| | | d. 8.4% 2. The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets | Cash and short-term investments | $ 30,000 | | Accounts receivable (net) | 20,000 | | Inventory | 15,000 | | Property, plant, and equipment | 185,000 | | Total assets | $250,000 | Liabilities and Stockholders Equity | Current liabilities | $ 45,000 | | Long-term liabilities | 70,000 | | Stockholders equityCommon | 135,000 | | Total liabilities and stockholders equity | $250,000 | Income Statement | Sales | $85,000 | | Cost of goods sold | 45,000 | | Gross margin | $40,000 | | Operating expenses | (15,000) | | Interest expense | (5,000) | | Net income | $20,000 | | Number of shares of common stock outstanding | | 6,000 | | Market price of common stock | | $20 | | Total dividends paid | | $9,000 | | Cash provided by operations | | $30,000 | What are the dividends per common share for Diane Company? | | a. | $0.67 | | | b. | $3.00 | | | c. | $1.50 | | | | d. $20.00 3. The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets | Cash and short-term investments | $ 30,000 | | Accounts receivable (net) | 20,000 | | Inventory | 15,000 | | Property, plant, and equipment | 185,000 | | Total assets | $250,000 | Liabilities and Stockholders Equity | Current liabilities | $ 45,000 | | Long-term liabilities | 70,000 | | Stockholders equityCommon | 135,000 | | Total liabilities and stockholders equity | $250,000 | Income Statement | Sales | $85,000 | | Cost of goods sold | 45,000 | | Gross margin | $40,000 | | Operating expenses | (15,000) | | Interest expense | (5,000) | | Net income | $20,000 | | Number of shares of common stock outstanding | | 6,000 | | Market price of common stock | | $20 | | Total dividends paid | | $9,000 | | Cash provided by operations | | $30,000 | What is the dividend yield for Diane Company? | | a. | 13.3% | | | b. | 1.3% | | | c. | 7.5% | | | | d. 0.75% 4. The purpose of an audit is to | | a. | render an opinion on the fairness of the statements | | | b. | determine whether or not a company is a good investment | | | c. | determine whether or not a company complies with corporate social responsibility | | | d. | determine whether or not a company is a good credit risk 5. Based on the following data for the current year, what is the number of days' sales in accounts receivable? | Sales on account during year | $584,000 | | Cost of merchandise sold during year | 300,000 | | Accounts receivable, beginning of year | 45,000 | | Accounts receivable, end of year | 35,000 | | Inventory, beginning of year | 90,000 | | Inventory, end of year | 110,000 | | | a. | 14.6 | | | b. | 25 | | | c. | 7.3 | | | | d.2.5 6. The following information is available for Jase Company: | Market price per share of common stock | $25.00 | | Earnings per share on common stock | $1.25 | Which of the following statements is correct? | | a. | The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of the year. | | | b. | The price-earnings ratio is 5% and a share of common stock was selling for 5% more than the amount of earnings per share at the end of the year. | | | c. | The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year. | | | | d.The market price per share and the earnings per share are not statistically related to each other 7. The balance sheets at the end of each of the first two years of operations indicate the following: | | Year 2 | Year 1 | | Total current assets | $600,000 | $560,000 | | Total investments | 60,000 | 40,000 | | Total property, plant, and equipment | 900,000 | 700,000 | | Total current liabilities | 125,000 | 65,000 | | Total long-term liabilities | 350,000 | 250,000 | | Preferred 9% stock, $100 par | 100,000 | 100,000 | | Common stock, $10 par | 600,000 | 600,000 | | Paid-in capital in excess of parCommon stock | 75,000 | 75,000 | | Retained earnings | 310,000 | 210,000 | If net income is $250,000 and interest expense is $30,000 for Year 2, what are the earnings per share on common stock for Year 2? | | a. | $4.16 | | | b. | $4.02 | | | c. | $2.49 | | | | d. $4.32 8. An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to | | a. | increase | | | b. | remain the same | | | c. | decrease | | | | d.either increase or decrease 9. The independent auditor's report | | a. | summarizes what the auditor did | | | b. | states that the financial statements were presented on time | | | c. | describes which financial statements are covered by the audit | | | | d. gives the auditor's opinion regarding the fairness of the financial statements 10. | Accounts payable | $ 40,000 | | Accounts receivable | 65,000 | | Accrued liabilities | 7,000 | | Cash | 30,000 | | Intangible assets | 40,000 | | Inventory | 72,000 | | Long-term investments | 110,000 | | Long-term liabilities | 75,000 | | Marketable securities | 36,000 | | Notes payable (short-term) | 30,000 | | Property, plant, and equipment | 625,000 | | Prepaid expenses | 2,000 | Based on the above data, what is the amount of working capital? | | a. | $168,000 | | | b. | $203,000 | | | c. | $238,000 | | | d. | $128,000 | | | | | | | | | |
