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Exam 14: Capital Budgeting Decisions

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Question 41

Multiple Choice

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Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000.Cost of goods sold amounted to $710,000 in Year 2.The company's inventory turnover for Year 2 is closest to:

A) 5.92
B) 1.05
C) 6.07
D) 6.23

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

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Question 42

Multiple Choice

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

A) Bonds payable.
B) Accounts payable.
C) Taxes payable.
D) Prepaid rent.

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

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Question 43

Multiple Choice

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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:

Fongeallaz Corporation's income statement for Year 2 appears below: The company's total stockholders' equity at the end of Year 2 amounted to $841,000 and at the end of Year 1 to $810,000.The company's return on equity for Year 2 is closest to:

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:

Data from Keniston Corporation's most recent balance sheet and income statement appear below: The average collection period for this year is closest to:

Mayfield Corporation has provided the following financial data: The company's working capital is:

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 book value per share at the end of Year 2 is closest to:

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 working capital at the end of Year 2 is:

Acquiring land by taking out a long-term mortgage will not affect the current ratio.

Stimac Corporation has total cash of $210,000,no marketable securities,total current receivables of $281,000,total inventory of $151,000,total prepaid expenses of $53,000,total current assets of $695,000,total current liabilities of $261,000,total stockholders' equity of $1,014,000,total assets of $1,415,000,and total liabilities of $401,000.The company's acid-test (quick) ratio is closest to:

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 equity multiplier at the end of Year 2 is closest to:

Data from Dalpiaz Corporation's most recent balance sheet and income statement appear below: Required: Compute the average collection period for this year:

Wittels Corporation has provided the following data: 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:

Steinkraus Corporation has provided the following data: Required: Compute the accounts receivable turnover for this year.Show your work!

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 acid-test ratio at the end of Year 2 is closest to:

Younis Corporation's income statement appears below: The company's net profit margin percentage is closest to:

Purchasing inventory on credit increases the book value per share of a retailer.

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

If a company's return on assets is substantially lower than its cost of borrowing,then the common stockholders would normally want the company to have a relatively high debt/equity ratio.