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Exam 13: Financial Statement Analysis

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Question 91

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Granger Corporation had $180,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $18,000. The corporation's average collection period was closest to:

A) 20.3 days
B) 28.4 days
C) 36.5 days
D) 56.8 days

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

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Question 92

Multiple Choice

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Orem Corporation's current liabilities are $75,000, its long-term liabilities are $225,000, and its working capital is $100,000. If the corporation's debt-to-equity ratio is 0.30, total long-term assets must equal:

A) $1,000,000
B) $1,300,000
C) $1,125,000
D) $1,225,000

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

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Question 93

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Kaloi Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $3,500. The market price of common stock at the end of Year 2 was $7.46 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?

Sapien Corporation has provided the following data for the most recent year: The company's gross margin percentage is closest to:

Smay Corporation has provided the following data: $\begin{array} { | l | r | r | } & \text { This Year } & \text { Last Y ear } \\\hline \text { Accounts receivable } & \$ 107,000 & \$ 108,000 \\\hline \text { Inventory } & \$ 179,000 & \$ 187,000 \\\hline \text { Sales on account } & \$ 654,000 & \\\hline \text { Cost of goods sold } & \$ 461,000 & \\\hline\end{array}$ The accounts receivable turnover for this year is closest to:

Rough Corporation's total assets at the end of Year 2 were $1,247,000 and at the end of Year 1 were $1,270,000. The company's total liabilities at the end of Year 2 were $512,000 and at the end of Year 1 were $550,000. The company's total stockholders' equity at the end of Year 2 was $735,000 and at the end of Year 1 was $720,000. The company's equity multiplier is closest to:

Accounts receivable turnover will normally decrease as a result of:

Irawaddy Company, a retailer, had cost of goods sold of $230,000 last year. The beginning inventory balance was $24,000 and the ending inventory balance was $22,000. The company's average sale period was closest to:

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:

Neef Corporation has provided the following financial data from its balance sheet and income statement: The company's gross margin percentage for Year 2 is closest to:

The formula for the net profit margin percentage is: Net profit margin percentage = Net income ÷ Sales.

Rawe Corporation's accounts receivable at the end of Year 2 was $329,000 and its accounts receivable at the end of Year 1 was $280,000. Sales, all on account, amounted to $1,350,000 in Year 2. The company's average collection period (age of receivables) for Year 2 is closest to:

Weightman Corporation's net operating income in Year 2 was $76,385, net income before taxes was $55,385, and the net income was $36,000. Total common stock was $200,000 at the end of both Year 2 and Year 1. The par value of common stock is $4 per share. The company's total stockholders' equity at the end of Year 2 amounted to $983,000 and at the end of Year 1 to $950,000. The market price per share at the end of Year 2 was $7.92. The company's price-earnings ratio for Year 2 is closest to:

M. K. Berry is the managing director of CE Ltd. a small, family-owned company which manufactures cutlery. His company belongs to a trade association which publishes a monthly magazine. The latest issue of the magazine contains a very brief article based on the analysis of the accounting statements published by the 40 companies which manufacture this type of product. The article contains the following table: CE Ltd's latest financial statements are as follows: The country in which the company operates has no corporate income tax. No dividends were paid during the year. All sales are on account. Required: a. Calculate each of the ratios listed in the magazine article for this year for CE, and comment briefly on CE Ltd's performance in comparison to the industrial averages. b. Explain why it could be misleading to compare CE Ltd's ratios with those taken from the article.

Selling used equipment at book value for cash will:

Symons Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share. The company's dividend payout ratio for Year 2 is closest to:

Jepson Corporation's most recent income statement appears below: Required: Compute the gross margin percentage.

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

A portion of Lapore Corporation's Balance Sheet appears below: The company's debt-to-equity ratio at the end of Year 2 is closest to:

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 return on total assets for Year 2 is closest to: