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Exam 15: Financial Statement Analysis

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Question 51

True/False

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To increase total asset turnover, management must either increase sales or reduce total stockholders' equity.

A) True
B) False

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Question 52

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

A) 95.9 days
B) 75.3 days
C) 162.0 days
D) 9.2 days

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

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Question 53

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Accounts receivable turnover will normally decrease as a result of:

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:

Vogelsberg Corporation has provided the following financial data: The company's net operating income in Year 2 was $62,308; its interest expense was $12,000; and its net income was $32,700. Dividends on common stock during Year 2 totaled $2,700. The market price of common stock at the end of Year 2 was $6.37 per share. 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? d. What is the company's earnings per share for Year 2? e. What is the company's price-earnings ratio for Year 2? f. What is the company's dividend payout ratio for Year 2? g. What is the company's dividend yield ratio for Year 2? h. What is the company's book value per share at the end of Year 2?

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:

Kaloi Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $3,500. The market price of common stock at the end of Year 2 was $7.46 per share. Required: a. What is the company's working capital at the end of Year 2? b. What is the company's current ratio at the end of Year 2? c. What is the company's acid-test (quick) ratio at the end of Year 2? d. What is the company's accounts receivable turnover for Year 2? e. What is the company's average collection period (age of receivables) for Year 2? f. What is the company's inventory turnover for Year 2? g. What is the company's average sale period (turnover in days) for Year 2? h. What is the company's operating cycle for Year 2? i. What is the company's total asset turnover for Year 2? j. What is the company's times interest earned for Year 2? k. What is the company's debt-to-equity ratio at the end of Year 2? l. What is the company's equity multiplier at the end of Year 2? m. What is the company's net profit margin percentage for Year 2? n. What is the company's gross margin percentage for Year 2? o. What is the company's return on total assets for Year 2? p. What is the company's return on equity for Year 2?

Mihok Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $5,000. The market price of common stock at the end of Year 2 was $0.97 per share. Required: a. What is the company's earnings per share for Year 2? b. What is the company's price-earnings ratio for Year 2? c. What is the company's dividend payout ratio for Year 2? d. What is the company's dividend yield ratio for Year 2? e. What is the company's book value per share at the end of Year 2?

Mormino Corporation's income statement appears below: $\begin{array}{lr}\text { Income Statement }\\\text { Sales (all on account) }&\$1,240,000\\\text { Cost of goods sold }&730,000\\\text { Gross margin }&510,000\\\text { Operating expenses }&450,000\\\text { Net operating income }&59,538\\\text { Interest expense. }&18,000\\\text { Net income before taxes }&41,538\\\text { Income taxes (35\%) }&14,538\\\text { Net income }&\$27,000\end{array}$ The company's gross margin percentage 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 working capital at the end of Year 2 is:

Fayer Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at the end of Year 2 was $10.88 per share. -The company's debt-to-equity ratio at the end of 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:

Kearin Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at the end of Year 2 was $2.02 per share. -The company's net profit margin percentage 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 price-earnings ratio for Year 2 is closest to:

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 price-earnings ratio for Year 2 is closest to:

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:

Linzey Corporation has provided the following data: $\begin{array}{ll}&\text { Year 2 } & \text { Year 1 } \\\text {Common stock, \$ 2 par value }&\$ 120,000 & \$ 120,000 \\\text {Retained earnings }&\$ 747,000 & \$ 720,000 \\\text {Total stockholders' equity }&\$ 927,000 & \$ 900,000\end{array}$ The company's net income in Year 2 was $33,000. The company's book value per share at the end of Year 2 is closest to:

Younis Corporation's income statement appears below: $\begin{array}{lr}\text { Income Statement }\\\text { Sales (all on account) }&\$1,240,000\\\text { Cost of goods sold }&780,000\\\text { Gross margin }&460,000\\\text { Operating expenses }&416,571\\\text { Net operating income }&43,429\\\text { Interest expense. }&14,000\\\text { Net income before taxes }&29,429\\\text { Income taxes (35\%) }&8,829\\\text { Net income }&\$20,600\end{array}$ The company's net profit margin percentage is closest to:

Hernande Corporation has provided the following data: $\begin{array}{ll}&\text { Year 2 } & \text { Year 1 } \\\text {Common stock, \$4 par value }&\$ 400,000 & \$ 400,000 \\\text {Net operating income. }&\$ 75,429 & \\\text {Net income before taxes }&\$ 61,429 & \\\text {Net income }&\$ 43,000 &\end{array}$ The company's earnings per share 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 company's current ratio is closest to: