59
44) Peartree Company provides the following data:
BALANCE SHEET Dec 31, 2014 Dec 31, 2013
Cash $21,000 $18,000
Accounts receivable, net 31,000 35,000
Inventory 53,000 25,000
PP&E, net 120,000 90,000
Total assets $225,000 $168,000
Additional information:
• Net sales (all on account): $240,000
• Cost of goods sold: $110,000
How much is the accounts receivable turnover for 2014?
A) 7.27
B) 0.76
C) 1.55
D) 7.07
45) Peartree Company provides the following data:
BALANCE SHEET Dec 31, 2014 Dec 31, 2013
Cash $ 21,000 $ 18,000
Accounts receivable, net 31,000 35,000
Inventory 53,000 25,000
PP&E, net 120,000 90,000
Total assets $225,000 $168,000
Accounts payable $4,000 $ 6,000
Accrued liabilities 2,000 1,000
Long-term notes payable 84,000 90,000
Total liabilities $ 90,000 $ 97,000
Common stock $ 30,000 $ 2,000
Retained earnings 113,000 74,000
Treasury stock (8,000) (5,000)
Total stockholders’ equity $135,000 $71,000
Total liabilities and stockholders’equity $225,000 $168,000
What is Peartree’s debt-to-equity ratio at year-end 2014?
A) 0.60
B) 0.92
C) 1.33
D) 0.67
46) Peartree Company provides the following data:
BALANCE SHEET Dec 31, 2014 Dec 31, 2013
Cash $ 21,000 $ 18,000
Accounts receivable, net 31,000 35,000
Inventory 53,000 25,000
PP&E, net 120,000 90,000
Total assets $225,000 $168,000
Accounts payable $4,000 $ 6,000
Accrued liabilities 2,000 1,000
Long-term notes payable 84,000 90,000
Total liabilities $ 90,000 $ 97,000
Common stock $ 30,000 $ 2,000
Retained earnings 113,000 74,000
Treasury stock (8,000) (5,000)
Total stockholders’ equity $135,000 $71,000
Total liabilities and stockholders’equity $225,000 $168,000
What is Peartree’s debt ratio at year-end 2014?
A) 0.40
B) 0.67
C) 4.67
D) 1.00
47) Peartree Company provides the following data:
BALANCE SHEET Dec 31, 2014 Dec 31, 2013
Cash $21,000 $18,000
Accounts receivable, net 31,000 35,000
Inventory 53,000 25,000
PP&E, net 120,000 90,000
Total assets $225,000 $168,000
Additional information:
• Net sales (all on account): $240,000
• Cost of goods sold: $110,000
How much is the asset turnover for 2014?
A) 7.27
B) 1.22
C) 1.55
D) 7.07
48) Peartree Company provides the following data:
BALANCE SHEET Dec 31, 2014 Dec 31, 2013
Cash $21,000 $18,000
Accounts receivable, net 31,000 35,000
Inventory 53,000 25,000
PP&E, net 120,000 90,000
Total assets $225,000 $168,000
Additional information:
• Net sales (all on account): $240,000
• Cost of goods sold: $110,000
• Interest expense: $1,000
• Net income: $49,000
How much is the return on total assets for 2014?
A) 7.27
B) 1.22
C) 0.25
D) 7.07
49) Peartree Company provides the following income statement for the year 2014:
Sales revenue $240,000
Cost of goods sold 110,000
Gross profit $130,000
Operating expenses
Salary expense 45,000
Depreciation expense 12,000
Other operating expenses 23,000
Total operating expenses 80,000
Operating income 50,000
Gain on sale of plant assets 5,000
Interest expense (1,000)
Net income before income tax $54,000
Income tax expense 5,000
Net income (loss) $49,000
How much is the times-interest-earned ratio?
A) 0.02
B) 49.0
C) 50.0
D) 0.25
50) Peartree Company provides the following income statement for the year 2014:
Sales revenue $240,000
Cost of goods sold 110,000
Gross profit $130,000
Operating expenses
Salary expense 45,000
Depreciation expense 12,000
Other operating expenses 23,000
Total operating expenses 80,000
Operating income 50,000
Gain on sale of plant assets 5,000
Interest expense (1,000)
Net income before income tax $54,000
Income tax expense 5,000
Net income (loss) $49,000
How much is the gross profit percentage?
A) 0.38
B) 0.54
C) 1.55
D) 0.46
51) Partridge Company provides the following information for the year 2014:
Net income: $31,200
Market price of common stock: $12.00/share
Dividends paid: $0.80/share
Common stock outstanding at January 1, 2014: 110,000 shares
Common stock outstanding at December 31, 2014: 150,000 shares
(No preferred stock issued)
How much was the earnings per share for 2014?
A) $0.21
B) $0.28
C) $0.24
D) $4.05
52) Partridge Company provides the following information for the year 2014:
Net income: $31,200
Market price of common stock: $12.00/share
Dividends paid: $0.80/share
Common stock outstanding at January 1, 2014: 110,000 shares
Common stock outstanding at December 31, 2014: 150,000 shares
(No preferred stock issued)
How much was the price/earnings ratio for one share of common stock?
A) 3.05
B) 0.50
C) 1.50
D) 50.0
53) Partridge Company provides the following information for the year 2014:
Net income: $31,200
Market price of common stock: $12.00/share
Dividends paid: $0.80/share
Common stock outstanding at January 1, 2014: 110,000 shares
Common stock outstanding at December 31, 2014: 150,000 shares
(No preferred stock issued)
How much was the dividend yield for one share of common stock?
A) $0.067
B) $0.167
C) $0.071
D) $0.385
54) Partridge Company provides the following information for the year 2014:
Net income: $31,200
Market price of common stock: $12.00/share
Dividends paid: $0.80/share
Common stock outstanding at January 1, 2014: 110,000 shares
Common stock outstanding at December 31, 2014: 150,000 shares
(No preferred stock issued)
How much was the dividend payout for one share of common stock?
A) 1.67
B) 3.33
C) 0.30
D) 3.95
55) Partridge Company provides the following information for the year 2014:
Earnings per share $0.24/share
Market price of common stock: $12.00/share
Dividends paid: $0.80/share
(No preferred stock issued)
How much was the dividend payout for one share of common stock?
A) 1.67
B) 3.33
C) 0.30
D) 3.95
56) Days in inventory is a ratio measure that addresses:
A) how well a company is positioned to pay its current liabilities.
B) how quickly a company can collect its receivables.
C) how profitable a company is.
D) how quickly a company can sell its inventory.
57) When comparing one company to another, what kind of information does the gross profit percentage provide?
A) How effective each company is at collecting its receivables
B) How well each company manages the financing of its assets
C) How profitable each company is based on the sale of its products
D) How much profit is generated by a share of stock of each company
58) When comparing one company to another, what kind of information does the accounts receivable turnover
provide?
A) How effective each company is at collecting cash from its credit customers
B) How well each company manages the financing of its assets
C) How profitable each company is based on the sale of its products
D) How much profit is generated by a share of stock of each company
59) What kind of information does a company’s debt ratio provide?
A) What proportion of the company‘s debts are long-term liabilities
B) What proportion of the company‘s assets are financed by debt, as opposed to equity
C) How well a company is positioned to pay off all of its long-term debt
D) How much profit is generated by each share of stock
60) What does the term financial leverage mean?
A) The ability of a company to generate cash flows
B) The amount of profit earned by one share of common stock
C) The ability of a company to pay off its current liabilities
D) The proportion of a company’s total capital that is financed by debt, as opposed to equity
61) What does the debt-to-equity ratio show?
