Question 1

Krast Company has total assets of $160,000 and total liabilities of $70,000.The company's debt-to-equity ratio is closest to:

Accepted Answer

A) 0.56 
B) 0.44 
C) 0.30 
D) 0.78

Question 2

If the assets in which borrowed funds are invested are able to earn a rate of return greater than the interest rate required by the lender,then financial leverage is positive.

Accepted Answer

A) True 
 B)False

Question 3

All debt is considered in the computation of the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 4

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 times interest earned ratio for the year was closest to:

Accepted Answer

A) 11.0 
B) 10.5 
C) 12.0 
D) 22.0

Question 5

Excerpts from Zorra Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
-The acid-test ratio at the end of Year 2 is closest to:

Accepted Answer

A) 1.81 
B) 2.62 
C) 1.69 
D) 1.36

Question 6

Gaskamp Corporation's total current assets are $270,000,its noncurrent assets are $610,000,its total current liabilities are $170,000,its long-term liabilities are $400,000,and its stockholders' equity is $310,000.
Required:
Compute the company's current ratio.Show your work!

Accepted Answer

The answer of Gaskamp Corporation's total current assets are $270,000,its...

Question 7

Data from Adamis Corporation's most recent balance sheet appear below: $\begin{array}{lr}
\text {Cash }&\$ 10,000 \
\text {Marketable securities. }&\$ 24,000 \
\text {Accounts receivable. }&\$ 40,000 \
\text {Inventory }&\$ 55,000 \
\text {Prepaid expenses. }&\$ 10,000 \
\text {Current liabilities. }&\$ 104,000
\end{array}$

The company's acid-test ratio is closest to:

Accepted Answer

A) 0.33 
B) 0.71 
C) 0.81 
D) 0.10

Question 8

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 average collection period for Year 2 is closest to:

Accepted Answer

A) 0.9 days 
B) 70.3 days 
C) 1.1 days 
D) 67.6 days

Question 9

Grasse Company had $160,000 in sales on account last year.The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $12,000.The company's average collection period was closest to:

Accepted Answer

A) 25.09 days 
B) 22.81 days 
C) 50.19 days 
D) 27.38 days

Question 10

Vessels Corporation's net income for the most recent year was $2,532,000.A total of 200,000 shares of common stock and 200,000 shares of preferred stock were outstanding throughout the year.Dividends on common stock were $3.80 per share and dividends on preferred stock were $1.25 per share.The earnings per share of common stock is closest to:

Accepted Answer

A) $12.66 
B) $8.86 
C) $7.61 
D) $11.41

Question 11

Excerpts from Zorra Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
-The accounts receivable turnover for Year 2 is closest to:

Accepted Answer

A) 6.85 
B) 0.87 
C) 1.15 
D) 6.37

Question 12

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 current ratio at December 31 was closest to:

Accepted Answer

A) 1.95 
B) 2.67 
C) 1.33 
D) 2.00

Question 13

Condensed financial statements for Blackhurst Company appear below: $\text { Comparative Balance Sheets }$
  
There were 72,000 shares of common stock outstanding throughout the year.Dividends on common stock amounted to $320,400 and dividends on preferred stock amounted to $45,000.The market value of a share of common stock was $54 at the end of the year.

Required:

On the basis of the information given above,fill in the blanks with the appropriate figures:

Example: The gross margin as a percent of sales would be computed by dividing $2,160,000 by $5,400,000.

a.The earnings per share of common stock for the year would be computed by dividing
_______________ by _________________.
b.The times interest earned for the year would be computed by dividing _______________ by _________________.
c.The price-earnings ratio at the end of the year would be computed by dividing _______________ by _________________.
d.The dividend payout ratio for the year would be computed by dividing _______________ by _________________.
e.The dividend yield ratio for the year would be computed by dividing _______________ by _________________.
f.The return on total assets for the year would be computed by dividing _______________ by _________________.
g.The return on common stockholders' equity for the year would be computed by dividing _______________ by _________________.
h.The acid-test ratio at the end of the year would be computed by dividing _______________ by _________________.
i.The accounts receivable turnover for the year would be computed by dividing _______________ by _________________.
j.The inventory turnover for the year would be computed by dividing _______________ by _________________.
k.The debt-to-equity ratio at the end of the year would be computed by dividing _______________ by _________________.

Accepted Answer

The answer of Condensed financial statements for Blackhurst Company appear...

Question 14

Dieringer Corporation's most recent balance sheet and income statement appear below:  
-The acid-test ratio at the end of Year 2 is closest to:

Accepted Answer

A) 1.69 
B) 1.97 
C) 1.39 
D) 1.52

Question 15

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 times interest earned for Year 2 is closest to:

Accepted Answer

A) 3.40 
B) 8.34 
C) 4.84 
D) 5.84

Question 16

Financial statements for Rarig Company appear below:   
Required:
Compute the following for Year 2:
a.Current ratio.
b.Acid-test ratio.
c.Average collection period.
d.Inventory turnover.
e.Times interest earned.
f.Debt-to-equity ratio.

Accepted Answer

The answer of Financial statements for Rarig Company appear below:...

Question 17

Irastan Company,a retailer,had cost of goods sold of $250,000 last year.The beginning inventory balance was $28,000 and the ending inventory balance was $20,000.The company's average sale period was closest to:

Accepted Answer

A) 40.88 days 
B) 29.20 days 
C) 35.03 days 
D) 70.08 days

Question 18

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 return on common stockholders' equity for Year 2 is closest to:

Accepted Answer

A) 8.70% 
B) 10.17% 
C) 10.14% 
D) 11.86%

Question 19

Last year,Bickham Corporation's dividend on common stock was $8.70 per share and the dividend on preferred stock was $3.80 per share.The market price of common stock at the end of the year was $66.10 per share.
Required:
Compute the dividend yield ratio.Show your work!

Accepted Answer

The answer of Last year,Bickham Corporation's dividend on common stock...

Question 20

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 average sale period for Year 2 is closest to:

Accepted Answer

A) 60.0 days 
B) 35.1 days 
C) 62.4 days 
D) 213.6 days

Exam 14: Financial Statement Analysis

Krast Company has total assets of $160,000 and total liabilities of $70,000.The company's debt-to-equity ratio is closest to:

If the assets in which borrowed funds are invested are able to earn a rate of return greater than the interest rate required by the lender,then financial leverage is positive.

All debt is considered in the computation of the acid-test ratio.

Excerpts from Zorra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850. -The acid-test ratio at the end of Year 2 is closest to:

Gaskamp Corporation's total current assets are $270,000,its noncurrent assets are $610,000,its total current liabilities are $170,000,its long-term liabilities are $400,000,and its stockholders' equity is $310,000. Required: Compute the company's current ratio.Show your work!

Grasse Company had $160,000 in sales on account last year.The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $12,000.The company's average collection period was closest to:

Excerpts from Zorra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850. -The accounts receivable turnover for Year 2 is closest to:

Dieringer Corporation's most recent balance sheet and income statement appear below: -The acid-test ratio at the end of Year 2 is closest to:

Financial statements for Rarig Company appear below: Required: Compute the following for Year 2: a.Current ratio. b.Acid-test ratio. c.Average collection period. d.Inventory turnover. e.Times interest earned. f.Debt-to-equity ratio.

Irastan Company,a retailer,had cost of goods sold of $250,000 last year.The beginning inventory balance was $28,000 and the ending inventory balance was $20,000.The company's average sale period was closest to:

Last year,Bickham Corporation's dividend on common stock was $8.70 per share and the dividend on preferred stock was $3.80 per share.The market price of common stock at the end of the year was $66.10 per share. Required: Compute the dividend yield ratio.Show your work!