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Exam 15: Financial Statement Analysis

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Question 41

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Financial statements for Maraby Corporation appear below: -Maraby Corporation's inventory turnover for Year 2 was closest to:

A) 11.2
B) 7.8
C) 9.4
D) 13.5

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

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Question 42

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The accounts receivable for Note Corporation was $240,000 at the beginning of the year and $260,000 at the end of the year. If the accounts receivable turnover for the year was 8 and 20% of the total sales were cash sales, the total sales for the year were:

A) $2,600,000
B) $2,000,000
C) $2,400,000
D) $2,500,000

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

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Question 43

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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 total asset turnover for Year 2 is closest to:

Hagle Corporation has provided the following financial data: Required: a. What is the company's accounts receivable turnover for Year 2? b. What is the company's average collection period (age of receivables) for Year 2? c. What is the company's inventory turnover for Year 2? d. What is the company's average sale period (turnover in days) for Year 2? e. What is the company's operating cycle for Year 2? f. What is the company's total asset turnover for Year 2?

Marovich Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $4,000. The market price of common stock at the end of Year 2 was $6.41 per share. Required: a. What is the company's net profit margin percentage for Year 2? b. What is the company's gross margin percentage for Year 2? c. What is the company's return on total assets for Year 2? d. What is the company's return on equity for Year 2? e. What is the company's earnings per share for Year 2? f. What is the company's price-earnings ratio for Year 2? g. What is the company's dividend payout ratio for Year 2? h. What is the company's dividend yield ratio for Year 2? i. What is the company's book value per share at the end of Year 2?

Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The average sale period for Year 2 is closest to:

The price-earnings ratio is determined by dividing market price per share of stock by the earnings per share.

When computing the return on total assets, the interest expense is added back to net income to show what earnings would have been if the company had no debt.

Goldsmith Corporation has provided the following data: $\begin{array}{lcr}&\text { Year 2 } &{\text { Year 1 }} \\\text { Common stock, \$3 par value.}&\$ 270,000 & \$ 270,000 \\\text {Retained earnings }&\$ 419,000 & \$ 400,000 \\\text {Total stockholders' equity. }&\$ 749,000 & \$ 730,000 \\\text {Total liabilities \& stockholders' equity }&\$ 1,291,000 & \$ 1,270,000\end{array}$ The company's net income in Year 2 was $24,400. The company's book value per share at the end of Year 2 is closest to:

Wyand Corporation's net operating income last year was $212,000; its interest expense was $26,000; its total stockholders' equity was $1,000,000; and its total liabilities were $370,000. Required: Compute the following for Year 2: a. Times interest earned. b. Debt-to-equity ratio.

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

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

All other things the same, those who hold the company's debt (i.e., its creditors) would like a low debt-to-equity ratio to provide a buffer of protection.

As the inventory turnover increases, the average sales period decreases.

Cutsinger Corporation has provided the following data from its most recent income statement: $\begin{array}{lr}\text {Net operating income }&\$ 55,000 \\\text {Interest expense }&\$ 43,000 \\\text {Net income before taxes. }&\$ 12,000 \\\text {Income taxes. }&\$ 4,000 \\\text {Net income. }&\$ 8,000\end{array}$ The times interest earned ratio is closest to:

Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The company's working capital is:

Last year Truro Corporation purchased $800,000 of inventory. The cost of goods sold was $750,000 and the ending inventory was $125,000. The inventory turnover for the year was:

A high price-earnings ratio means that investors are willing to pay a premium for the company's stock.

Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The average collection period for Year 2 is closest to:

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 average collection period (age of receivables) for Year 2 is closest to: