Table 12-4

Carson Picture Company

Income Statement

(in thousands)

For the Years Ended December 31, 2X10 and 2X09

2X10 2X09

Sales $999 $800

Less Cost of Goods Sold 399 336

Gross Profit $600 $464

Less Operating Expenses:

Wage Expenses $214 $150

Rent Expense 120 120

Miscellaneous Expense 100 50

Depreciation Expense 40 40

Total Operating Expenses $474 $360

Operating Income $126 $104

Less Other Expense:

Interest Revenue $ 36 $ 36

Interest Expense (12) (12)

Income before Tax $150 $128

Less: Income Tax Expense 60 48

Net Income $ 90 $ 80

Earnings Per Share $ .45 $ .40

Annual Common Dividends Per Share $ .40 $ .20

Closing Market Price Common Stock, 12/31 $9.00 $6.00

Current Assets: 2X10 2X09

Cash $150 $ 57

Accounts Receivable 95 70

Accrued Interest Receivable 15 15

Inventory 20 60

Prepaid Rent 10 --

Total Current Assets $290 $202

Long-Term Assets:

Long-Term Note Receivable $288 $288

Equipment, less Accumulated Depreciation

of $120 and $80 80 120

Total Long-Term Assets $368 $408

Total Assets $658 $610

Current Liabilities:

Accounts Payable $ 90 $ 65

Accrued Wages Payable 24 10

Accrued Income Taxes Payable 16 12

Accrued Interest Payable 9 9

Unearned Sales Revenue -- 5

Current Portion

of Long-Term Notes Payable 80 --

Total Current Liabilities $219 $101

Long-Term Liabilities:

Notes Payable 40 120

Total Liabilities $259 $221

Stockholders' Equity:

Common Stock $102 $102

Retained Earnings 297 287

Total Stockholders' Equity $399 $389

Total Liabilities and

Stockholders' Equity $658 $610

17) Referring to Table 12-4, what is the price-earnings ratio for Carson Picture Company in 2X10? Has the price-earnings ratio improved or not improved since 2X09?

A) 15, not improved

B) 15, improved

C) 15, unknown

D) 20, improved

E) 20, not improved

18) Referring to Table 12-4, what is the dividend-yield for Carson Picture Company in 2X10? Has the dividend-yield increased or decreased since 2X09?

A) 10.0%, decreased

B) 3.3%, decreased

C) 4.4%, increased

D) 4.4%, decreased

E) 3.3%, increased

19) Referring to Table 12-4, what is the dividend-payout for Carson Picture Company in 2X10? Has the dividend-payout increased or decreased since 2X09?

A) 100%, increased

B) 89%, decreased

C) 89%, increased

D) 50%, increased

E) 50%, decreased