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Exam 14: Financial Statement Analysis

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Question 1

True/False

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The dividend payout ratio is equal to the dividend per share divided by the earnings per share.

A) True
B) False

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Question 2

Multiple Choice

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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.

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

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Question 3

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The company's inventory turnover for Year 2 is closest to:

Data from Estrin Corporation's most recent balance sheet and income statement appear below: The average sale period for this year is closest to:

The company's operating cycle for Year 2 is closest to:

The company's debt-to-equity ratio at the end of Year 2 is closest to:

The company's price-earnings ratio is closest to:

Arkin Corporation's total current assets are $290,000, its noncurrent assets are $520,000, its total current liabilities are $210,000, its long-term liabilities are $420,000, and its stockholders' equity is $180,000. Required: Compute the company's working capital.Show your work!

If a retailer sells a product whose contribution margin equals the gross margin percentage, the gross margin percentage will be unaffected by the transaction.

Valdovinos Corporation has provided the following data: The company's net profit margin percentage is closest to:

As the accounts receivable turnover ratio decreases, the average collection period increases.

The company's operating cycle for Year 2 is closest to:

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:

Data from Yochem Corporation's most recent balance sheet appear below: Required: Compute the company's acid-test (quick)ratio.Show your work!

Dilisio Corporation has provided the following data: Required: Compute the inventory turnover for this year:

The company's return on equity for Year 2 is closest to:

The inventory turnover for Year 2 is closest to:

Sand Company has an acid-test ratio of 0.8.Which of the following actions would improve the acid-test ratio?

Buying inventory in large lots to take advantage of quantity discounts can be responsible for a high inventory turnover ratio.

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