Question 1

When fixed costs are included in the cost of goods sold, the gross margin percentage should increase and decrease with sales volume.

Accepted Answer

A) True 
 B)False  True

Question 2

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?

Accepted Answer

a. Times interest earned = Net operating income ÷ Interest expense
= $39,077 ÷ $16,000 = 2.44 (rounded)
b. Debt-to-equity ratio = Liabilities ÷ Stockholders' equity
= $539,000 ÷ $902,000 = 0.60 (rounded)
c. Equity multiplier = Average total assets* ÷ Average stockholders' equity*
= $1,415,500 ÷ $896,000 = 1.58 (rounded)
*Average total assets = ($1,441,000 + $1,390,000) ÷ 2 = $1,415,500
**Average stockholders' equity = ($902,000 + $890,000) ÷ 2 = $896,000
d. Earnings per share = Net Income ÷ Average number of common shares outstanding*
= $15,000 ÷ 60,000 shares = $0.25 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $180,000 ÷ $3 per share = 60,000 shares
e. Price-earnings ratio = Market price per share ÷ Earnings per share
= $2.70 ÷ $0.25 = 10.80 (rounded)
f. Dividend payout ratio = Dividends per share* ÷ Earnings per share
= $0.05 ÷ $0.25 = 20.0% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $3,000 ÷ 60,000 shares = $0.05 per share (rounded)
g. Dividend yield ratio = Dividends per share* ÷ Market price per share
= $0.05 ÷ $2.70 = 1.85% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $3,000 ÷ 60,000 shares = $0.05 per share (rounded)
h. Book value per share = Common stockholders' equity ÷ Number of common shares outstanding*
= $902,000 ÷ 60,000 shares = $15.03 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $180,000 ÷ $3 per share = 60,000 shares

Question 3

Mihok Corporation has provided the following financial data:     Dividends on common stock during Year 2 totaled $5,000. The market price of common stock at the end of Year 2 was $0.97 per share.
Required:
a. What is the company's earnings per share for Year 2?
b. What is the company's price-earnings ratio for Year 2?
c. What is the company's dividend payout ratio for Year 2?
d. What is the company's dividend yield ratio for Year 2?
e. What is the company's book value per share at the end of Year 2?

Accepted Answer

a. Earnings per share = Net Income ÷ Average number of common shares outstanding*
= $10,000 ÷ 100,000 shares = $0.10 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $300,000 ÷ $3 per share = 100,000 shares
b. Price-earnings ratio = Market price per share ÷ Earnings per share
= $0.97 ÷ $0.10 = 9.70 (rounded)
c. Dividend payout ratio = Dividends per share* ÷ Earnings per share
= $0.05 ÷ $0.10 = 50.0% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $5,000 ÷ 100,000 shares = $0.05 per share (rounded)
d. Dividend yield ratio = Dividends per share* ÷ Market price per share
= $0.05 ÷ $0.97 = 5.15% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $5,000 ÷ 100,000 shares = $0.05 per share (rounded)
e. Book value per share = Common stockholders' equity ÷ Number of common shares outstanding*
= $775,000 ÷ 100,000 shares = $7.75 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $300,000 ÷ $3 per share = 100,000 shares

Question 4

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement:   The company's accounts receivable turnover for Year 2 is closest to:

Accepted Answer

A) 1.06 
B) 5.06 
C) 5.21 
D) 0.94 
A) 1.06 
B) 5.06 
C) 5.21 
D) 0.94

Question 5

Liquidity refers to how quickly an asset can be converted into cash.

Accepted Answer

A) True 
 B)False

Question 6

Fraction Corporation has provided the following financial data:   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?

Accepted Answer

a. Times interest earned = Net operating

Question 7

Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1. Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1.   The company's return on equity for Year 2 is closest to:

Accepted Answer

A) 3.02% 
B) 3.77% 
C) 2.11% 
D) 79.14% 
A) 3.02% 
B) 3.77% 
C) 2.11% 
D) 79.14%

Question 8

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 price-earnings ratio for Year 2 is closest to:

Accepted Answer

A) 3.79 
B) 10.58 
C) 0.17 
D) 7.44 
A) 3.79 
B) 10.58 
C) 0.17 
D) 7.44

Question 9

Excerpts from Sydner Corporation's most recent balance sheet appear below:   Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. The accounts receivable turnover for Year 2 is closest to:

Accepted Answer

A) 6.62 
B) 1.10 
C) 6.32 
D) 0.91 
A) 6.62 
B) 1.10 
C) 6.32 
D) 0.91

Question 10

Nickolls Corporation has provided the following financial data:   The company's working capital is:

Accepted Answer

A) $1,215,000 
B) $542,000 
C) $793,000 
D) $709,000 
A) $1,215,000 
B) $542,000 
C) $793,000 
D) $709,000

Question 11

Gambino Corporation has provided the following financial data:     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?

Accepted Answer

a. Times interest earned = Net operating

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Kisselburg Corporation has provided the following financial data:     Dividends on common stock during Year 2 totaled $4,000. The market price of common stock at the end of Year 2 was $5.75 per share.
Required:
a. What is the company's working capital at the end of Year 2?
b. What is the company's current ratio at the end of Year 2?
c. What is the company's acid-test (quick) ratio at the end of Year 2?
d. What is the company's accounts receivable turnover for Year 2?
e. What is the company's average collection period (age of receivables) for Year 2?
f. What is the company's inventory turnover for Year 2?
g. What is the company's average sale period (turnover in days) for Year 2?
h. What is the company's operating cycle for Year 2?
i. What is the company's total asset turnover for Year 2?
j. What is the company's times interest earned for Year 2?
k. What is the company's debt-to-equity ratio at the end of Year 2?
l. What is the company's equity multiplier at the end of Year 2?
m. What is the company's net profit margin percentage for Year 2?
n. What is the company's gross margin percentage for Year 2?
o. What is the company's return on total assets for Year 2?
p. What is the company's return on equity for Year 2?
q. What is the company's earnings per share for Year 2?
r. What is the company's price-earnings ratio for Year 2?
s. What is the company's dividend payout ratio for Year 2?
t. What is the company's dividend yield ratio for Year 2?
u. What is the company's book value per share at the end of Year 2?

Accepted Answer

a. Working capital = Current assets - Cu

Question 14

Dratif Corporation's working capital is $33,000 and its current liabilities are $80,000. The corporation's current ratio is closest to:

Accepted Answer

A) 1.41 
B) 0.59 
C) 3.42 
D) 0.41 
A) 1.41 
B) 0.59 
C) 3.42 
D) 0.41

Question 15

Mahoe Corporation has provided the following financial data:     Dividends on common stock during Year 2 totaled $500. The market price of common stock at the end of Year 2 was $8.06 per share. The company's total asset turnover for Year 2 is closest to:

Accepted Answer

A) 1.25 
B) 0.80 
C) 6.57 
D) 0.15 
A) 1.25 
B) 0.80 
C) 6.57 
D) 0.15

Question 16

Data from Yochem Corporation's most recent balance sheet appear below:   Required:
Compute the company's acid-test ratio. Show your work!

Accepted Answer

Acid-test ratio = Quick assets* ÷ Curren

Question 17

Data from Estrin Corporation's most recent balance sheet and income statement appear below: $$\begin{array} { | l | r | r | } 
\hline & \text { This Y ear } & \text { Last Year } \
\hline \text { Accounts receivable } & \$ 109,000 & \$ 106,000 \
\hline \text { Inventory } & \$ 139,000 & \$ 158,000 \
\hline \text { Sales on account } & \$ 787,000 & \
\hline \text { Cost of goods sold } & \$ 501,000 & \
\hline
\end{array}$$ The average sale period for this year is closest to:

Accepted Answer

A) 101 days 
B) 50 days 
C) 108 days 
D) 45 days 
A) 101 days 
B) 50 days 
C) 108 days 
D) 45 days

