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Exam 15: Financial Statement Analysis

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Question 51

Multiple Choice

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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 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) None of the above
F) A) and C)

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Question 52

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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:

A) 1.73
B) 1.44
C) 0.69
D) 0.58

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

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Question 53

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Wittels Corporation has provided the following data: $\begin{array}{lrr}&{\text { Year 2 }} & \text { Year 1 } \\\text {Total assets }&\$ 1,253,000 & \$ 1,230,000 \\\text { Total liabilities}&\$ 586,000 & \$ 570,000 \\\text {Total stockholders' equity }&\$ 667,000 & \$ 660,000\end{array}$ In Year 2,the company's net operating income was $42,571,its net income before taxes was $21,571,and its net income was $15,100.The company's equity multiplier is closest to:

An increase in the number of shares of common stock outstanding will increase a company's price-earnings ratio if the market price per share remains unchanged.

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 total assets 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 price-earnings ratio 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 ratio. b.Debt-to-equity ratio.

The times interest earned ratio of Whitney Corporation is 3.0.The interest expense for the year is $21,000,and the corporation's tax rate is 40%.The corporation's after-tax net income must be:

Gambino Corporation has provided the following financial data: Required: a.What is the company's times interest earned ratio 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?

A company's current ratio and its acid-test ratio are both greater than 1.Payment of an account payable would:

Straton 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 $5.56 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?

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 accounts receivable turnover for Year 2 is closest to:

Sand Company has an acid-test ratio of 0.8.Which of the following actions would improve the acid-test ratio?

Falmouth Corporation's debt to equity ratio is 0.6.Current liabilities are $120,000,long term liabilities are $360,000,and working capital is $140,000.Total assets of the corporation must be:

Vertical analysis of financial statements is accomplished by preparing common-size statements.

All other things the same,if a company uses long-term debt to purchase land to develop in the future,the company's return on total assets will decrease.

Feiler Corporation has total current assets of $483,000,total current liabilities of $347,000,total stockholders' equity of $1,057,000,total net plant and equipment of $1,031,000,total assets of $1,514,000,and total liabilities of $457,000.The company's current ratio is closest to:

Dilisio Corporation has provided the following data: Required: Compute the inventory turnover for this year:

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 net profit margin percentage for Year 2 is closest to:

Freiman Corporation's most recent balance sheet and income statement appear below: Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) $\begin{array}{lr}\text { Sales (all on account) }&\$ 1,310 \\\text {Cost of goods sold. }&780 \\\text {Gross margin. }&530 \\\text {Selling and administrative expense }&359 \\\text {Net operating income }&171 \\\text {Interest expense }& 35 \\\text {Net income before taxes }&136 \\\text { income taxes (30\%) }& 41 \\\text {Net income }& 95\end{array}$ -The average sale period for Year 2 is closest to: