Question 1

Financial statements for Orange Company appear below:   Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends.
The market price of a share of common stock on December 31, Year 2 was $100.

-Orange Company's accounts receivable turnover for Year 2 was closest to:

Accepted Answer

A) 15.7 
B) 11.0 
C) 17.7 
D) 12.4

Question 2

Fraser Company had $130,000 in sales on account last year.The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $14,000.The company's accounts receivable turnover was closest to:

Accepted Answer

A) 5.42 
B) 13.00 
C) 9.29 
D) 10.83

Question 3

Financial statements for Harwich Company for the most recent year appear below:   The balances in the Cash, Accounts Receivable, Inventory, Bonds Payable, Common Stock, and Additional Paid-In Capital accounts are unchanged from the beginning of the year. A $0.75 per share dividend was declared and paid during the year. On December 31, Harwich Company's common stock was trading at $24.00 per share.
-Harwich Company's inventory turnover ratio for the year was closest to:

Accepted Answer

A) 8 
B) 3 
C) 5 
D) 7.5

Question 4

Heningburg Corporation's total current assets are $230,000,its noncurrent assets are $530,000,its total current liabilities are $140,000,its long-term liabilities are $370,000,and its stockholders' equity is $250,000.
Required:
Compute the company's working capital.Show your work!

Accepted Answer

The answer of Heningburg Corporation's total current assets are $230,000,its...

Question 5

Ladabouche Corporation's total current assets are $390,000,its noncurrent assets are $630,000,its total current liabilities are $330,000,its long-term liabilities are $420,000,and its stockholders' equity is $270,000.The current ratio is closest to:

Accepted Answer

A) 0.85 
B) 0.79 
C) 1.18 
D) 0.62

Question 6

Bonine Corporation has provided the following data: $\begin{array}{lrr}
&\text { This Year } & \text { Last Year } \
\text {Accounts receivable }&\$ 88,000 & \$ 106,000 \
\text { Inventory}&\$ 178,000 & \$ 191,000 \
\text {Sales on account }&\$ 867,000 & \
\text {Cost of goods sold }&\$ 685,000 &
\end{array}$

The accounts receivable turnover for this year is closest to:

Accepted Answer

A) 0.83 
B) 8.94 
C) 9.85 
D) 1.20

Question 7

Zide Corporation's most recent balance sheet and income statement appear below:   
Required:
Compute the following for Year 2:
a.Times interest earned.
b.Debt-to-equity ratio.

Accepted Answer

The answer of Zide Corporation's most recent balance sheet and...

Question 8

Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share.
-The earnings per share of common stock for Year 2 is closest to:

Accepted Answer

A) $0.35 
B) $0.50 
C) $0.30 
D) $0.65

Question 9

Hartzog Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share.
-The current ratio at the end of Year 2 is closest to:

Accepted Answer

A) 2.03 
B) 0.35 
C) 0.75 
D) 0.46

Question 10

Financial statements for Larned Company appear below:   Dividends during Year 2 totaled $263 thousand, of which $12 thousand were preferred dividends.
The market price of a share of common stock on December 31, Year 2 was $160.

-Larned Company's return on common stockholders' equity for Year 2 was closest to:

Accepted Answer

A) 29.8% 
B) 26.9% 
C) 30.9% 
D) 27.9%

Question 11

Financial leverage is positive if the interest rate on debt is lower than the return on total assets.

Accepted Answer

A) True 
 B)False

Question 12

Hick Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $20 thousand. The market price of common stock at the end of Year 2 was $9.57 per share.
-The dividend yield ratio for Year 2 is closest to:

Accepted Answer

A) 1.05% 
B) 4.18% 
C) 75.00% 
D) 3.13%

Question 13

Bedrosian Incorporated has a line of credit from the Belmont National Bank that is due to be renewed on February 1.The bank has requested the company's current Income Statement and Comparative Statements of Financial Position which appear below. Bedrosian Incorporated
Income Statement
Year Ended December 31, This Year
(in thousands)
$\begin{array}{lr}
\text {Revenue }\\text {Sales }&\$ 60,000 \
\text {Other. }&4,500 \
\text {Total revenue }& 64,500 \
\text { Expenses }\
\text {Cost of goods sold  }&40,500 \
\text {Selling and administrative.  }&11,625 \
\text {Depreciation and amortization  }&1,875 \
\text {Interest  }&1,500 \
\text {Total expenses }& 55,500 \
\text { Income before income taxes}&9,000 \
\text {Income taxes. }&3,600 \
\text {Net income }& 5,400 \
\text {Less: Dividends to common stockholders ( $ \$ 3.86 $ per share) }&2,550 \
\text {Net income added to retained earnings }&2,850 \
\text {Retained earnings, beginning of year }&8,550 \
\text {Retained earnings, end of year. }&\$11,400 \\text { Earnings per share }&\$8.18
\end{array}$ Bedrosian Incorporated
Statement of Financial Position
As of December 31
(in thousands)
\(\begin{array}{l}
&\text { This Year}&\text { Last Year }\\text { Assets }\\text { Current assets: }\
\text {Cash and marketable securities }&\$ 1,950 & \$ 1,575 \
\text {Accounts receivable, net. }&3,600 & 3,750 \
\text { Inventories}&4,875 & 4,650 \
\text {Prepaid items }&375 & 225 \
\text {Total current assets }&10,800 & \underline{10,200} \\text { Noncurrent assets: }\
\text {Investments, at cost }&7,950 & 7,950 \
\text {Deposits. }&750 & 600 \
\text {Property, plant, and equipment }&21,000 & 19,500 \
\text {Total assets }& \$ 40,500 & \$ 38,250 \\\text { Liabilities and Shareholders' Equity }\
\text {Short-term loans }&\$ 1,650 & \$ 1,800 \
\text {Accounts payable }&5,400 & 5,325 \
\text {Salaries and wages payable }&1,950 & 2,025 \
\text {Total current liabilities }& 9,000 & 9,150 \
\text {Long-term debt }&12,000 & \underline{12,825} \
\text {Total liabilities }&\underline{21,000} & \underline{21,975} \\text { Shareholders' equity }\
\text {Common stock, at par }&3,300 & 3,150 \
\text {Paid-in capital in excess of par. }&4,800 & 4,575 \
\text {Total paid-in capital. }& 8,100 & 7,725 \
\text {Retained earnings }&11,400 & \underline{8,550} \
\text {Total stockholders' equity }& \underline{19,500} & \underline{16,275} \
\text {Total liabilities and stockholders' equity }& \underline{\$ 40,500} & \underline{\mathbf{\$ 3 8 , 2 5 0}} \
\end{array}\) The bank has also requested that Bedrosian calculate a number of financial ratios.Bedrosian's financial ratios have not yet been calculated for this year,but the company's accounting staff has gathered the following industry averages for the ratios from various sources. $\begin{array}{lr}
&\text { Industry } \
&\text { Averages } \
\text {Return on total assets }&6.4 \% \
\text {Return on common stockholders' equity }&12.5 \% \
\text {Current ratio. }&1.86 \
\text {Acid-test ratio }&0.85 \
\text { Debt-to-equity ratio}&1.23 \
\text {Times interest earned ratio }&7.78 \
\text {Dividend payout ratio. }&39.6 \%
\end{array}$ Required:
a.Calculate the following financial ratios for this year for Bedrosian Incorporated.
1.Return on total assets.
2.Return on common stockholders' equity.
3.Current ratio.
4.Acid-test ratio.
5.Debt-to-equity ratio.
6.Times interest earned.
7.Dividend payout ratio.
b.By comparing the ratios calculated in Requirement A with the industry ratios,evaluate Bedrosian's operations.

Accepted Answer

The answer of Bedrosian Incorporated has a line of credit...

Question 14

Kaelker Corporation has provided the following data: $\begin{array}{lrr}
&\text { This Year } & \text { Last Year } \
\text { Accounts receivable. }&\$ 95,000 & \$ 101,000 \
\text { Inventory. }&\$ 213,000 & \$ 186,000 \
\text { Sales on account }&\$ 854,000 & \
\text { Cost of goods sold }&\$ 671,000 &
\end{array}$

The inventory turnover for this year is closest to:

Accepted Answer

A) 3.36 
B) 0.87 
C) 1.15 
D) 3.15

Question 15

The average stockholders' equity for Horn Co.last year was $2,000,000.Included in this figure was $200,000 of preferred stock.Preferred dividends were $16,000.If the return on common stockholders' equity was 12.5% for the year,net income was:

Accepted Answer

A) $225,000 
B) $250,000 
C) $241,000 
D) $234,000

Question 16

Eaglen Corporation has provided the following data:  Required:
Compute the inventory turnover for this year:

Accepted Answer

The answer of Eaglen Corporation has provided the following data:...

Question 17

Delatrinidad Corporation's net income last year was $7,736,000.The dividend on common stock was $12.60 per share and the dividend on preferred stock was $2.80 per share.The market price of common stock at the end of the year was $53.30 per share.Throughout the year,400,000 shares of common stock and 200,000 shares of preferred stock were outstanding.The dividend payout ratio is closest to:

Accepted Answer

A) 0.70 
B) 0.65 
C) 2.36 
D) 1.87

Question 18

Hartzog Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share.
-The dividend payout ratio for Year 2 is closest to:

Accepted Answer

A) 81.3% 
B) 75.0% 
C) 70.6% 
D) 1250.0%

Question 19

Financial statements for Orange Company appear below:   Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends.
The market price of a share of common stock on December 31, Year 2 was $100.

-Orange Company's times interest earned for Year 2 was closest to:

Accepted Answer

A) 16.0 
B) 28.3 
C) 17.0 
D) 11.2

Question 20

Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share.
-The book value per share at the end of Year 2 is closest to:

Accepted Answer

A) $0.30 
B) $3.05 
C) $6.10 
D) $3.55

Exam 14: Financial Statement Analysis

Financial statements for Orange Company appear below: Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $100. -Orange Company's accounts receivable turnover for Year 2 was closest to:

Fraser Company had $130,000 in sales on account last year.The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $14,000.The company's accounts receivable turnover was closest to:

Heningburg Corporation's total current assets are $230,000,its noncurrent assets are $530,000,its total current liabilities are $140,000,its long-term liabilities are $370,000,and its stockholders' equity is $250,000. Required: Compute the company's working capital.Show your work!

Ladabouche Corporation's total current assets are $390,000,its noncurrent assets are $630,000,its total current liabilities are $330,000,its long-term liabilities are $420,000,and its stockholders' equity is $270,000.The current ratio is closest to:

Zide Corporation's most recent balance sheet and income statement appear below: Required: Compute the following for Year 2: a.Times interest earned. b.Debt-to-equity ratio.

Financial leverage is positive if the interest rate on debt is lower than the return on total assets.

The average stockholders' equity for Horn Co.last year was $2,000,000.Included in this figure was $200,000 of preferred stock.Preferred dividends were $16,000.If the return on common stockholders' equity was 12.5% for the year,net income was:

Eaglen Corporation has provided the following data: Required: Compute the inventory turnover for this year:

Financial statements for Orange Company appear below: Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $100. -Orange Company's times interest earned for Year 2 was closest to: