. 2008 2009 Net Income \ 1200 \ 1500 Depreciation \ 200 \ 300 Total Current Assets \ 700 \ 900 Total Current Liabilities \ 500 \ 800 During 2009 Klandy Corp. made capital expenditures totaling $500 and disposed property worth $400. -Refer to Exhibit 19-6. What is the firm's cash flow from operating activities for the year 2009?

(Multiple Choice)

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Question 57

Business risk is a function of

(Multiple Choice)

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(74)

Question 58

Exhibit 19-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS') Net Sales \ 1025 Cost of Goods Sold Gross Profit Margin 343 Depreciation 31 Operating Expense 103 Administrative Expense Operating Profit 82 Interest Profit Before Taxes Taxes Net Income frac 17 38 BMC CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2009 (DOLLARS IN THOUSANDS) ASSETS Cash \ 61 Accounts receivables 286 Inventory Total current assets 701 Net fixed assets Total assets \ 1503 LIABILITIES Notes payable \ 223 Accounts payable 152 Accruals Total current liabilities 407 Long term debt 306 Common stock ( \ 1.50 par) 102 Paid in surplus 226 Retained earnings Total liabilities and Stockholders' equity \ 1503 -Refer to Exhibit 19-1. What was BMC's interest coverage for 2009?

(Multiple Choice)

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(84)

Question 59

Some factors the determine business risk include sales variability and debt to equity ratio.

(True/False)

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Question 60

Determinants of market liquidity include all except the

In common size analysis all assets and liabilities on the balance sheet are divided by total sales.

A common-size balance sheet expresses all balance sheet items

The market liquidity of a security can be measured using

The current ratio, receivables turnover and total asset turnover are measures of internal liquidity.

Traditional cash flow and Free cash flow are equivalent concepts.

Business risk is a function of

Some factors the determine business risk include sales variability and debt to equity ratio.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

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