During 19x5, Reuel Company purchased P1,920,000 of inventory. The cost of goods sold for 19x5 was P1,800,000 and the ending inventory at December 31, 19x5 was P360,000. What was the inventory turnover for 19x5? (SHOW SOLUTION)

a. 5.0

b. 5.3

c. 6.0

d. 6.4

JunJun & Co. has debt ratio of 0.50, a total asset turnover of 0.25 and a profit margin of 10%. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. What new debt ratio, along with the 14% profit margin, is required to double the return on equity? (SHOW SOLUTION)

a. 0.75

b. 0.70

c. 0.65

d. 0.55

Ian Goods, Inc. has a total assets turnover of 0.30 and a profit margin of 10%. The president is unhappy with the current return on assets, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 15% and (2) by increasing total assets turnover. What new asset turnover ratio, along with the 15% profit margin, is required to double the return on total assets? (SHOW SOLUTION)

a. 35%

b. 45%

c. 40%

d. 50%

Per share market price of Far Eastern Co. stock on January 1, 19x8 was P60 and on December 31, 19x8 was P72. Net income for 19x8 was P48,000. Dividends to the preferred stockholders for the year totaled P12,000, and dividends of P2.50 per share were paid on the 6,000 shares of common stock outstanding during the year. The price-earnings ratio for Far Eastern Co. at year end was: (SHOW SOLUTION)

a. 10 to 1

b. 6 to 1

c. 11 to 1

d. 12 to 1

The total assets in the DeidetCo. on December 31, 29x8 were P2.3 million and on December 31, 19x9 were P2.5 million. Income after taxes for 19x9 was P188,000. Dividends for 19x9 totaled P75,000, interest expenses totaled P70,000, and tax rate was 30%. The return on total assets for 19x9 (rounded to the nearest tenth of a percentage point) is: (SHOW SOLUTION)

a. 9.5%

b. 6.8%

c. 9.9%

d. 10.8%

Gilbert Co. presently has a current ratio of 0.8 to 1. The company has been informed by its bank that it must improve its current ratio to qualify for a line of credit. Which of the following actions would improve current ratio?

a. Use cash to pay off some current liabilities

b. Purchase additional marketable securities with cash

c. Acquire a parcel of land in exchange for common stock

d. Purchase additional inventory on credit

A drop in the market price of a firm's common stock will immediately affect its:

a. Return on common stockholders' equity

b. Current ratio

c. Dividend payout ratio

d. Dividend yield ratio

How are dividends per share for common stock used in the calculation of the following?

a. Dividend per-share payout ratio- Denominator, Earnings per share- Denominator

b. Dividend per-share payout ratio- Denominator, Earnings per share- Not used

c.. Dividend per-share payout ratio- Numerator, Earnings per share- Not used

d. Dividend per-share payout ratio- Numerator, Earnings per share- Numerator