Question
At the end of the most current year, B&B reported the following key performance indicators: Return on Assets 14.21% Return on Equity 21.11% Which statement
- At the end of the most current year, B&B reported the following key performance indicators:
Return on Assets | 14.21% |
Return on Equity | 21.11% |
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Which statement provides an accurate interpretation of one of these ratios?
- Each dollar invested in B&Bs assets generated about 14 cents of profit.
- For every dollar of sales revenue, B&B generated about 14 cents of profit.
- The profit margin ratio is about 21 cents of every dollar of revenue.
- B&B generated about 21 cents of profit for every share of common stock owned by investors.
- B&B Corporation reported the following amounts in its comparative balance sheets:
Amounts in thousands | Dec. 31, Yr 2 | Dec. 31, Yr 1 |
Current assets | $ 32,000 | $ 30,000 |
Non-current assets | 178,000 | 174,000 |
Total assets | $210,000 | $204,000 |
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Current liabilities | $35,000 | $26,000 |
Non-current liabilities | 31,000 | 38,000 |
Shareholders equity | 144,000 | 140,000 |
Its income statement reported sales revenue of $210,000,000 for Year 2.
How much sales revenue did B&B generate for every dollar invested in the business assets?
- $0.10
- $0.50
- $1.00
- $2.00
- Presented below are Income Statement data for B&B:
Operating expenses $ 62,000
Other expenses 11,000
Income taxes 10,500
Cost of goods sold 25,200
Net revenue 200,000
What is the companys return on sales?
- 23.86 percent
- 26.92 percent
- 35.28 percent
- 45.65 percent
- B&B provided the following information:
Depreciation expense | $ 30,000 |
Funds borrowed from the bank | 200,000 |
Dividends paid to shareholders | 100,000 |
Proceeds from sale of building | 750,000 |
Purchase of inventories | 600,000 |
Purchase of equipment | 200,000 |
How much is the net cash from (for) investing activities?
- $400,000
- $550,000
- ($200,000)
- $330,000
- B&B reported net income totaling $300,000. Depreciation expense for the year was $122,000. Accounts receivable decreased by $2,300, inventory increased by $4,500, dividends paid totaled $10,000, accounts payable increased by $5,000, and taxes payable increased by $7,000.
How much is the companys cash flow from operations?
- $431,800
- $421,800
- $418,200
- $417,800
16. B&B presented the following income statement for the year:
Sales | $4,400,000 |
Cost of goods sold | 2,140,000 |
Restructuring charges | 548,000 |
Litigation settlement | 75,000 |
Other operating expenses | 870,000 |
Income before taxes and extraordinary loss | 767,000 |
Income taxes expense | 198,450 |
Income after taxes | 568,550 |
Extraordinary loss, net of $77,000 taxes | (143,000) |
Net income | $ 425,550 |
B&B has a 30% income tax rate. How much are B&B's sustainable earnings?
- $ 767,000
- $ 903,500
- $ 773,500
- $ 973,000
17. B&B statement of cash flow appears below:
Operating activities |
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| Net income | $20,400 |
| Depreciation expense | 7,500 |
| Accounts receivable | 2,200 |
| Inventory | (4,100) |
| Accounts payable | 1,000 |
Cash flow from operations | 27,000 | |
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Investing activities |
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| Equipment | (6,500) |
Cash flow from investing | (6,500) | |
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Financing activities |
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| Common stock issued | 10,200 |
| Long-term note payable | (16,600) |
| Dividends paid | (13,200) |
Cash flow from financing | (19,600) | |
Net decrease in cash | 900 | |
Cash, beginning of year | 16,500 | |
Cash, end of year | $17,400 |
What can be said about B&Bs discretionary cash flow for the year?
- B&B has a strong discretionary cash flow.
- B&B is unable to undertake discretionary, value-creating actions.
- B&B has very little cash available for corporate use.
- B&B has $27,000 generated from operations to use to pay it obligations.
18. The income statement for B&B, Inc. appears below:
Revenue | $75,000 |
Cost of goods sold | 25,000 |
Depreciation expense | 16,000 |
Other operating expenses | 4,000 |
Income tax expense | 7,000 |
Net income | $23,000 |
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During the year, B&Bs cash increased by $2,100, accounts receivable increased by $600, inventory decreased by $1,900, accounts payable increased by $200 and dividends were paid of $2,000.
How much is the companys cash flow from operations?
- $29,000
- $30,500
- $40,500
- $38,500
- What requirement did the U.S. Securities and Exchange Commission mandate for reporting pro forma earnings?
- Companies may not report pro forma earnings.
- Companies may report pro forma earnings only with their audited financial statements.
- Companies must report GAAP-based earnings first in their public earnings announcements and must reconcile pro forma earnings amounts with their GAAP-based earnings.
- Companies may report pro forma earnings only if the pro forma earnings amount is greater than GAAP-based earnings.
20. The following information is available from the financial statements of B&B for the year ended December 31:
| Net Income | $520,000 |
| Increase in Accounts Payable | $10,000 |
| Depreciation Expense | $20,000 |
| Payment of Dividends | $5,000 |
| Decrease in Accounts Receivable | $15,000 |
| Increase in Inventories | $10,000 |
| Decrease in Income Taxes Payable | $20,000 |
What are B&Bs Cash Flows from Operating Activities?
- $485,000
- $495,000
- $535,000
- $515,000
- Presented below is information from B&B, Inc.:
Amounts in millions | Year 2 | Year 1 | |
Balance sheet |
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| Total assets | $17,155 | $16,377 |
| Shareholders' equity | 3,152 | 3,939 |
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Income statement |
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| Net sales | $15,560 | $17,517 |
| Net income | 3,000 | 1,965 |
During the year, B&B paid preferred dividends totaling $960 million. What percentage of B&Bs Year 2 net income remains from each dollar of sales after subtracting all expenses?
- 87.37%
- 12.33%
- 19.28%
- 33.01%
- Presented below are select financial data from B&Bs annual report:
Amounts in millions | Year 1 | Year 2 |
Balance sheet |
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Accounts receivable (net) | $9,367 | $10,250 |
Inventory | 6,860 | 6,239 |
Income statement |
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Net sales | $52,716 | $41,948 |
Cost of goods sold | 7,541 | 8,525 |
How many days, on average, did it take Pfizer to collect an outstanding receivable during Year 2?
- 89.2 days
- 77.2 days
- 37.7 days
- 64.5 days
- Presented below are select financial data from B&Bs annual report:
Amounts in millions | Year 1 | Year 2 |
Balance sheet |
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Accounts receivable (net) | $9,367 | $13,765 |
Inventory | 6,860 | 6,500 |
Income statement |
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Net sales | $52,716 | $62,800 |
Cost of goods sold | 7,541 | 9,525 |
If B&B were to allow its inventory level to drop to zero units on hand at December 31, Year 2, and its sales remained steady, how long would it take to sell its entire inventory?
- 158.1 days
- 188.5 days
- 249.1 days
- 365.0 days
24. Which of the following statements is true?
- The current ratio is a measure of firm solvency.
- The current ratio is a measure of firm liquidity.
- The debt-to-total assets ratio is a measure of firm liquidity.
- None of the above is true.
25. B&B Company has net sales of $190,000, an ending balance in accounts receivable of $18,000 and accounts payable of $15,000. What is the companys receivable turnover?
A. 13.97
B. 12.67
C. 10.55
D. 19.23
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