QUESTIONS...

Which financial factor in the following list is most likely to be a cause of a going-concern problem?

Multiple Choice

• A high inventory turnover ratio.

• A high current ratio.

• Excessive reliance on debt financing.

• Stable net income growth.

Based on the following information, calculate the price to earnings ratio.

Net sales revenue	$900,000
Expenses	$500,000
Interest	$10,000
Income tax expense	$90,000
Net cash from operations	$290,000
Assets end of current year	$600,000
Liabilities end of current year	$100,000
Shareholders equity end of current year	$500,000
Assets end of previous year	$590,000
Shareholders equity end of previous year	$490,000
Common shares outstanding	40,000 shares
Current market price of shares	$15 per share

Multiple Choice

• 2.00

• 2.07

• 1.50