191) The company’s total asset turnover for Year 2 is closest to:
A) 0.99
B) 0.19
C) 5.32
D) 1.01
192) The company’s equity multiplier at the end of Year 2 is closest to:
A) 0.70
B) 1.43
C) 2.34
D) 0.43
142
193) Financial statements for Narstad Corporation appear below:
Narstad Corporation
Balance Sheet
December 31, Year 2 and Year 1
(dollars in thousands)
Year 2
Year 1
Current assets:
Cash and marketable securities
$
100
$
100
Accounts receivable, net
220
190
Inventory
190
180
Prepaid expenses
10
20
Total current assets
520
490
Plant & equipment, net
1,940
1,940
Total assets
$
2,460
$
2,430
Current liabilities:
Accounts payable
$
150
$
150
Accrued liabilities
90
70
Notes payable, short term
100
150
Total current liabilities
340
370
Bonds payable
310
300
Total liabilities
650
670
Stockholders’ equity:
Common stock, $2 par
180
180
Additional paid-in capital
330
330
Retained earnings
1,300
1,250
Total stockholders’ equity
1,810
1,760
Total liabilities & stockholders’ equity
$
2,460
$
2,430
Narstad Corporation
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account)
$
1,770
Cost of goods sold
1,230
Gross margin
540
Selling and administrative expense
210
Net operating income
330
Interest expense
30
Net income before taxes
300
Income taxes (30%)
90
Net income
$
210
Narstad Corporation’s times interest earned ratio for Year 2 was closest to:
A) 11.0
B) 10.0
C) 18.0
D) 7.0
144
194) Financial statements for Narstad Corporation appear below:
Narstad Corporation
Balance Sheet
December 31, Year 2 and Year 1
(dollars in thousands)
Year 2
Year 1
Current assets:
Cash and marketable securities
$
100
$
100
Accounts receivable, net
220
190
Inventory
190
180
Prepaid expenses
10
20
Total current assets
520
490
Plant & equipment, net
1,940
1,940
Total assets
$
2,460
$
2,430
Current liabilities:
Accounts payable
$
150
$
150
Accrued liabilities
90
70
Notes payable, short term
100
150
Total current liabilities
340
370
Bonds payable
310
300
Total liabilities
650
670
Stockholders’ equity:
Common stock, $2 par
180
180
Additional paid-in capital
330
330
Retained earnings
1,300
1,250
Total stockholders’ equity
1,810
1,760
Total liabilities & stockholders’ equity
$
2,460
$
2,430
Narstad Corporation
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account)
$
1,770
Cost of goods sold
1,230
Gross margin
540
Selling and administrative expense
210
Net operating income
330
Interest expense
30
Net income before taxes
300
Income taxes (30%)
90
Net income
$
210
Narstad Corporation’s debt-to-equity ratio at the end of Year 2 was closest to:
A) 0.50
B) 0.36
C) 0.19
D) 0.17
Lasch Corporation has provided the following financial data from its balance sheet and income
statement:
Year 2
Year 1
Total assets
$
1,333,000
$
1,320,000
Accounts payable
$
158,000
$
160,000
Accrued liabilities
$
43,000
$
40,000
Notes payable, short term
$
47,000
$
50,000
Bonds payable
$
250,000
$
250,000
Total liabilities
$
498,000
$
500,000
Total stockholders’ equity
$
835,000
$
820,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account)
$
1,250,000
Cost of goods sold
840,000
Gross margin
410,000
Operating expenses
366,286
Net operating income
43,714
Interest expense
18,000
Net income before taxes
25,714
Income taxes (30%)
7,714
Net income
$
18,000
195) The company’s times interest earned ratio for Year 2 is closest to:
A) 1.43
B) 3.47
C) 2.43
D) 1.00
196) The company’s debt-to-equity ratio at the end of Year 2 is closest to:
A) 0.30
B) 0.36
C) 0.41
D) 0.60
197) The company’s equity multiplier at the end of Year 2 is closest to:
A) 1.60
B) 1.68
C) 0.63
D) 0.60
Deacon Corporation has provided the following financial data from its balance sheet and income
statement:
Year 2
Year 1
Total assets
$
1,198,000
$
1,160,000
Total liabilities
$
466,000
$
460,000
Total stockholders’ equity
$
732,000
$
700,000
Net operating income (income before interest and
taxes)
$
67,769
Interest expense
$
13,000
198) The company’s times interest earned ratio for Year 2 is closest to:
A) 2.74
B) 8.02
C) 5.21
D) 4.21
199) The company’s debt-to-equity ratio at the end of Year 2 is closest to:
A) 0.29
B) 0.38
C) 0.23
D) 0.64
200) The company’s equity multiplier at the end of Year 2 is closest to:
A) 0.64
B) 1.65
C) 1.57
D) 0.61
150
Fayer Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets
Year 2
Year 1
Current assets:
Cash
$
161,000
$
180,000
Accounts receivable, net
110,000
130,000
Inventory
181,000
160,000
Prepaid expenses
57,000
70,000
Total current assets
509,000
540,000
Plant and equipment, net
1,044,000
960,000
Total assets
$
1,553,000
$
1,500,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
188,000
$
160,000
Accrued liabilities
57,000
60,000
Notes payable, short term
36,000
40,000
Total current liabilities
281,000
260,000
Bonds payable
200,000
200,000
Total liabilities
481,000
460,000
Stockholders’ equity:
Common stock, $4 par value
200,000
200,000
Additional paid-in capital
80,000
80,000
Retained earnings
792,000
760,000
Total stockholders’ equity
1,072,000
1,040,000
Total liabilities & stockholders’ equity
$
1,553,000
$
1,500,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account)
$
1,220,000
Cost of goods sold
760,000
Gross margin
460,000
Operating expenses
389,846
Net operating income
70,154
Interest expense
14,000
Net income before taxes
56,154
Income taxes (35%)
19,654
Net income
$
36,500
Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at
the end of Year 2 was $10.88 per share.
201) The company’s times interest earned ratio for Year 2 is closest to:
A) 7.71
B) 2.61
C) 5.01
D) 4.01
202) The company’s debt-to-equity ratio at the end of Year 2 is closest to:
A) 0.22
B) 0.27
C) 0.45
D) 0.19
203) The company’s equity multiplier at the end of Year 2 is closest to:
A) 0.69
B) 2.23
C) 0.45
D) 1.45
153
204) Tweedle Corporation’s most recent balance sheet and income statement appear below:
Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Assets
Year 2
Year 1
Current assets:
Cash
$
140
$
130
Accounts receivable, net
200
210
Inventory
150
180
Prepaid expenses
20
20
Total current assets
510
540
Plant and equipment, net
950
910
Total assets
$
1,460
$
1,450
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
130
$
150
Accrued liabilities
70
70
Notes payable, short term
70
60
Total current liabilities
270
280
Bonds payable
170
190
Total liabilities
440
470
Stockholders’ equity:
Common stock, $1 par value
200
200
Additional paid-in capital
320
320
Retained earnings
500
460
Total stockholders’ equity
1,020
980
Total liabilities & stockholders’ equity
$
1,460
$
1,450
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)
$
1,190
Cost of goods sold
710
Gross margin
480
Selling and administrative expense
226
Net operating income
254
Interest expense
25
Net income before taxes
229
Income taxes (30%)
69
Net income
$
160
The times interest earned ratio for Year 2 is closest to:
A) 6.40
B) 9.16
C) 14.51
D) 10.16
155
205) Tweedle Corporation’s most recent balance sheet and income statement appear below:
Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Assets
Year 2
Year 1
Current assets:
Cash
$
140
$
130
Accounts receivable, net
200
210
Inventory
150
180
Prepaid expenses
20
20
Total current assets
510
540
Plant and equipment, net
950
910
Total assets
$
1,460
$
1,450
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
130
$
150
Accrued liabilities
70
70
Notes payable, short term
70
60
Total current liabilities
270
280
Bonds payable
170
190
Total liabilities
440
470
Stockholders’ equity:
Common stock, $1 par value
200
200
Additional paid-in capital
320
320
Retained earnings
500
460
Total stockholders’ equity
1,020
980
Total liabilities & stockholders’ equity
$
1,460
$
1,450
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)
$
1,190
Cost of goods sold
710
Gross margin
480
Selling and administrative expense
226
Net operating income
254
Interest expense
25
Net income before taxes
229
Income taxes (30%)
69
Net income
$
160
The debt-to-equity ratio at the end of Year 2 is closest to:
A) 0.43
B) 0.24
C) 0.17
D) 0.54
206) Data from Lheureux Corporation’s most recent balance sheet and the company’s income
statement appear below:
Year 2
Year 1
Total assets
$
1,440
$
1,480
Total liabilities
$
400
$
450
Total stockholders’ equity
$
1,040
$
1,030
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)
$
1,280
Cost of goods sold
850
Gross margin
430
Selling and administrative expense
355
Net operating income
75
Interest expense
18
Net income before taxes
57
Income taxes (30%)
17
Net income
$
40
The times interest earned ratio for Year 2 is closest to:
A) 2.22
B) 4.17
C) 3.17
D) 5.95
207) Data from Lheureux Corporation’s most recent balance sheet and the company’s income
statement appear below:
Year 2
Year 1
Total assets
$
1,440
$
1,480
Total liabilities
$
400
$
450
Total stockholders’ equity
$
1,040
$
1,030
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)
$
1,280
Cost of goods sold
850
Gross margin
430
Selling and administrative expense
355
Net operating income
75
Interest expense
18
Net income before taxes
57
Income taxes (30%)
17
Net income
$
40
The debt-to-equity ratio at the end of Year 2 is closest to:
A) 0.38
B) 0.13
C) 0.16
D) 0.43
Neef Corporation has provided the following financial data from its balance sheet and income
statement:
Year 2
Year 1
Total assets
$
1,302,000
$
1,330,000
Total stockholders’ equity
$
885,000
$
880,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account)
$
1,420,000
Cost of goods sold
890,000
Gross margin
530,000
Operating expenses
493,000
Net operating income
37,000
Interest expense
17,000
Net income before taxes
20,000
Income taxes (35%)
7,000
Net income
$
13,000
208) The company’s net profit margin percentage for Year 2 is closest to:
A) 37.3%
B) 2.6%
C) 1.4%
D) 0.9%
209) The company’s gross margin percentage for Year 2 is closest to:
A) 59.6%
B) 2.5%
C) 37.3%
D) 4076.9%
210) The company’s return on total assets for Year 2 is closest to:
A) 0.99%
B) 1.00%
C) 1.85%
D) 1.83%