A) The proportion of a company’s total financing that is accomplished by borrowing
B) The amount of profit earned by one share of common stock
C) The ability of a company to pay off its current liabilities
D) The potential for growth in the price of a share of stock
62) What kind of information does a company’s times-interest-earned ratio provide?
A) What proportion of the company‘s debts are long-term liabilities
B) What proportion of the company’s assets are financed by debt, as opposed to equity
C) How well a company is positioned to pay interest expense on its debt
D) How much profit is generated by each share of stock
63) What kind of information does a company’s rate of return on net sales provide?
A) What proportion of each dollar of sales revenue generates net income
B) What proportion of each dollar of sales revenue generates gross profit
C) The proportion of sales returns and allowances to gross sales revenue
D) How effectively a company collects cash on credit sales
64) When comparing two companies, what kind of information does a company’s rate of return on total assets
provide?
A) How much profit each company generates with each dollar of sales
B) How effectively each company uses leverage to finance its business
C) How effectively each company uses assets to generate profits
D) How effectively a company collects cash on credit sales
65) What kind of information does a company’s asset turnover ratio provide?
A) What proportion of each dollar of sales revenue generates net income
B) How often a company acquires new assets
C) How well a company collects cash from its customers
D) The amount of net sales generated by each dollar of assets invested
66) What kind of information does the rate of return on common stockholders’ equity provide?
A) What proportion of each dollar of sales revenue generates net income
B) How much profit a company generates relative to its stockholders’ equity
C) How much profit each shareholder makes when he sells his shares of stock
D) How much merchandise is returned by customers
67) When comparing a company’s results from one year to the next, what kind of information does a company’s
earnings per share figure provide?
A) Whether the company generates more or less profit per sales dollar
B) Whether the market price of a share of stock has gone up or down
C) Whether the company’s total net income has gone up or down
D) Whether the amount of profit generated by one share of stock has gone up or down
68) What kind of information does the dividend yield provide?
A) How much an investor can expect to receive in dividends
B) How often a company pays dividends
C) How much profit each shareholder makes when he sells his shares of stock
D) How much dividend revenue a company earns on its short–term investments
69) What kind of information does the dividend payout ratio provide?
A) How much the dividend is in proportion to the stock‘s market price
B) What proportion of a share’s earnings are paid out in dividends
C) How much profit each shareholder makes when he sells his shares of stock
D) How much dividend revenue a company earns on its short–term investments
70) Which of the following describes the book value per share of common stock?
A) Common equity divided by number of common shares outstanding
B) The current market value of a share of stock
C) The amount of net income per each share of stock
D) The par value of a share of stock
71) Which of the following factors might suggest that a company is having difficulty selling its inventory?
A) An increase in receivables
B) A buildup of inventory balances
C) An increase in total debt
D) An increase in interest expense
72) Which of the following is a “red flag” suggesting that a company may be in trouble?
A) A decline in days in inventory
B) An increase in dividend payout
C) A reduction in inventories
D) Cash flow from operations lower than net income
73) Which of the following is a “red flag” suggesting that a company may be in trouble?
A) A decline in days in inventory
B) An increase in dividend payout
C) A buildup of inventories
D) Cash flow from operations is higher than net income
74) Which of the following is a “red flag” suggesting that a company may be in trouble?
A) Inconsistent movements among sales, inventory, and receivables
B) A reduction in the debt ratio
C) A decrease in inventory levels
D) Cash flow from operations is higher than net income
75) The current ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to collect its receivables
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
76) The acid-test ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to collect its receivables
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
77) The accounts receivable turnover is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to collect its receivables
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
78) The debt ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long–term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
79) The debt-to-equity ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long–term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
80) The rate of return on net sales is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long–term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
81) The asset turnover ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long–term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
82) The rate of return on common stockholders’ equity is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long-term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
83) Earnings per share is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long–term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
84) The price/earnings ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long–term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
85) The dividend yield is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long-term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective
86) The dividend payout ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long-term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor’s perspective