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Exam 15: Financial Statement Analysis

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Question 61

Multiple Choice

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Gnas Corporation's total current assets are $210,000, its noncurrent assets are $590,000, its total current liabilities are $160,000, its long-term liabilities are $490,000, and its stockholders' equity is $150,000. The current ratio is closest to:

A) 1.31
B) 0.76
C) 0.33
D) 0.36

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

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Question 62

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Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1. Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1. -The company's gross margin percentage for Year 2 is closest to:

A) 4.9%
B) 61.4%
C) 38.1%
D) 2031.9%

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

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Question 63

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The formula for the average sale period is: Average sale period = Accounts receivable turnover ÷ Inventory turnover.

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 earnings per share for Year 2 is closest to:

The times interest earned ratio is based on net income because that is the amount of earnings that is available for making interest payments. Interest expense is deducted before taxes are determined; creditors have first claim on the earnings before taxes are paid.

Deacon 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:

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.

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 current ratio at the end of Year 2 is closest to:

Which of the following is not a source of financial leverage?

Mahoe Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $500. The market price of common stock at the end of Year 2 was $8.06 per share. -The company's operating cycle for Year 2 is closest to:

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 current ratio at the end of Year 2 is closest to:

Wowk Corporation has provided the following financial data: Required: a. What is the company's working capital? b. What is the company's current ratio? c. What is the company's acid-test (quick) ratio?

Rawdon Corporation's net operating income in Year 2 was $52,429, net income before taxes was $34,429, and the net income was $24,100. Total common stock was $360,000 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 $976,000 and at the end of Year 1 to $960,000. The company's earnings per share for Year 2 is closest to:

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: -The company's average sale period (turnover in days) for Year 2 is closest to:

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: -The company's total asset turnover for Year 2 is closest to:

Sperle Corporation has provided the following data concerning its stockholders' equity accounts: Net income for Year 2 was $30,400. Dividends on common stock during Year 2 totaled $6,400. The market price of common stock at the end of Year 2 was $3.08 per share. -The company's dividend payout ratio for 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 equity for Year 2 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 working capital at the end of Year 2 is:

Tempel Corporation has provided the following data: $\begin{array}{ll}&\text { Year 2 } & \text { Year 1 } \\\text {Common stock, \$4 par value }&\$ 240,000 & \$ 240,000 \\\text { Total stockholders' equity. }&\$ 817,000 & \$ 810,000 \\\text {Net operating income. }&\$ 36,714 & \\\text {Net income before taxes }&\$ 17,714 & \\\text { Net income }&\$ 12,400 &\end{array}$ The market price of common stock at the end of Year 2 was $2.77 per share. The company's price-earnings ratio for Year 2 is closest to:

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 return on equity for Year 2 is closest to: