94.
Which of the following transactions does not affect earnings per share?
95.
Which of the following transactions increases both the quick ratio and the current ratio
assuming that both ratios are greater than 1?
96.
Which of the following correctly describes the effect of Mogul Company declaring and
distributing a 10% common stock dividend?
97.
Which of the following does not correctly describe the effect of Mylan Company declaring and
distributing a 2–for-1 common stock split?
98.
Which of the following ratios increases when inventory is sold on account for a price equal to
its original cost?
99.
Which of the following ratios increases when cash is collected on an account receivable?
100.
Which of the following ratios increases when a company switches from FIFO to LIFO during a
period of increasing unit costs?
101.
Which of the following transactions decreases the earnings quality ratio?
102.
The year-end adjusting entry to record bad debt expense will increase which of the following
ratios?
103.
The year-end adjusting entry to adjust the unearned revenue account for revenue earned
decreases which of the following ratios?
104.
Which of the following ratios are not affected by issuing long-term bonds payable in exchange
for cash?
105.
The journal entry to record depreciation expense decreases which of the following ratios?
106.
The cash payment of a previously declared dividend increases which of the following ratios?
107.
Complete the following income statement for the dollar amounts and the component
percentages:
Dollar $
Amount
Component
Percentages %
Sales revenue
Cost of goods sold
40%
Gross profit
$120,000
Operating expenses
Interest expense
2%
Income before income tax
Income tax expense (rate 20%)
Net income
6%
Sales revenue
$200,000
Cost of goods sold
Gross profit
$120,000
Operating expenses
$101,000
Interest expense
2%
Income before income tax
Income tax expense (rate 20%)
Net income
108.
Packers Corporation reported the following data for the year ended December 31, 2016:
Net sales revenue
$400,000
Net income
$25,000
Interest expense (net of tax)
$3,000
Average total assets
$200,000
Average stockholders’ equity
$160,000
Average net fixed assets
$100,000
Average shares of common stock
outstanding
10,000
shares
Market value per share
$16.00
Calculate each of the following ratios:
A. Net 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
109.
At the end of 2016, 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.
Required:
What was Jared’s financial leverage percentage?
110.
At the end of 2016, Doran Corporation reported net income of $70,000, gross sales revenue of
$1,525,000, and sales returns of $125,000.
Required:
Calculate the net profit margin ratio.
111.
The records of Washington Company showed the following:
Average
Assets
$230,000
Revenues
$100,000
Average
Liabilities
130,000
Operating
Expenses**
(81,000)
Average
Stockholders’
equity*
100,000
Interest
expense
(2,000)
Net income
$17,000
*10,000 shares outstanding; current market price, $30
**Including income tax; income tax rate is 30%
Required:
Calculate each of the following ratios:
A. Return on assets
B. Return on equity
C. Financial leverage percentage
D. Is the financial leverage percentage positive or negative?
112.
The 2016 financial statements of Companies Y and Z showed the following:
Item
Company
Y
Z
Net sales
revenue
$150,000
$200,000
Net profit
margin
6%
5%
Total average
assets
$40,000
$80,000
Financial
leverage
percentage
–5%
+6.5%
Interest expense
(net of tax)
$1,000
$800
Required:
Part A: For each company, calculate the items listed in the following tabulation.
Item
Company
Y
Z
1.
Net income
$
$
2.
Return on assets
%
%
3.
Return on equity
%
%
4.
Average total stockholders’ equity
$
$
Part B: Assuming both Company Y and Company Z are in the same industry, which company
(Y or Z) appears to be the better investment and why?
1.
Net income
113.
The following return on investment ratios were computed for Steven Company:
2017
2016
2015
2014
Return on assets
12%
15%
15%
18%
Return on equity
15%
15%
11%
20%
Required:
A. Compute financial leverage percentage for each year and state whether it is positive or
negative.
B. Explain briefly the stockholders’ advantage or disadvantage for each year, beginning with
year 2014.