Examine the financial statements below. Use this information toanswer questions 1-7. Note: All figures are in millions ofdollars.
The XXX Corporation: Balance Sheet, 2008
Cash & marketable securities $200 Accounts payable 100
Accounts receivable 150 Notes payable 100
Inventories 250 Total current liabilities $200
Total current assets $600 Long-term debt 400
Total liabilities $600
Fixed assets 900
Common stock 50
Retained earnings 850
Total equity $900
Total assets $1,500 Total liabilities and equity $1,500
The XXX Corporation: Income Statement, 2008
Sales revenue $1,200
Cost of goods sold 700
Selling expenses 200
Depreciation 150
Earnings before interest and taxes $150
Interest paid 50
Taxable income $100
Taxes (40%) 40
Net income $60
1. The quick ratio is:
0.57 B. 1.75 C. 3.0 D. 1.25 E. 0.80
2. The equity multiplier is:
1.67 B. 0.60 C. 0.40 D. 1.50 E. 0.67
3. The net profit margin is:
A. 0.05 B. 0.15 C. 0.60 D. 0.50 E. 0.12
4. The operating cash flow for 2008 was ____ million.
A. +$60 B. -$60 C. +$260 D. +$160 E. +$100
5. The current market price of XXX is $30 per share. The priceearnings ratio is 25. The number of shares outstanding is _______million.
10 B. 20 C. 30 D. 40 E. 50
6. The total asset turnover ratio is:
0.8 B. 1.25 C. 2.0 D. 4.0 E. 6.0
7. If XXX were to acquire $50 million in inventory with a $50million increase in accounts payable (other things equal), thecurrent ratio would _____, and the quick ratio would _____.
A. increase, increase
B. not change, decrease
C. not change, not change
D. decrease, increase
E. decrease, decrease
Examine the financial statements below. Use this information toanswer questions 1-7. Note: All figures are in millions ofdollars.
The XXX Corporation: Balance Sheet, 2008
Cash & marketable securities $200 Accounts payable 100
Accounts receivable 150 Notes payable 100
Inventories 250 Total current liabilities $200
Total current assets $600 Long-term debt 400
Total liabilities $600
Fixed assets 900
Common stock 50
Retained earnings 850
Total equity $900
Total assets $1,500 Total liabilities and equity $1,500
The XXX Corporation: Income Statement, 2008
Sales revenue $1,200
Cost of goods sold 700
Selling expenses 200
Depreciation 150
Earnings before interest and taxes $150
Interest paid 50
Taxable income $100
Taxes (40%) 40
Net income $60
1. The quick ratio is:
0.57 B. 1.75 C. 3.0 D. 1.25 E. 0.80
2. The equity multiplier is:
1.67 B. 0.60 C. 0.40 D. 1.50 E. 0.67
3. The net profit margin is:
A. 0.05 B. 0.15 C. 0.60 D. 0.50 E. 0.12
4. The operating cash flow for 2008 was ____ million.
A. +$60 B. -$60 C. +$260 D. +$160 E. +$100
5. The current market price of XXX is $30 per share. The priceearnings ratio is 25. The number of shares outstanding is _______million.
10 B. 20 C. 30 D. 40 E. 50
6. The total asset turnover ratio is:
0.8 B. 1.25 C. 2.0 D. 4.0 E. 6.0
7. If XXX were to acquire $50 million in inventory with a $50million increase in accounts payable (other things equal), thecurrent ratio would _____, and the quick ratio would _____.
