Exam 14: Capital Budgeting Decisions

Medina Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,000.The market price of common stock at the end of Year 2 was $1.49 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 net profit margin percentage for Year 2? e.What is the company's gross margin percentage for Year 2? f.What is the company's return on total assets for Year 2? g.What is the company's return on equity for Year 2? h.What is the company's earnings per share for Year 2? i.What is the company's price-earnings ratio for Year 2? j.What is the company's dividend payout ratio for Year 2? k.What is the company's dividend yield ratio for Year 2? l.What is the company's book value per share at the end of Year 2?

The market price of Friden Company's common stock increased from $15 to $18.Earnings per share of common stock remained unchanged.The company's price-earnings ratio would:

All other things the same,those who hold the company's debt (i.e. ,its creditors)would like a low debt-to-equity ratio to provide a buffer of protection.

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?

Macmillan Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $7,200.The market price of common stock at the end of Year 2 was $3.69 per share. The company's current ratio at the end of Year 2 is closest to:

Lasch Corporation has provided the following financial data from its balance sheet and income statement: The company's times interest earned for Year 2 is closest to:

Sperle Corporation has provided the following data concerning its stockholders' equity accounts: Net income for Year 2 was $30,400.Dividends on common stock during Year 2 totaled $6,400.The market price of common stock at the end of Year 2 was $3.08 per share. The company's dividend yield ratio for Year 2 is closest to:

Harris Corporation,a retailer,had cost of goods sold of $290,000 last year.The beginning inventory balance was $26,000 and the ending inventory balance was $24,000.The corporation's inventory turnover was closest to:

Kovack Corporation's net operating income in Year 2 was $66,571,net income before taxes was $46,571,and the net income was $32,600.Total common stock was $120,000 at the end of both Year 2 and Year 1.The par value of common stock is $2 per share.The company's total stockholders' equity at the end of Year 2 amounted to $962,000 and at the end of Year 1 to $930,000.The company declared and paid $600 dividends on common stock.The market price per share was $4.37.The company's dividend yield ratio for Year 2 is closest to:

Goldsmith Corporation has provided the following data: The company's net income in Year 2 was $24,400.The company's book value per share at the end of Year 2 is closest to:

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The accounts receivable turnover for Year 2 is closest to:

If a retailer sells a product whose contribution margin equals the gross margin percentage,the gross margin percentage will be unaffected by the transaction.

Dennisport Corporation has an acid-test ratio of 2.5.It has current liabilities of $40,000 and noncurrent assets of $70,000.The corporation's current assets consist of cash,marketable securities,accounts receivable,prepaid expenses,and inventory;it has no short-term notes receivable.If Dennisport's current ratio is 3.1,its inventory and prepaid expenses must be:

Purchasing marketable securities with cash will have no effect on a company's acid-test ratio.

The formula for total asset turnover is: Total asset turnover = Total assets ÷ Total stockholders' equity.

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The working capital at the end of Year 2 is:

Jester Corporation's most recent income statement appears below: The beginning balance of total assets was $360,000 and the ending balance was $320,000.The return on total assets is closest to:

Data from Dunshee Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. The acid-test ratio at the end of 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 working capital at the end of Year 2 is:

In determining whether a company's financial condition is improving or deteriorating over time,horizontal analysis of financial statement data would be more useful than vertical analysis.