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Exam 15: Financial Statement Analysis

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Question 121

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Settles Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share. -The company's earnings per share for Year 2 is closest to:

A) $0.31 per share
B) $0.47 per share
C) $0.79 per share
D) $3.88 per share

E) C) and D)
F) B) and D)

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Question 122

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Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. -The company's total asset turnover for Year 2 is closest to:

A) 10.17
B) 0.10
C) 1.02
D) 0.98

E) A) and B)
F) All of the above

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Question 123

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Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share. -The company's earnings per share is closest to:

Mahoe Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $500. The market price of common stock at the end of Year 2 was $8.06 per share. -The company's total asset turnover for Year 2 is closest to:

Pribyl Corporation has provided the following financial data: Required: a. What is the company's net profit margin percentage for Year 2? b. What is the company's gross margin percentage for Year 2? c. What is the company's return on total assets for Year 2? d. What is the company's return on equity for Year 2?

Neef Corporation has provided the following financial data from its balance sheet and income statement: -The company's net profit margin percentage for Year 2 is closest to:

A company could improve its acid-test ratio by selling some equipment it no longer needs for cash.

Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1. The par value of common stock is $5 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000. The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000. The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000. The company's net income in Year 2 was $39,000. -The company's current ratio is closest to:

Vertical analysis of financial statements is accomplished by preparing common-size statements.

If a company's return on assets is substantially lower than its cost of borrowing, then the common stockholders would normally want the company to have a relatively high debt/equity ratio.

Hyrkas Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $30 thousand. The market price of common stock at the end of Year 2 was $6.90 per share. Required: Compute the following for Year 2: a. Gross margin percentage. b. Earnings per share. c. Price-earnings ratio. d. Dividend payout ratio. e. Dividend yield ratio. f. Return on total assets. g. Return on equity. h. Book value per share. i. Working capital. j. Current ratio. k. Acid-test ratio. l. Accounts receivable turnover. m. Average collection period. n. Inventory turnover. o. Average sale period. p. Times interest earned. q. Debt-to-equity ratio.

Klein Corporation has provided the following data: $\begin{array}{lrr}&\text { Year 2 } &{\text { Year 1 }} \\\text { Total assets }&\$ 1,337,000 & \$ 1,310,000 \\\text { Total liabilities }&\$ 598,000 & \$ 580,000 \\\text { Total stockholders' equity }&\$ 739,000 & \$ 730,000\end{array}$ The company's equity multiplier is closest to:

The times interest earned ratio of Whitney Corporation is 3.0. The interest expense for the year is $21,000, and the corporation's tax rate is 40%. The corporation's after-tax net income must be:

Purchasing inventory on credit increases the book value per share of a retailer.

The ratio of total cash, marketable securities, accounts receivable, and short-term notes to current liabilities is:

Keyton Corporation's net operating income in Year 2 was $43,714, net income before taxes was $30,714, and the net income was $21,500. Total common stock was $200,000 at the end of both Year 2 and Year 1. The par value of common stock is $4 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,148,000 and at the end of Year 1 to $1,130,000. The company declared and paid $3,500 dividends on common stock in Year 2. The market price per share was $8.43 at the end of Year 2. The company's dividend payout ratio for Year 2 is closest to:

Kisselburg Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $4,000. The market price of common stock at the end of Year 2 was $5.75 per share. Required: a. What is the company's working capital at the end of Year 2? b. What is the company's current ratio at the end of Year 2? c. What is the company's acid-test (quick) ratio at the end of Year 2? d. What is the company's accounts receivable turnover for Year 2? e. What is the company's average collection period (age of receivables) for Year 2? f. What is the company's inventory turnover for Year 2? g. What is the company's average sale period (turnover in days) for Year 2? h. What is the company's operating cycle for Year 2? i. What is the company's total asset turnover for Year 2? j. What is the company's times interest earned for Year 2? k. What is the company's debt-to-equity ratio at the end of Year 2? l. What is the company's equity multiplier at the end of Year 2? m. What is the company's net profit margin percentage for Year 2? n. What is the company's gross margin percentage for Year 2? o. What is the company's return on total assets for Year 2? p. What is the company's return on equity for Year 2? q. What is the company's earnings per share for Year 2? r. What is the company's price-earnings ratio for Year 2? s. What is the company's dividend payout ratio for Year 2? t. What is the company's dividend yield ratio for Year 2? u. What is the company's book value per share at the end of Year 2?

All other things the same, if a company uses long-term debt to purchase land to develop in the future, the company's return on total assets will decrease.

Earnings per share is computed by multiplying net income by the average number of common shares outstanding.

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: