King Products Corporation

King Products Corporation
Statement of Financial Position
(in thousands)

\begin{array}{lll}&\text { June } 30\\&\text { Year } 6&\text { Year } 5\\\text { Cash } & \$ 60 & \$ 50 \\\text { Marketable securities (at market) } & 40 & 30 \\\text { Accounts receivable (net) } & 90 & 60 \\\text { Inventories (at lower of cost or market) } & 120 & 100 \\\text { Prepaid items } & {30} & 40\\\text { Total current assets }&\$340&\$280\\\text { Long-term investments (at cost) } & 50 & 40 \\\text { Land (at cost) } & 150 & 150 \\\text { Building (net) } & 160 & 180 \\\text { Equipment (net) } & 190 & 200 \\\text { Patents (net) } & 70 & 34\\ \text {Gondwill (net) }&40&26\\\text { Total long-term assets }&\$660&\$630\\\text { Total assets }&\$1,000&\$910\\\text { Notes payable } & \$ 46 & \$ 24 \\\text { Accounts payable } & 94 & 56 \\\text { Accrued interest } & 30 & 30\\(\text { Total current liabilities }&\$170&\$110\\ \text {Notes payable, \( 10 \% \) due \( 12 / 31 / \) Year 12 }&20 & 20 \\ \text {Bonds payable, \( 12 \% \) due \( 6 / 30 / \) Year 15 }&30 & 30 \\ \text {Total long-term debt }&\$50&\$50\\ \text {Total liabilities }&\$220&\$160\\ \text { \text { Preferred stock- } 5 \% \text { cumulative, } \$ 100 \text { par, non-participating, authorized, issued }}&200&200\\ \text {and outstanding, 2,000 shares }\\\text { Common stock- } \$ 10 \text { par, } 40,000 \text { shares authorized, } 30,000 \text { shares issued and }&300&300\\\text { outstanding }\\\text { Additional paid-in capital--common } & 150 & 150 \\\text { Retained earnings } & 130 & 100\\\text { Total shareholders' equity }&\$780&\$750\\\text { Total liabilities and shareholders' equity }&\$1,000&\$910\end{array}

King Products Corporation
Income Statement
For the year ended June 30
(in thousands)

\begin{array}{lc}&\text { Year } 6\\\text { Net sales } & \$ 600 \\\text { Costs and expenses } & \\\text { Cost of goods sold } & 440 \\\text { Selling, general, and administrative } & 60 \\\text { Interest expense } & 10\\\text { Income before taxes } & \$ 90 \\\text { Income taxes } & 45\\\text { Net income }&\$45\end{array}

(CMA adapted, Dec 96 #16) Refer to the King Products Corporation example.King Products Corporation's accounts receivable turnover for the fiscal year ended at June 30, Year 6, was
A)4.9
B)5.9
C)6.7
D)8.0
E)none of the above

Analysts Use Measures of Long-Term _____ to Evaluate a Firm's

Multiple Choice

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified