Question 6 Use the following to answer questions 6 - 10 Given below are comparative balance sheets and an income statement for Pearl Corporation Pearl Corporation Balance Sheets ? 2005 Dec. 31 Jan. 1 Pearl Corporation Income Statement for the 2005 Cash $ 15,000 $ 15,000 Sales $220,000 Accounts receivable 45,000 37,000 Cost of goods sold (132,250) Inventory 32,000 35,000 Gross profit on sales $ 87,750 Equipment (net) 55,000 64,000 Operating expenses (72,950) $147,000 $151,000 Operating income $ 14,800 Accounts payable 25,000 28,000 Interest expense and income taxes (8,750) Dividends payable 8,000 4,000 Net income $ 6,050 Long-term note payable 14,000 14,000 Capital stock, $5 par 70,000 70,000 Retained earnings 30,000 35,000 $147,000 $151,000 All sales were made on account. Cash dividends declared during the year totaled $11,050. 6. Refer to the above data. Pearl Corporation's accounts receivable turnover for 2005 is: A) 4.6 times. B) 2.9 times. C) 5.4 times. D) 68 days. 7. Refer to the above data. Pearl Corporation's inventory turnover for 2005 is: A) 6.6 times. B) 3.9 times. C) 4.1 times. D) 94 days. 8. Refer to the above data. Pearl Corporation's gross profit rate for 2005 is: A) 60.1%. B) 39.9%. C) 33%. D) 68%. 9. Refer to the above data. Pearl Corporation's return on assets for 2005, rounded to the nearest tenth of a percent, is A) 9.9%. B) 4.1%. C) 5.9%. D) 16.9%. 10. Refer to the above data. Pearl Corporation's return on common stockholders' equity for 2005, rounded to the nearest tenth of a percent, is: A) 5.9.%. B) 6.05%. C) 14.4%. D) 9.4%. 12. Quick assets include which of the following A). Cash, marketable securities and receivables. B). Cash, marketable securities and inventories. C). Cash, inventories and receivables D). Market securities, receivables and inventories. 14. In evaluating the quality of a company's earnings, which of the following factors is least important? Answer A). The accounting methods used by management. B). The trend of the company's earnings over a period of years. C). The dollar amount of earnings per share. D). The stability and sources of the company's earnings.