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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

  1. 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 provides an accurate interpretation of one of these ratios?

  1. Each dollar invested in B&Bs assets generated about 14 cents of profit.
  2. For every dollar of sales revenue, B&B generated about 14 cents of profit.
  3. The profit margin ratio is about 21 cents of every dollar of revenue.
  4. B&B generated about 21 cents of profit for every share of common stock owned by investors.

  1. 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

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?

  1. $0.10
  2. $0.50
  3. $1.00
  4. $2.00

  1. 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?

  1. 23.86 percent
  2. 26.92 percent
  3. 35.28 percent
  4. 45.65 percent

  1. 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?

  1. $400,000
  2. $550,000
  3. ($200,000)
  4. $330,000

  1. 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?

  1. $431,800
  2. $421,800
  3. $418,200
  4. $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?

  1. $ 767,000
  2. $ 903,500
  3. $ 773,500
  4. $ 973,000

17. B&B statement of cash flow appears below:

Operating activities

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

Investing activities

Equipment

(6,500)

Cash flow from investing

(6,500)

Financing activities

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?

  1. B&B has a strong discretionary cash flow.
  2. B&B is unable to undertake discretionary, value-creating actions.
  3. B&B has very little cash available for corporate use.
  4. 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

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?

  1. $29,000
  2. $30,500
  3. $40,500
  4. $38,500

  1. What requirement did the U.S. Securities and Exchange Commission mandate for reporting pro forma earnings?

  1. Companies may not report pro forma earnings.
  2. Companies may report pro forma earnings only with their audited financial statements.
  3. Companies must report GAAP-based earnings first in their public earnings announcements and must reconcile pro forma earnings amounts with their GAAP-based earnings.
  4. 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?

  1. $485,000
  2. $495,000
  3. $535,000
  4. $515,000

  1. Presented below is information from B&B, Inc.:

Amounts in millions

Year 2

Year 1

Balance sheet

Total assets

$17,155

$16,377

Shareholders' equity

3,152

3,939

Income statement

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?

  1. 87.37%
  2. 12.33%
  3. 19.28%
  4. 33.01%

  1. Presented below are select financial data from B&Bs annual report:

Amounts in millions

Year 1

Year 2

Balance sheet

Accounts receivable (net)

$9,367

$10,250

Inventory

6,860

6,239

Income statement

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?

  1. 89.2 days
  2. 77.2 days
  3. 37.7 days
  4. 64.5 days

  1. Presented below are select financial data from B&Bs annual report:

Amounts in millions

Year 1

Year 2

Balance sheet

Accounts receivable (net)

$9,367

$13,765

Inventory

6,860

6,500

Income statement

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?

  1. 158.1 days
  2. 188.5 days
  3. 249.1 days
  4. 365.0 days

24. Which of the following statements is true?

  1. The current ratio is a measure of firm solvency.
  2. The current ratio is a measure of firm liquidity.
  3. The debt-to-total assets ratio is a measure of firm liquidity.
  4. 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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