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Exam 15: Financial Statement Analysis

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Question 71

Multiple Choice

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Tempel Corporation has provided the following data: The market price of common stock at the end of Year 2 was $2.77 per share.The company's price-earnings ratio for Year 2 is closest to:

A) 9.23
B) 0.35
C) 4.54
D) 13.40

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

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Question 72

Multiple Choice

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Kovack Corporation's net operating income in Year 2 was $66,571,net income before taxes was $46,571,and the net income was $32,600.Total common stock was $120,000 at the end of both Year 2 and Year 1.The par value of common stock is $2 per share.The company's total stockholders' equity at the end of Year 2 amounted to $962,000 and at the end of Year 1 to $930,000.The company declared and paid $600 dividends on common stock.The market price per share was $4.37.The company's dividend yield ratio for Year 2 is closest to:

A) 0.2%
B) 1.3%
C) 1.9%
D) 0.5%

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

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Question 73

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Earnings per share is computed by multiplying net income by the average number of common shares outstanding.

Orem Corporation's current liabilities are $75,000,its long-term liabilities are $225,000,and its working capital is $100,000.If the corporation's debt-to-equity ratio is 0.30,total long-term assets must equal:

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:

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 working capital at the end of Year 2 is:

Rawe Corporation's accounts receivable at the end of Year 2 was $329,000 and its accounts receivable at the end of Year 1 was $280,000.Sales,all on account,amounted to $1,350,000 in Year 2.The company's average collection period for Year 2 is closest to:

Walker Corporation has provided the following financial data: The company's net operating income for Year 2 was $63,615 and its interest expense was $15,000. 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 times interest earned ratio for Year 2? e.What is the company's debt-to-equity ratio at the end of Year 2? f.What is the company's equity multiplier at the end of Year 2?

A high price-earnings ratio means that investors are willing to pay a premium for the company's stock.

Wegener Corporation's most recent balance sheet and income statement appear below: Required: Compute the following for Year 2: a.Working capital. b.Current ratio. c.Acid-test (quick)ratio. d.Accounts receivable turnover. e.Average collection period. f.Inventory turnover. g.Average sale period.

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 dividend payout ratio for Year 2 is closest to:

Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. -The current ratio at the end of Year 2 is closest to:

The dividend payout ratio is equal to the dividend per share divided by the earnings per share.

Mormino Corporation's income statement appears below: $\begin{array}{lr}\text { Income Statement }\\\text {Sales (all on account) }&\$1,240,000\\\text {Cost of goods sold }&730,000\\\text { Gross margin}&510,000\\\text {Operating expenses. }&450,462\\\text {Net operating income }&59,538\\\text {Interest expense }&18,000\\\text {Net income before taxes }&41,538\\\text {Income taxes (35\%) }&14,538\\\text {Net income }&\$27,000\\\end{array}$ The company's gross margin percentage is closest to:

Neef Corporation has provided the following financial data from its balance sheet and income statement: -The company's return on total assets for Year 2 is closest to:

As the accounts receivable turnover ratio decreases,the average collection period increases.

Tweedle Corporation's most recent balance sheet and income statement appear below: -The times interest earned ratio 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 return on equity for Year 2 is closest to:

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 return on total assets for Year 2 is closest to:

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!