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Exam 15: Financial Statement Analysis

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Question 21

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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 inventory turnover for Year 2 is closest to:

A) 0.92
B) 6.50
C) 1.08
D) 6.24

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

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Question 22

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

A) True
B) False

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Question 23

Multiple Choice

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Burdick Corporation has provided the following financial data from its balance sheet: Sales (all on account) in Year 2 amounted to $1,410,000 and the cost of goods sold was $860,000. -The company's operating cycle for Year 2 is closest to:

Excerpts from Sydner Corporation's most recent balance sheet appear below: -The accounts receivable turnover for Year 2 is closest to:

Crosswhite Corporation's sales last year were $1,270,000, its gross margin was $400,000, its net operating income was $53,769, and its net income was $26,500. The company's net profit margin percentage is closest to:

Laverde Corporation has provided the following data: $\begin{array}{cc}&\text { Year 2 } & \text { Year 1 } \\\text {Inventory. }&\$ 185,000 & \$ 200,000 \\\text {Total assets. }&\$ 1,489,000 & \$ 1,470,000 \\\text {Sales }&\$ 1,220,000 &\end{array}$ 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 earnings per share for Year 2 is closest to:

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:

Issuing common stock will decrease a company's 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 equity multiplier at the end of Year 2 is closest to:

Deacon Corporation has provided the following financial data from its balance sheet and income statement: -The company's equity multiplier at the end of Year 2 is closest to:

Liquidity refers to how quickly an asset can be converted into cash.

Fraction 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?

Data from Lheureux Corporation's most recent balance sheet and the company's income statement appear below: -The debt-to-equity ratio at the end of Year 2 is closest to:

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

Gremel 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?

Kienle Corporation's Year 2 income statement appears below: The company's total assets at the end of Year 2 amounted to $1,359,000 and at the end of Year 1 to $1,320,000. The company's return on total assets 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 current ratio at the end of Year 2 is closest to:

Data from Estrin Corporation's most recent balance sheet and income statement appear below: $\begin{array}{ll}&\text { This Year } & \text { Last Year } \\\text {Accounts receivable. }&\$ 109,000 & \$ 106,000 \\\text {Inventory. }&\$ 139,000 & \$ 158,000 \\\text {Sales on account. }&\$ 787,000 & \\\text {Cost of goods sold }&\$ 501,000 &\end{array}$ The average sale period for this year is closest to:

Deacon Corporation has provided the following financial data from its balance sheet and income statement: -The company's debt-to-equity ratio at the end of Year 2 is closest to: