81) A firm has total equity of $61,600 and total liabilities of $18,900. Current assets are $44,700
and current liabilities are $15,200. What is the value of the net fixed assets?
A) $8,300
B) $10,600
C) $29,500
D) $35,800
E) $42,700
82) A company has the following account balances. How much cash does the firm have
assuming there are no other accounts?
Inventory
$
22,500
Total Equity
$
98,800
Accounts Receivable
$
20,200
Fixed assets
$
78,300
Accounts payable
$
19,100
Long-term debt
$
34,000
A) $27,300
B) $27,900
C) $30,900
D) $47,300
E) $50,300
83) The Erie Bay Liner Company has sales of $2.4 million and operating expenses of $180,000.
The firm uses the percentage of sales approach and estimates next year’s sales at $2.5 million.
What are the operating expenses expected to be next year?
A) $171,231
B) $175,123
C) $179,400
D) $182,549
E) $187,500
84) A firm has sales of $685,000 and cost of goods sold of $435,000. The firm expects sales to
increase by 6 percent next year. What is the gross profit amount expected to be next year if the
firm uses the percentage of sales approach when compiling pro forma statements?
A) $235,100
B) $265,000
C) $335,000
D) $355,100
E) $536,100
85) Your company has pretax income of $52,000 on sales of $506,000. Sales are expected to
increase by 6 percent next year and the tax rate is 40 percent. What is the expected net income
for next year if your firm uses the percentage of sales approach when compiling pro forma
statements?
A) $28,938
B) $31,835
C) $33,072
D) $35,582
E) $44,520
86) A firm has net income of $32,000 on sales of $190,000. Sales are expected to increase by 6
percent next year and the dividend payout ratio is 35 percent. The firm uses the percentage of
sales approach when compiling pro forma statements. What amount is expected to be added to
retained earnings next year?
A) $14,300
B) $15,400
C) $15,686
D) $17,550
E) $22,048
87) Last year, a firm had net income of $62,000 on sales of $595,000. The projected sales for
next year are $654,500. Assume the firm uses the percentage of sales method for pro forma
statements. What is the projected net income?
A) $59,500
B) $65,500
C) $68,200
D) $71,500
E) $71,900
88) Zonvier, Inc. has sales of $53,800, a profit margin of 10.5 percent, and a plowback ratio of
40 percent. The company has 15,000 shares of stock outstanding. The firm uses the percentage of
sales method for pro forma statements and estimates next year’s sales will increase by 15 percent.
What is the dividend per share expected to be next year?
A) $0.249
B) $0.250
C) $0.260
D) $0.268
E) $0.274
89) A firm has current sales of $42,000. Projected sales for next year are $44,000. The
percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except
long-term debt and common stock, change according to that approach. The expected increase in
retained earnings is $2,500. What is the projected external financing need given the following
current account values?
Current assets
$
9,400
Net fixed assets
22,000
Current liabilities
5,600
Long-term debt
10,500
Common stock
4,500
Retained earnings
10,500
A) -$3,532
B) -$1,969
C) -$1,390
D) $987
E) $1,341
Sales growth =
(44,000 – 42,000) / 42,000 =
%
Current assets
10,434
Net fixed assets
24,420
Current liabilities
$
Long-term debt
$
10,500
Common stock
$
Retained earnings
$
13,000
34,854
$
33,867
987
90) A firm has the following account balances for this year. Sales for the year are $500,000.
Projected sales for next year are $545,000. The percentage of sales approach is used for pro
forma purposes. All balance sheet accounts, except long-term debt and common stock, change
according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next
year. Retained earnings is expected to increase by $3,500 next year. What is the projected
external financing need?
Current assets
$
48,000
Net fixed assets
$
158,000
Current liabilities
$
48,000
Long-term debt
$
83,000
Common stock
$
36,000
Retained earnings
$
40,000
A) $10,520
B) $14,720
C) $18,520
D) $20,720
E) $25,620
Pro Forma Estimates
Change
Assets
Current assets
%
$
Net fixed assets
158,000
%
$
Current liabilities
%
$
Long-term debt
-$
5,000
$
Common stock
$
Retained earnings
3,500
$
$
$
209,820
$
$
224,540
91) A firm has the following account balances for this year. Sales for the year are $420,000.
Projected sales for next year are $441,000. The percentage of sales approach is used for pro
forma purposes. All balance sheet accounts, except long-term debt and common stock, change
according to that approach. The firm plans to decrease the long-term debt balance by $23,500
next year. Retained earnings is expected to increase by $5,400 next year. What is the projected
external financing need?
Current assets
$
84,000
Net fixed assets
270,000
Current liabilities
56,000
Long-term debt
154,000
Common stock
50,000
Retained earnings
91,000
A) -$14,150
B) -$6,850
C) $32,850
D) $36,000
E) $56,350
Sales growth =($441,000 – $42,000) / $420,000 = 0.05
Current assets
$84,000 × (1 + 0.05) =
$
Net fixed assets
270,000 × (1 + 0.05) =
Current liabilities
56,000 × (1 + 0.05)
Long-term debt
154,000 – $23,500
=
130,500
Common stock
50,000
=
Retained earnings
91,000 + $5,400
=
$
$
335,700
$
$
371,700
92) What is the operating cash flow, given the following information?
Net income
$
475
Depreciation
$
55
Issuance of new stock
$
25
Repayment of debt
$
30
Sale of old equipment
$
45
Purchase of new equipment
$
65
Dividend payments
$
70
Interest payments
$
100
A) $400
B) $470
C) $530
D) $540
E) $610
93) What is the investment cash flow, given the following information?
Net income
$
600
Depreciation
70
Issuance of new stock
30
Repayment of long-term debt
20
Sale of old equipment
40
Purchase of new equipment
60
Dividend payments
70
Interest payments
100
A) -$20
B) -$10
C) $10
D) $20
E) $100
94) What is the financing cash flow, given the following information?
Net income
$
550
Depreciation
$
60
Issuance of new stock
$
25
Repayment of debt
$
30
Sale of old equipment
$
45
Purchase of new equipment
$
65
Dividend payments
$
70
Interest payments
$
100
A) -$180
B) -$150
C) -$110
D) -$75
E) -$10
95) What is the operating cash flow, given the following information?
Net income
$
825
Depreciation
$
65
Issuance of new stock
$
20
Repayment of debt
$
35
Sale of old equipment
$
40
Purchase of new equipment
$
60
Dividend payments
$
55
Interest payments
$
80
A) $680
B) $650
C) $780
D) $890
E) $930
96) What is the investment cash flow?
Net income
$
550
Depreciation
$
60
Issuance of new stock
$
25
Repayment of debt
$
30
Sale of old equipment
$
45
Purchase of new equipment
$
65
Dividend payments
$
70
Interest payments
$
100
A) -$220
B) -$140
C) -$120
D) -$20
E) -$10
97) What is the financing cash flow, given the following information?
Net income
$
800
Depreciation
130
Issuance of new stock
60
Repayment of long-term debt
80
Sale of old equipment
50
Purchase of new equipment
70
Dividend payments
30
Interest payments
90
A) -$210
B) -$160
C) -$110
D) -$60
E) -$50
98) A firm has $4,500 of cash, equipment worth $42,000, inventory of $16,700, $12,200 worth
of patents, and $15,500 of accounts receivable. What is the value of the total current assets?
A) $2,500
B) $24,700
C) $36,700
D) $40,000
E) $62,900
99) Baker Jewelry, Inc. has annual sales of $5.2 million and a gross profit margin of 60 percent.
The operating expenses are $489,000 and depreciation is $155,000. Interest expense is $70,000
and the tax rate is 35 percent. What is the net income?
A) $1,002,980
B) $1,084,818
C) $1,227,980
D) $1,563,900
E) $2,385,000
100) For the year, Wilson Manufacturing, Inc. increased its current assets by $62,000, decreased
its current liabilities by $55,000, and decreased its fixed assets by $19,000. What is the
investment cash flow for the year?
A) -$31,000
B) -$12,000
C) $19,000
D) $31,000
E) $48,000
101) The Corner Market had annual sales of $355,000 and total assets of $305,000. What is the
return on assets if the profit margin is 9.5 percent?
A) 8.23 percent
B) 9.88 percent
C) 10.62 percent
D) 11.06 percent
E) 12.87 percent
102) Carter’s Books, Inc. has net income of $75,000 and a plowback ratio of 80 percent. There
are 30,000 shares of stock outstanding at a market price of $25.50 a share. What is the price-
earnings ratio?
A) 6.9
B) 8.2
C) 9.7
D) 10.2
E) 11.6
103) The DeSoto Container Company has sales of $3.6 million and operating expenses of
$225,000. The firm uses the percentage of sales approach and estimates next year’s sales at $3.8
million. What are the operating expenses expected to be next year?
A) $221,231
B) $225,123
C) $229,400
D) $232,549
E) $237,500
104) A firm has current sales of $56,000. Projected sales for next year are $60,000. The
percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except
long-term debt and common stock, change according to that approach. The expected increase in
retained earnings is $3,100. What is the projected external financing need given the following
current account values?
Current assets
$
10,700
Net fixed assets
26,000
Current liabilities
7,800
Long-term debt
10,400
Common stock
5,000
Retained earnings
12,400
A) -$3,532
B) -$1,969
C) -$1,390
D) $987
E) $1,480
Sales growth = (44,000-42,000)/42,000 = 7.1%
Current assets
Net fixed assets
Current liabilities
Long-term debt
Common stock
Retained earnings
105) What is the operating cash flow, given the following information?
Net income
$
740
Depreciation
$
40
Issuance of new stock
$
20
Repayment of dept
$
35
Sale of old equipment
$
40
Purchase of new equipment
$
60
Dividend payments
$
65
Interest payments
$
80
A) $680
B) $650
C) $780
D) $890
E) $930