Use the following information to answer Questions 1 to 3.

Select information for Zoe Bug Inc. (ZBI) appears below:

During 20X9, ZBI sold equipment that originally cost $100,000 for $56,000. Its net book value at time of sale was $62,000.

During 20X9, ZBI acquired $100,000 of land by issuing common shares.

During 20X9, ZBI acquired $20,000 of equipment by finance lease.

Zoe Bug Inc.

Income statement

For the year ended December 31, 20X9

Sales

$550,000

Depreciation expense

$18,000

Other expenses

467,000

Loss on sale of equipment

6,000

491,000

Net income before income taxes

59,000

Income tax expense

26,000

Net income

$ 33,000

Zoe Bug Inc.

Balance sheet

As at December 31, 20X9

Assets

20X9

20X8

Cash

$ 22,000

$ 42,000

Accounts receivable

107,000

81,000

Inventory

135,000

138,000

Prepaid expenses

8,000

7,000

Equipment (net of accumulated depreciation)

265,000

119,000

Land

100,000

0

Total assets

$637,000

$387,000

Liabilities and shareholders' equity

Accounts payable

$ 84,000

$ 58,000

Unearned revenue

10,000

0

Wages payable

2,000

7,000

Finance lease

20,000

0

Bonds payable

160,000

77,000

Common shares

259,000

159,000

Retained earnings

102,000

86,000

Total liabilities and shareholders' equity

$637,000

$387,000

1. What was ZBI's net cash inflow from operating activities for 20X9?

a) $46,000

b) $58,000

c) $64,000

d) $65,000

2. What was ZBI's net cash outflow from investing activities for 20X9?

a) ($170,000)

b) ($150,000)

c) ($146,000)

d) ($132,000)

3. What was ZBI's net cash inflow from financing activities for 20X9?

a) $ 66,000

b) $ 83,000

c) $ 86,000

d) $166,000

Use the following information to answer Questions 4 to 6.

Select information for Meekha's Veterinary Corp. (MVC) appears below:

During 20X7, MVC sold equipment that originally cost $40,000 for $30,000. Its net book value at time of sale was $18,000.

During 20X7, MVC acquired $10,000 of equipment by issuing bonds payable.

During 20X7, MVC acquired $20,000 of equipment by issuing $20,000 of common shares.

During 20X7, MVC sold land that originally cost $50,000.

Meekha's Veterinary Corp.

Income statement

For the year ended December 31, 20X7

Sales

$350,000

Gain on sale of equipment

12,000

Total revenues

$362,000

Depreciation expense

27,000

Other expenses

294,000

Loss on sale of land

5,000

Income tax expense

11,000

Total expenses

337,000

Net income

$ 25,000

Meekha's Veterinary Corp.

Balance sheet

As at December 31, 20X7

Assets

20X7

20X6

Cash

$15,000

$10,000

Accounts receivable

42,000

48,000

Inventory

26,000

24,000

Prepaid expenses

5,000

6,000

Equipment (net of accumulated depreciation)

250,000

170,000

Land

250,000

300,000

Total assets

$588,000

$558,000

Liabilities and shareholders' equity

Accounts payable

$43,000

$46,000

Unearned revenue

9,000

11,000

Wages payable

2,000

3,000

Finance lease

20,000

24,000

Bonds payable

160,000

150,000

Common shares

250,000

200,000

Retained earnings

104,000

124,000

Total liabilities and shareholders' equity

$588,000

$558,000

4. What was MVC's net cash inflow from operating activities for 20X7?

a) $44,000

b) $45,000

c) $46,000

d) $51,000

5. What was MVC's net cash from investing activities for 20X7?

a) $30,000 outflow

b) $20,000 outflow

c) $15,000 outflow

d) $ 7,000 inflow

6. What was MVC's net cash from financing activities for 20X7?

a) $19,000 outflow

b) $15,000 outflow

c) $11,000 inflow

d) $26,000 inflow

Use the following information to answer Questions 7 to 10.

Select information for LKL Ltd. appears below:

LKL Ltd.

Balance sheet

As at December 31

Assets

20X6

20X5

Cash

$500

$390

Accounts receivable

1,120

990

Inventory

980

990

Prepaid expenses

120

130

Plant and equipment (net of accumulated depreciation)

1,550

1,560

Land

1,150

1,150

Intangible assets

320

400

Total assets

$5,740

$5,610

Liabilities and shareholders' equity

Accounts payable

$980

$1,010

Accrued liabilities

130

$150

Unearned revenue

80

70

Income taxes payable

110

40

Long-term debt

490

520

Bonds payable

500

700

Preferred shares

1,200

1,200

Common shares

1,000

800

Retained earnings

1,250

1,120

Total liabilities and shareholders' equity

$5,740

$5,610

LKL Ltd.

Income statement

For the year ended December 31

20X6

20X5

Sales

$4,800

$4,400

Less sales returns and allowances

300

200

Net sales

4,500

4,200

Cost of goods sold

2,750

2,650

Depreciation expense

280

340

Operating expenses

1,020

980

Total expenses

4,050

3,970

Operating income

450

230

Other items

Interest expense

(150)

(130)

Gain on sale of equipment

50

0

Income before income taxes

350

100

Income tax expense

60

10

Net income

$290

$90

The preferred shares are cumulative in nature and entitled to annual dividends of $60.

In 20X6, LKL declared and paid $60 dividends on the preferred shares and $100 on the common shares.

In 20X5, LKL declared and paid $60 dividends on the preferred shares and $0 on the common shares.

7. What was LKL's return on assets (ROA) for its year ended December 31, 20X6?

a) 5.11%

b) 7.67%

c) 7.75%

d) 8.81%

8. What was LKL's leverage ratio for 20X6?

a) 1.73 times

b) 2.55 times

c) 2.72 times

d) 6.31 times

9. What was LKL's rate of return on common shareholders' equity (ROE) for its year ended December 31, 20X6?

a) 6.24%

b) 7.00%

c) 11.03%

d) 13.91%

10. What was LKL's cash conversion cycle in days for 20X6? (Round all interim calculations to two significant decimal places.)

a) 33 days

b) 65 days

c) 79 days

d) 84 days