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Exam 15: Financial Statement Analysis

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Question 1

Multiple Choice

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The gross margin percentage is equal to:

A) (Net operating income + Selling and administrative expenses) /Sales
B) Net operating income/Sales
C) Cost of goods sold/Sales
D) Cost of goods sold/Net income

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

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Question 2

Multiple Choice

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The accounts receivable for Note Corporation was $240,000 at the beginning of the year and $260,000 at the end of the year.If the accounts receivable turnover for the year was 8 and 20% of the total sales were cash sales,the total sales for the year were:

A) $2,600,000
B) $2,000,000
C) $2,400,000
D) $2,500,000

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

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Question 3

Multiple Choice

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Norton Inc.could improve its current ratio of 2 by:

Financial statements for Maraby Corporation appear below: -Maraby Corporation's acid-test (quick) ratio at the end of Year 2 was 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 gross margin percentage for Year 2 is closest to:

Abdool Corporation has provided the following financial data: 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 for Year 2? f.What is the company's inventory turnover for Year 2? g.What is the company's average sale period 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?

Leflore Corporation has provided the following data: Dividends on common stock during Year 2 totaled $6,000.The market price of common stock at the end of Year 2 was $1.38 per share.The company's dividend yield ratio for Year 2 is closest to:

McRae Corporation's total current assets are $380,000,its noncurrent assets are $500,000,its total current liabilities are $340,000,its long-term liabilities are $250,000,and its stockholders' equity is $290,000.Working capital is:

Shipley Corporation has provided the following data from its most recent balance sheet: $\begin{array} { l l l } \text { Tatal assets......... } & \$ 760,000 \\\text { Tatal liabilities } \ldots \ldots \ldots & \$ 590,00\\\text { Tatal stackhalders' equity...... } & \$ 170,000\end{array}$ The debt-to-equity ratio is closest to:

Neef Corporation has provided the following financial data from its balance sheet and income statement: -The company's net profit margin percentage for Year 2 is closest to:

Kopas Corporation has provided the following data: $\begin{array}{lrr}&\text { This Year}&\text { Last Year }\\\text { Accounts receivable ....... } & \$ 89,000 & \$ 107,000 \\\text { Inventory .................... } & \$ 160,000 & \$ 156,000 \\\text { Sales on account .......... } & \$ 627,000 & \\\text { Cost of goods sold.......... } & \$ 488,000 &\end{array}$ The inventory turnover for this year is closest to:

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 equity for 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:

Financial statements for Maraby Corporation appear below: -Maraby Corporation's average sale period for Year 2 was 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:

Data from Dunshee Corporation's most recent balance sheet appear below: $\begin{array}{lrr}&\text { Year 2 } & \text { Year 1 } \\\text { Current assets: }\\\text { Cash}&\$ 130 & \$ 100 \\\text { Accounts receivable, net.}&270 & 290 \\\text {Inventory }&90 & 110 \\\text {Prepaid expenses }&10 & 10\\\text { Total current assets. }&\$500&\$510\\\text { Total current liabilities }&\$230&\$220\end{array}$ Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. -The acid-test (quick) ratio at the end of Year 2 is closest to:

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

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 earnings per share for Year 2 is closest to:

The acid-test ratio is usually greater than the current ratio.

Deflorio Corporation's inventory at the end of Year 2 was $156,000 and its inventory at the end of Year 1 was $140,000.The company's total assets at the end of Year 2 were $1,416,000 and its total assets at the end of Year 1 were $1,390,000.Sales amounted to $1,320,000 in Year 2.The company's total asset turnover for Year 2 is closest to: