21
58) The market price of Friden Company’s common stock increased from $15 to $18. Earnings per
share of common stock remained unchanged. The company’s price-earnings ratio would:
A) increase.
B) decrease.
C) remain unchanged.
D) impossible to determine.
59) The Seabury Corporation has a current ratio of 3.5 and an acid-test ratio of 2.8. The
corporation’s current assets consist of cash, marketable securities, accounts receivable, and
inventories. Inventory equals $49,000. Seabury Corporation’s current liabilities must be:
A) $70,000
B) $100,000
C) $49,000
D) $125,000
60) Data from Fontecchio Corporation’s most recent balance sheet appear below:
Cash
$
18,000
Marketable securities
$
24,000
Accounts receivable
$
39,000
Short-term notes receivable
$
0
Inventory
$
60,000
Prepaid expenses
$
14,000
Current liabilities
$
120,000
The corporation’s acid-test ratio is closest to:
A) 0.35
B) 0.15
C) 0.68
D) 0.79
61) Feiler Corporation has total current assets of $483,000, total current liabilities of $347,000,
total stockholders’ equity of $1,057,000, total plant and equipment (net) of $1,031,000, total assets
of $1,514,000, and total liabilities of $457,000.The company’s current ratio is closest to:
A) 0.32
B) 0.30
C) 1.39
D) 0.95
62) Gnas Corporation’s total current assets are $210,000, its noncurrent assets are $590,000, its
total current liabilities are $160,000, its long-term liabilities are $490,000, and its stockholders’
equity is $150,000. The current ratio is closest to:
A) 1.31
B) 0.76
C) 0.33
D) 0.36
63) Dratif Corporation’s working capital is $33,000 and its current liabilities are $80,000. The
corporation’s current ratio is closest to:
A) 1.41
B) 0.59
C) 3.42
D) 0.41
64) Dennisport Corporation has an acid-test ratio of 2.5. It has current liabilities of $40,000 and
noncurrent assets of $70,000. The corporation’s current assets consist of cash, marketable
securities, accounts receivable, prepaid expenses, and inventory; it has no short-term notes
receivable. If Dennisport’s current ratio is 3.1, its inventory and prepaid expenses must be:
A) $12,400
B) $24,000
C) $30,000
D) $40,000
65) Calin Corporation has total current assets of $615,000, total current liabilities of $230,000,
total stockholders’ equity of $1,183,000, total plant and equipment (net) of $958,000, total assets
of $1,573,000, and total liabilities of $390,000.The company’s working capital is:
A) $615,000
B) $1,183,000
C) $385,000
D) $958,000
66) 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:
A) $380,000
B) $40,000
C) $250,000
D) $290,000
67) Erastic Corporation has $14,000 in cash, $8,000 in marketable securities, $34,000 in account
receivable, $40,000 in inventories, and $42,000 in current liabilities. The corporation’s current
assets consist of cash, marketable securities, accounts receivable, and inventory. The corporation’s
acid-test ratio is closest to:
A) 1.33
B) 0.81
C) 2.29
D) 1.14
68) Windham Corporation has current assets of $400,000 and current liabilities of $500,000.
Windham Corporation’s current ratio would be increased by:
A) the purchase of $100,000 of inventory on account.
B) the payment of $100,000 of accounts payable.
C) the collection of $100,000 of accounts receivable.
D) refinancing a $100,000 long-term loan with short-term debt.
69) Stimac Corporation has total cash of $210,000, no marketable securities, total current
receivables of $281,000, total inventory of $151,000, total prepaid expenses of $53,000, total
current assets of $695,000, total current liabilities of $261,000, total stockholders’ equity of
$1,014,000, total assets of $1,415,000, and total liabilities of $401,000.The company’s acid-test
(quick) ratio is closest to:
A) 2.08
B) 1.73
C) 2.66
D) 1.88
70) 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:
A) $1,000,000
B) $1,300,000
C) $1,125,000
D) $1,225,000
71) Irawaddy Company, a retailer, had cost of goods sold of $230,000 last year. The beginning
inventory balance was $24,000 and the ending inventory balance was $22,000. The company’s
average sale period was closest to:
A) 36.5 days
B) 73.0 days
C) 38.1 days
D) 34.9 days
72) Harris Corporation, a retailer, had cost of goods sold of $290,000 last year. The beginning
inventory balance was $26,000 and the ending inventory balance was $24,000. The corporation’s
inventory turnover was closest to:
A) 12.08
B) 11.60
C) 5.80
D) 11.15
73) Natcher Corporation’s accounts receivable at the end of Year 2 was $126,000 and its accounts
receivable at the end of Year 1 was $130,000. The company’s inventory at the end of Year 2 was
$127,000 and its inventory at the end of Year 1 was $120,000. Sales, all on account, amounted to
$1,380,000 in Year 2. Cost of goods sold amounted to $800,000 in Year 2.The company’s
operating cycle for Year 2 is closest to:
A) 44.7 days
B) 17.3 days
C) 62.8 days
D) 90.2 days
74) Kopas Corporation has provided the following data:
This Year
Last Year
Accounts receivable
$
89,000
$
107,000
Inventory
$
160,000
$
156,000
Sales on account
$
627,000
Cost of goods sold
$
488,000
The inventory turnover for this year is closest to:
A) 3.09
B) 0.98
C) 1.03
D) 3.05
75) Granger Corporation had $180,000 in sales on account last year. The beginning accounts
receivable balance was $10,000 and the ending accounts receivable balance was $18,000. The
corporation’s average collection period was closest to:
A) 20.3 days
B) 28.4 days
C) 36.5 days
D) 56.8 days
76) During the year just ended, the retailer James Corporation purchased $425,000 of inventory.
The inventory balance at the beginning of the year was $175,000. If the cost of goods sold for the
year was $450,000, then the inventory turnover for the year was:
A) 2.77
B) 2.57
C) 3.00
D) 2.62
77) Laverde Corporation has provided the following data:
Year 2
Year 1
Inventory
$
185,000
$
200,000
Total assets
$
1,489,000
$
1,470,000
Sales
$
1,220,000
The company’s total asset turnover for Year 2 is closest to:
A) 1.22
B) 7.60
C) 0.13
D) 0.82
78) Spomer Corporation’s inventory at the end of Year 2 was $114,000 and its inventory at the end
of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. The company’s
inventory turnover for Year 2 is closest to:
A) 5.92
B) 1.05
C) 6.07
D) 6.23
79) Frantic Corporation had $130,000 in sales on account last year. The beginning accounts
receivable balance was $10,000 and the ending accounts receivable balance was $16,000. The
corporation’s accounts receivable turnover was closest to:
A) 5.00
B) 13.00
C) 10.00
D) 8.13
80) Data from Keniston Corporation’s most recent balance sheet and income statement appear
below:
This Year
Last Year
Accounts receivable
$
128,000
$
114,000
Inventory
$
228,000
$
193,000
Sales on account
$
813,000
Cost of goods sold
$
597,000
The average collection period for this year is closest to:
A) 39.1 days
B) 45.1 days
C) 54.3 days
D) 57.5 days