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Exam 15: Financial Statement Analysis

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Question 31

Multiple Choice

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Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share. -The company's book value per share at the end of the year is closest to:

A) $11.37 per share
B) $7.37 per share
C) $0.19 per share
D) $16.81 per share

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

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Question 32

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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 price-earnings ratio for Year 2 is closest to:

A) 0.76
B) 10.64
C) 16.52
D) 7.73

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

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Question 33

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

If the acid-test ratio is less than one, then paying off some current liabilities with cash will increase the acid-test (quick) ratio.

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: -The company's average collection period (age of receivables) for Year 2 is closest to:

Delfavero Corporation has provided the following data: The company's earnings per share for Year 2 is closest to:

In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.

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

Which one of the following statements about book value per share is most correct?

All other things the same, if long-term debt is exchanged for short-term debt, the debt-to-equity ratio will be unchanged.

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

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

Excerpts from Sydner Corporation's most recent balance sheet appear below: -The acid-test ratio at the end of Year 2 is closest to:

Financial statements for Rardin Corporation appear below: Required: Compute the following for Year 2: a. Current ratio. b. Acid-test ratio. c. Average collection period. d. Inventory turnover. e. Times interest earned. f. Debt-to-equity ratio.

Degollado Corporation's most recent income statement appears below: The beginning balance of total assets was $200,000 and the ending balance was $220,000. Required: Compute the return on total assets. Show your work!

All other things the same, purchasing inventory would decrease the inventory turnover ratio.

The gross margin percentage is computed by dividing the gross margin by net income before interest and taxes.

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

Excerpts from Sydner Corporation's most recent balance sheet appear below: -The average collection period for Year 2 is closest to: