Chapter 14 – Analyzing Financial Statements
79. Main Street Company paid out $2.30 in dividends per share and had earnings per share of
$5.00 during 2010. The market price of the stock on December 31, 2010 was $21.00 per
share. There were 15,000 shares of stock outstanding for the entire year. What was the
dividend yield as of December 31, 2010?
80. MusicPod’s earnings per share ratios were $2.47 and $2.07 respectively for 2011 and
2010. MusicPod’s stock was trading at $53.00 and $41.50 per share at the end of 2011 and
2010 respectively. The company paid cash dividends per share of $.85 in 2011 and $.63 in
2010. Total stockholders’ equity was $13,572 million and $11,896 million in 2011 and 2010
respectively. The common shares outstanding were approximately 1,782,000 in both 2011 and
2010. What was MusicPod’s price/earnings ratio for 2011?
Chapter 14 – Analyzing Financial Statements
81. MusicPod’s earnings per share ratios were $2.47 and $2.07 respectively for 2011 and
2010. MusicPod’s stock was trading at $53.00 and $41.50 per share at the end of 2011 and
2010 respectively. The company paid cash dividends per share of $.85 in 2011 and $.63 in
2010. Total stockholders’ equity was $13,572 million and $11,896 million in 2011 and 2010
respectively. The common shares outstanding were approximately 1,782,000 during both
2011 and 2010. What was MusicPod’s dividend yield ratio for 2011?
Chapter 14 – Analyzing Financial Statements
82. Lee Company has provided the following information:
• Cash flow from operating activities, $240,000;
• Net income, $204,000;
• Interest expense, $20,000;
• Interest cash payments, $10,000;
• Income tax payments, $140,000;
• Income tax expense, $136,000.
What was Lee’s cash coverage ratio?
Chapter 14 – Analyzing Financial Statements
83. Lee Company has provided the following information:
• Cash flow from operating activities, $240,000;
• Net income, $204,000;
• Interest expense, $20,000;
• Interest cash payments, $10,000;
• Income tax payments, $140,000;
• Income tax expense, $136,000.
What was Lee’s times interest earned ratio?
Chapter 14 – Analyzing Financial Statements
84. Lee Company has provided the following information:
• Cash flow from operating activities, $240,000;
• Net income, $204,000;
• Interest expense, $20,000;
• Interest cash payments, $10,000;
• Income tax payments, $140,000;
• Income tax expense, $136,000.
What was Lee’s quality of income ratio?
Chapter 14 – Analyzing Financial Statements
85. Lucas Company has provided the following information:
• Cash flow from operating activities, $360,000;
• Net income, $306,000;
• Interest expense, $30,000;
• Interest cash payments, $20,000;
• Income tax payments, $240,000;
• Income tax expense, $246,000.
What was Lucas’ cash coverage ratio?
Chapter 14 – Analyzing Financial Statements
86. Lucas Company has provided the following information:
• Cash flow from operating activities, $360,000;
• Net income, $306,000;
• Interest expense, $30,000;
• Interest cash payments, $20,000;
• Income tax payments, $240,000;
• Income tax expense, $246,000.
What was Lucas’ times interest earned ratio?
Chapter 14 – Analyzing Financial Statements
87. Lucas Company has provided the following information:
• Cash flow from operating activities, $360,000;
• Net income, $306,000;
• Interest expense, $30,000;
• Interest cash payments, $20,000;
• Income tax payments, $240,000;
• Income tax expense, $246,000.
What was Lucas’ quality of income ratio?
88. Which of the following transactions doesn’t affect earnings per share?
Chapter 14 – Analyzing Financial Statements
89. Which of the following transactions increases both the quick and current ratios assuming
that both ratios are greater than 1?
90. Which of the following correctly describes the effect of Mogul Company declaring and
distributing a 10% common stock dividend?
Chapter 14 – Analyzing Financial Statements
91. Which of the following does not correctly describe the effect of Mogul Company
declaring and distributing a 2-for-1 common stock split?
92. Which of the following ratios increases when inventory is sold on account for a price
equal to its original cost?
Chapter 14 – Analyzing Financial Statements
93. Which of the following ratios increases when cash is collected on an account receivable?
94. Which of the following ratios increases when a company switches from FIFO to LIFO
during a period of increasing prices?
Chapter 14 – Analyzing Financial Statements
95. Which of the following transactions decreases the quality of income ratio?
96. The year-end adjusting entry to record bad debt expense will increase which of the
following ratios?
Chapter 14 – Analyzing Financial Statements
97. The year-end adjusting entry to adjust the unearned revenue account for revenue earned,
decreases which of the following ratios?
98. Which of the following ratios are not affected by issuing long-term bonds payable in
exchange for cash?
Chapter 14 – Analyzing Financial Statements
99. The journal entry to record depreciation expense decreases which of the following ratios?
100. The cash payment of a previously declared dividend increases which of the following
ratios?
Chapter 14 – Analyzing Financial Statements
101. Complete the following income statement (both dollar amounts and component
percentages):
Chapter 14 – Analyzing Financial Statements
14–56
102. Packers Corporation reported the following data for the year ended December 31, 2010:
Calculate each of the following ratios:
A. Profit margin
B. Return on assets
C. Return on equity
D. Earnings per share
E. Price/earnings ratio
F. Debt-to-equity ratio
G. Financial leverage percentage
H. Fixed asset turnover ratio
Chapter 14 – Analyzing Financial Statements
103. At the end of 2010, Jared Corporation reported a return on assets of 16%; net income of
$42,000; average total assets of $365,000, and average total liabilities of $165,000. What was
Jared’s financial leverage percentage?
104. At the end of 2010, Doran Corporation reported net income of $70,000, gross sales
revenue of $1,525,000, and sales returns of $125,000. Calculate the profit margin ratio.