6) The vertical analysis statement of Nobell Inc. is as below:

The figure 47.0% shown for gross profit in 2016 signifies that:

A) gross profit is equal to 47.0% of net income.

B) gross profit is increased by 47.0% over the previous year.

C) gross profit is 47.0% of net sales revenue.

D) gross profit is 47.0% of cost of goods sold.

7) Healthier Cook Company manufactures two products: toaster ovens and bread machines. The following data are available:

	Toaster Ovens	Bread Machines
Sale price	$80	$150
Variable costs	$40	$70

Healthier Cook can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Healthier Cook's production capacity is 1,800 machine hours per month. What is the contribution margin per machine hour for toaster ovens?

A) $235

B) $320

C) $7

D) $20

8) Clay Corporation manufactures two styles of lampsa Bedford Lamp and a Lowell Lamp. The following per unit data are available:

	Bedford Lamp	Lowell Lamp
Sale price	$25	$35
Variable costs	$17	$23
Machine hours required for 1 lamp	2	4

Total fixed costs are $30,000. Marketing data indicate that the company can sell up to 8,000 units of the Bedford lamp and up to 4,000 units of the Lowell lamp. Machine hour capacity is 25,000 hours per year. What product mix will deliver the optimum operating income?

A) 4,500 Bedford lamps, 4,000 Lowell lamps

B) 12,500 Bedford lamps, zero Lowell lamps

C) 8,000 Bedford lamps, 2,250 Lowell lamps

D) 7,500 Bedford lamps, 3,000 Lowell lamps

9) Delleate Inc. has prepared the following purchases budget:

Month	Budgeted Purchases
June	$67,000
July	72,500
August	76,300
September	73,700
October	69,200

All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. Calculate balance of Accounts payable at the end of October.

A) $77,680

B) $91,760

C) $69,330

D) $74,290

10) Gladeer Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Use the tables below and determine the internal rate of return.

Present value of $1:

	8%	9%	10%	11%
1	0.926	0.917	0.909	0.901
2	0.857	0.842	0.826	0.812
3	0.794	0.772	0.751	0.731
4	0.735	0.708	0.683	0.659
5	0.681	0.65	0.621	0.593

The IRR of the project will be:

A) between 9% and 10%.

B) less than 8%

C) less than 9%, more than 8%

D) more than 10%

11) Olivera Inc. provides the following data for the year 2015:

Sales Revenue	$625,000
Sales Returns and Allowances	20,000
Sales Discounts	5,000
Net Sales Revenue	$600,000

Assume the cost of goods sold is $350,000. On vertical analysis report, gross profit as a percentage of net sales will be:

41.67%

35.9%

56.1%

44.1%

12) Peartree Inc. provides the following income statement for the year 2015:

	2015
Net Sales	$240,000
Cost of Goods Sold	110,000
Gross Profit	$130,000
Operating Expenses:
Selling Expenses	45,000
Administrative expenses	12,000
Total Expenses	57,000
Operating Income	$73,000
Other Revenues and (Expenses):
Loss of sale of capital assets	(23,000)
Interest Expense	(1,000)
Total Other Revenues and (Expenses)	(24,000)
Income Before Taxes	$49,000
Income Tax Expense	5,000
Net Income	$44,000

Calculate the times interest earned ratio.

13) Atlantis Inc. reported the following data:

Increase (Decrease)
(in millions)	2015	2014	Amount	Percentage
Assets Current Assets:
Cash	$10,000	$7,200	$2,800	38.9%
Accounts Receivable, net	15,600	16,800	(1,200)	(7.1)%
Merchandise Inventory	38,000	31,000	7,000	22.6%
Total Current Assets	63,600	55,000	8,600	15.6%
Property, plant and equipment, net	195,000	168,000	27,000	16.1%
Other long term assets	15,000	27,100	(12,100)	(44.6%)
Total assets	$273,600	$250,100	$23,500	9.4%
Liabilities
Current liabilities:
Accounts payable	$8,500	$7,300	$1,200	16.4%
Other current liabilities	1,400	3,900	(2,500)	(64.1%)
Total current liabilities	9,900	11,200	(1,300)	(11.6%)
Long term notes payable	54,000	30,000	24,000	80.0%
Total liabilities	$63,900	41,200	$22,700	55.1%
Stockholders Equity
Common stock	$12,000	$12,000	$0	0.0%
Paid in capital in excess of par	$149,000	149,000	0	0.0%
Retained earnings	48,700	47,900	800	1.7%
Total stockholders equity	$209,700	$208,000	$800	0.4%
Total liabilities and stockholders equity	$273,600	$250,100	$23,500	9.4%

The horizontal report shows that the amount of total liabilities has:

increased by $2,500.

decreased by $2,500.

increased by $22,700.

14) eBay Inc. provides the following data:

	2015	2014
Assets
Current Assets:
Cash and Cash Equivalents	$29,000	$25,000
Accounts Receivable, Net	31,000	62,000
Merchandise Inventory	53,000	50,000
Total Current Assets	$113,000	137,000
Property, Plant, and Equipment, Net	120,000	120,000
Total Assets	$233,000	257,000
Net Sales	$500,000
Cost of Goods Sold	(150,000)
Gross Profit	$350,000

Calculate the asset turnover for the year 2015.

1.22 times

1.55 times

2.04 times

7.27 times

15) The following is a summary of information presented on the financial statements of a company on December 31, 2015.

Account	2015	2014
Current Assets	$65,000	$50,000
Accounts Receivable	80,000	75,000
Merchandise Inventory	50,000	40,000
Current Liabilities	75,000	50,000
Long-term Liabilities	30,000	50,000
Common Stock	50,000	40,000
Retained Earnings	40,000	25,000
Net Sales Revenue	$525,000	$500,000
Cost of Goods Sold	400,000	395,000
Gross Profit	$125,000	$105,000
Selling Expenses	45,000	50,000
Net Income before income tax expense	$80,000	$55,000
Income tax expense	24,000	16,500
Net income	$56,000	$38,500

What would a horizontal analysis report show with respect to current liabilities?

a 33.3% increase in current liabilities

a current ratio of 0.87

current liabilities are 38.46% of total capital

a 50.00% increase in current liabilities