Please answer all 4 questions!

1.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%

2. 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

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 are the dividends per common share for Diane Company?

a. $0.67

b. $3.00

c. $1.50

d. $20.00

4. 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 $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?

a. 10.4%

b. 10.5%

c. 11.9%

d. 8.4%