Question 18

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 book value per share at the end of Year 2 is closest to:

Accepted Answer

A) $0.39 per share 
B) $15.81 per share 
C) $11.25 per share 
D) $5.45 per share 
A) $0.39 per share 
B) $15.81 per share 
C) $11.25 per share 
D) $5.45 per share

Question 19

Financial statements for Maraby Corporation appear below:     Maraby Corporation's current ratio at the end of Year 2 was closest to:

Accepted Answer

A) 1.34 
B) 1.72 
C) 0.60 
D) 0.44 
A) 1.34 
B) 1.72 
C) 0.60 
D) 0.44

Question 20

Mormino Corporation's income statement appears below:   The company's gross margin percentage is closest to:

Accepted Answer

A) 1888.9% 
B) 5.3% 
C) 41.1% 
D) 69.9% 
A) 1888.9% 
B) 5.3% 
C) 41.1% 
D) 69.9%

When fixed costs are included in the cost of goods sold, the gross margin percentage should increase and decrease with sales volume.

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: The company's accounts receivable turnover for Year 2 is closest to:

Liquidity refers to how quickly an asset can be converted into cash.

Fraction Corporation has provided the following financial data: 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?

Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1. Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1. The company's return on equity for Year 2 is closest to:

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 price-earnings ratio for Year 2 is closest to:

Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. The accounts receivable turnover for Year 2 is closest to:

Nickolls Corporation has provided the following financial data: The company's working capital is:

Gambino Corporation has provided the following financial data: 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?

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

Dratif Corporation's working capital is $33,000 and its current liabilities are $80,000. The corporation's current ratio is closest to:

Mahoe Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $500. The market price of common stock at the end of Year 2 was $8.06 per share. The company's total asset turnover for Year 2 is closest to:

Data from Yochem Corporation's most recent balance sheet appear below: Required: Compute the company's acid-test ratio. Show your work!

Data from Estrin Corporation's most recent balance sheet and income statement appear below: This Y ear Last Year Accounts receivable \ 109,000 \ 106,000 Inventory \ 139,000 \ 158,000 Sales on account \ 787,000 Cost of goods sold \ 501,000 The average sale period for this year is closest to:

Financial statements for Maraby Corporation appear below: Maraby Corporation's current ratio at the end of Year 2 was closest to:

Mormino Corporation's income statement appears below: The company's gross margin percentage is closest to:

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

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Exam 13: Financial Statement Analysis

When fixed costs are included in the cost of goods sold, the gross margin percentage should increase and decrease with sales volume.

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: The company's accounts receivable turnover for Year 2 is closest to:

Liquidity refers to how quickly an asset can be converted into cash.

Fraction Corporation has provided the following financial data: 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?

Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1. Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1. The company's return on equity for Year 2 is closest to:

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 price-earnings ratio for Year 2 is closest to:

Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. The accounts receivable turnover for Year 2 is closest to:

Nickolls Corporation has provided the following financial data: The company's working capital is:

Gambino Corporation has provided the following financial data: 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?

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

Dratif Corporation's working capital is $33,000 and its current liabilities are $80,000. The corporation's current ratio is closest to:

Mahoe Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $500. The market price of common stock at the end of Year 2 was $8.06 per share. The company's total asset turnover for Year 2 is closest to:

Data from Yochem Corporation's most recent balance sheet appear below: Required: Compute the company's acid-test ratio. Show your work!

Data from Estrin Corporation's most recent balance sheet and income statement appear below: This Y ear Last Year Accounts receivable \ 109,000 \ 106,000 Inventory \ 139,000 \ 158,000 Sales on account \ 787,000 Cost of goods sold \ 501,000 The average sale period for this year is closest to:

Financial statements for Maraby Corporation appear below: Maraby Corporation's current ratio at the end of Year 2 was closest to:

Mormino Corporation's income statement appears below: The company's gross margin percentage is closest to:

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

Filters