A. increase, increase
B. not change, decrease
C. not change, not change
D. decrease, increase
E. decrease, decrease
Related questions
20. Brigman Inc. has the following financial statementinformation for 2009 and 2008:
Balance Sheet Information: | 2009 | 2008 | |
Assets: | |||
Cash | $ 5,000 | $ 12,000 | |
Accounts receivable | 14,000 | 10,000 | |
Inventory | 35,000 | 30,000 | |
Total current assets | $ 54,000 | $ 52,000 | |
Property and Equipment (net) | 50,000 | 45,000 | |
Total assets | $104,000 | $ 97,000 | |
Liabilities: | |||
Accounts payable | $ 9,000 | $ 3,000 | |
Salaries payable | 3,000 | 1,000 | |
Total current liabilities | $ 12,000 | $ 4,000 | |
Notes payable | 20,000 | 25,000 | |
Total liabilities | $ 32,000 | $ 29,000 | |
Stockholders' Equity: | |||
Common stock | $ 40,000 | $ 40,000 | |
Retained earnings | 32,000 | 28,000 | |
Total stockholders' equity | $ 72,000 | $ 68,000 | |
Total liabilities and stockholders' equity | $104,000 | $ 97,000 | |
Income Statement Information: | |||
Net sales | $650,000 | $556,000 | |
Cost of goods sold | 380,000 | 290,000 | |
Gross profit | $270,000 | $266,000 | |
Selling and administrative expenses | 75,000 | 70,000 | |
Interest expense | 4,000 | 10,000 | |
Income before income taxes | $191,000 | $186,000 | |
Income tax expense | 57,300 | 56,300 | |
Net income | $133,700 | $129,700 | |
Other Information: | |||
Number of common shares outstanding | 4,000 | 4,000 | |
Dividends paid | $ 0 | $ 0 | |
Market price per share (12/31) | $40 | $30 | |
Income tax rate | 30% | 30.27% |
Required: Compute the following ratios for the year endingDecember 31, 2009: (round to two decimal places)
A. | Inventory turnover |
B. | Return on assets (ROA) ratio |
C. | Asset turnover ratio |
D. | Earnings per share (EPS) |
E. | Price earnings (P/E) ratio. |
F. Return on common stockholdersâ equity
G. Current ratio
H. Quick ratio
I. Debt-to-equity ratio
P23-3 (SCFâDirect Method) MortonsonCompany has not yet prepared a formal statement of cash flows forthe 2014 fiscal year. Comparative balance sheets as of December 31,2013, and 2014, and a statement of income and retained earnings forthe year ended December 31, 2014, are presented below. | |||
MORTONSON COMPANY | |||
Statement of Income and Retained Earnings | |||
For The Year Ended December 31, 2014 | |||
($000 Omitted) | |||
Sales | $3,800 | ||
Expenses | |||
Cost of goods sold | $1,200 | ||
Salaries and benefits | 725 | ||
Heat, light, and power | 75 | ||
Depreciation | 80 | ||
Property taxes | 19 | ||
Patent amortization | 25 | ||
Miscellaneous expenses | 10 | ||
Interest | 30 | 2,164 | |
Income before income taxes | 1,636 | ||
Income taxes | 818 | ||
Net income | 818 | ||
Retained earnings - January 1, 2014 | 310 | ||
1,128 | |||
Stock dividend declared and issued | 600 | ||
Retained earnings - December 31, 2014 | $528 | ||
MORTONSON COMPANY | |||
Comparative Balance Sheet | |||
December 31 | |||
($000 Omitted) | |||
Assets | 2014 | 2013 | |
Current assets | |||
Cash | $333 | $100 | |
U.S. Treasury notes (Available-for-sale) | 10 | 50 | |
Accounts receivable | 780 | 500 | |
Inventory | 720 | 560 | |
Total current assets | 1,843 | 1,210 | |
Long-term assets | |||
Land | 150 | 70 | |
Buildings and equipment | 910 | 600 | |
Accumulated depreciation | (200) | (120) | |
Patents (less amortization) | 105 | 130 | |
Total long-term assets | 965 | 680 | |
Total assets | $2,808 | $1,890 | |
Liabilities and Stockholders' Equity | |||
Current liabilities | |||
Accounts payable | $420 | $330 | |
Income taxes payable | 40 | 30 | |
Notes payable | 320 | 320 | |
Total current liabilities | 780 | 680 | |
Long-term notes payable - due 2016 | 200 | 200 | |
Total liabilities | 980 | 880 | |
Stockholders' equity | |||
Common stock outstanding | 1,300 | 700 | |
Retained earnings | 528 | 310 | |
Total stockholders' equity | 1,828 | 1,010 | |
Total liabilities and stockholders' equity | $2,808 | $1,890 | |
Instructions: | |||
Prepare a statement of cash flows using the direct method.Changes in accounts receivable and in accounts payable relate tosales and cost of sales. Do not prepare a reconciliationschedule. | |||
MORTONSON COMPANY | |||
Statement of Cash Flows | |||
For The Year Ended December 31, 2014 | |||
($000 omitted) | |||
Cash flows from operating activities | |||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | Formula | |
Net cash provided by operating activities | Formula | ||
Cash flows from investing activities | |||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Net cash used by investing activities | Formula | ||
Increase in cash | Amount | ||
Title | Amount | ||
Title | Formula | ||
(a) Sales | Amount | ||
Title | Amount | ||
Formula | |||
Add: Title | Amount | ||
Cash receipts (collections from customers) | Formula | ||
(b) Cost of goods sold | Amount | ||
Add: Title | Amount | ||
Title | Formula | ||
Deduct: Title | Amount | ||
Title | Formula | ||
Deduct: Title | Amount | ||
Formula | |||
Add: Title | Amount | ||
Cash purchases (payments for merchandise) | Formula | ||
| |||
(c) Income taxes | Amount | ||
Title | Amount | ||
Formula | |||
Add: Title | Amount | ||
Income taxes (cash) | Formula | ||
| Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
| This Year | Last Year | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 1,280 | $ | 1,560 | ||
| Accounts receivable, net | 12,300 | 9,100 | ||||
| Inventory | 9,700 | 8,200 | ||||
| Prepaid expenses | 1,800 | 2,100 | ||||
| Total current assets | 25,080 | 20,960 | ||||
| Property and equipment: | ||||||
| Land | 6,000 | 6,000 | ||||
| Buildings and equipment,net | 19,200 | 19,000 | ||||
| Total property andequipment | 25,200 | 25,000 | ||||
| Total assets | $ | 50,280 | $ | 45,960 | ||
| Liabilities andStockholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 9,500 | $ | 8,300 | ||
| Accrued liabilities | 600 | 700 | ||||
| Notes payable, short term | 300 | 300 | ||||
| Total current liabilities | 10,400 | 9,300 | ||||
| Long-term liabilities: | ||||||
| Bonds payable | 5,000 | 5,000 | ||||
| Total liabilities | 15,400 | 14,300 | ||||
| Stockholders' equity: | ||||||
| Common stock | 800 | 800 | ||||
| Additional paid-in capital | 4,200 | 4,200 | ||||
| Total paid-in capital | 5,000 | 5,000 | ||||
| Retained earnings | 29,880 | 26,660 | ||||
| Total stockholders' equity | 34,880 | 31,660 | ||||
| Total liabilities andstockholders' equity | $ | 50,280 | $ | 45,960 | ||
| Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
| This Year | Last Year | |||||
| Sales | $ | 79,000 | $ | 74,000 | ||
| Cost of goods sold | 52,000 | 48,000 | ||||
| Gross margin | 27,000 | 26,000 | ||||
| Selling and administrativeexpenses: | ||||||
| Selling expenses | 8,500 | 8,000 | ||||
| Administrative expenses | 12,000 | 11,000 | ||||
| Total selling and administrativeexpenses | 20,500 | 19,000 | ||||
| Net operating income | 6,500 | 7,000 | ||||
| Interest expense | 600 | 600 | ||||
| Net income before taxes | 5,900 | 6,400 | ||||
| Income taxes | 2,360 | 2,560 | ||||
| Net income | 3,540 | 3,840 | ||||
| Dividends to commonstockholders | 320 | 600 | ||||
| Net income added to retainedearnings | 3,220 | 3,240 | ||||
| Beginning retained earnings | 26,660 | 23,420 | ||||
| Ending retained earnings | $ | 29,880 | $ | 26,660 | ||
Required:
Compute the following financial data and ratios for thisyear:
1. Working capital. (Enter answer inthousands.)
2. Current ratio. (Round your answer to 2 decimalplaces.)
3. Acid-test ratio. (Round your answer to 2 decimalplaces.)
