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If a company's operating cycle is much longer than its average payment period for suppliers, it creates the need to borrow money to fund its inventories and accounts receivable.

A) True
B) False

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Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share. The company's price-earnings ratio is closest to:


A) 19.79
B) 0.51
C) 8.36
D) 12.53

E) B) and C)
F) A) and D)

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Brill Corporation has provided the following financial data: Brill Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,100. The market price of common stock at the end of Year 2 was $2.32 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? Brill Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,100. The market price of common stock at the end of Year 2 was $2.32 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? Dividends on common stock during Year 2 totaled $2,100. The market price of common stock at the end of Year 2 was $2.32 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?

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a. Times interest earned = Net operating...

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Delfavero Corporation has provided the following data: Delfavero Corporation has provided the following data: The company's earnings per share for Year 2 is closest to: A) $10.33 per share B) $0.52 per share C) $0.34 per share D) $0.79 per share The company's earnings per share for Year 2 is closest to:


A) $10.33 per share
B) $0.52 per share
C) $0.34 per share
D) $0.79 per share

E) B) and C)
F) None of the above

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A common-size financial statement is a vertical analysis in which each financial statement account is expressed as a percentage.

A) True
B) False

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Guttery Corporation has provided the following financial data from its balance sheet: Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's operating cycle for Year 2 is closest to: A) 71.2 days B) 93.5 days C) 18.6 days D) 41.0 days Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000. The company's operating cycle for Year 2 is closest to:


A) 71.2 days
B) 93.5 days
C) 18.6 days
D) 41.0 days

E) A) and D)
F) None of the above

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Deacon Corporation has provided the following financial data from its balance sheet and income statement: Deacon Corporation has provided the following financial data from its balance sheet and income statement: The company's equity multiplier at the end of Year 2 is closest to: A) 0.64 B) 1.65 C) 1.57 D) 0.61 The company's equity multiplier at the end of Year 2 is closest to:


A) 0.64
B) 1.65
C) 1.57
D) 0.61

E) A) and B)
F) A) and C)

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Lasch Corporation has provided the following financial data from its balance sheet and income statement: 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: A) 1.43 B) 3.47 C) 2.43 D) 1.00 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: A) 1.43 B) 3.47 C) 2.43 D) 1.00 The company's times interest earned for Year 2 is closest to:


A) 1.43
B) 3.47
C) 2.43
D) 1.00

E) A) and D)
F) B) and D)

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Macmillan Corporation has provided the following financial data: 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 acid-test (quick) ratio at the end of Year 2 is closest to: A) 1.96 B) 1.41 C) 1.20 D) 1.48 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 acid-test (quick) ratio at the end of Year 2 is closest to: A) 1.96 B) 1.41 C) 1.20 D) 1.48 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 acid-test (quick) ratio at the end of Year 2 is closest to:


A) 1.96
B) 1.41
C) 1.20
D) 1.48

E) A) and D)
F) A) and C)

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Linzey Corporation has provided the following data: Linzey Corporation has provided the following data: The company's net income in Year 2 was $33,000. The company's book value per share at the end of Year 2 is closest to: A) $22.45 per share B) $12.45 per share C) $0.55 per share D) $15.45 per share The company's net income in Year 2 was $33,000. The company's book value per share at the end of Year 2 is closest to:


A) $22.45 per share
B) $12.45 per share
C) $0.55 per share
D) $15.45 per share

E) A) and B)
F) A) and C)

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Dahn Corporation has provided the following financial data: Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's total asset turnover for Year 2 is closest to: A) 10.17 B) 0.10 C) 1.02 D) 0.98 Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's total asset turnover for Year 2 is closest to: A) 10.17 B) 0.10 C) 1.02 D) 0.98 Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's total asset turnover for Year 2 is closest to:


A) 10.17
B) 0.10
C) 1.02
D) 0.98

E) None of the above
F) A) and B)

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Dahn Corporation has provided the following financial data: Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's operating cycle for Year 2 is closest to: A) 66.2 days B) 16.5 days C) 95.3 days D) 45.6 days Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's operating cycle for Year 2 is closest to: A) 66.2 days B) 16.5 days C) 95.3 days D) 45.6 days Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's operating cycle for Year 2 is closest to:


A) 66.2 days
B) 16.5 days
C) 95.3 days
D) 45.6 days

E) B) and C)
F) A) and C)

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All other things the same, if the company purchases equipment on credit, this transaction would have no impact on the company's book value per share.

A) True
B) False

Correct Answer

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Doonan Corporation has provided the following financial data from its balance sheet and income statement: Doonan Corporation has provided the following financial data from its balance sheet and income statement: The market price of common stock at the end of Year 2 was $4.79 per share. The company's earnings per share for Year 2 is closest to: A) $6.33 per share B) $0.29 per share C) $0.45 per share D) $0.62 per share The market price of common stock at the end of Year 2 was $4.79 per share. The company's earnings per share for Year 2 is closest to:


A) $6.33 per share
B) $0.29 per share
C) $0.45 per share
D) $0.62 per share

E) All of the above
F) A) and B)

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Norton Inc. could improve its current ratio of 2 by:


A) paying a previously declared stock dividend.
B) writing off an uncollectible receivable.
C) selling merchandise on credit at a profit.
D) purchasing inventory on credit.

E) A) and B)
F) A) and C)

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Excerpts from Sydner Corporation's most recent balance sheet appear below: 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 inventory turnover for Year 2 is closest to: A) 3.75 B) 1.20 C) 4.09 D) 0.83 Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. The inventory turnover for Year 2 is closest to:


A) 3.75
B) 1.20
C) 4.09
D) 0.83

E) B) and D)
F) All of the above

Correct Answer

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Settles Corporation has provided the following financial data: Settles Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share. The company's earnings per share for Year 2 is closest to: A) $0.31 per share B) $0.47 per share C) $0.79 per share D) $3.88 per share Settles Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share. The company's earnings per share for Year 2 is closest to: A) $0.31 per share B) $0.47 per share C) $0.79 per share D) $3.88 per share Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share. The company's earnings per share for Year 2 is closest to:


A) $0.31 per share
B) $0.47 per share
C) $0.79 per share
D) $3.88 per share

E) A) and D)
F) C) and D)

Correct Answer

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Kienle Corporation's Year 2 income statement appears below: Kienle Corporation's Year 2 income statement appears below: The company's total assets at the end of Year 2 amounted to $1,359,000 and at the end of Year 1 to $1,320,000. The company's return on total assets for Year 2 is closest to: A) 2.48% B) 3.14% C) 2.52% D) 3.10% The company's total assets at the end of Year 2 amounted to $1,359,000 and at the end of Year 1 to $1,320,000. The company's return on total assets for Year 2 is closest to:


A) 2.48%
B) 3.14%
C) 2.52%
D) 3.10%

E) A) and B)
F) A) and C)

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Freiman Corporation's most recent balance sheet and income statement appear below: Freiman Corporation's most recent balance sheet and income statement appear below: The acid-test ratio at the end of Year 2 is closest to: A) 0.96 B) 1.36 C) 1.50 D) 1.93 Freiman Corporation's most recent balance sheet and income statement appear below: The acid-test ratio at the end of Year 2 is closest to: A) 0.96 B) 1.36 C) 1.50 D) 1.93 The acid-test ratio at the end of Year 2 is closest to:


A) 0.96
B) 1.36
C) 1.50
D) 1.93

E) A) and B)
F) A) and D)

Correct Answer

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Buying inventory in large lots to take advantage of quantity discounts can be responsible for a high inventory turnover ratio.

A) True
B) False

Correct Answer

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