Question 1

Danny Corporation's total current assets are valued at $233,000 and are comprised of cash, accounts receivable and inventory. Determine the value of the cash account given the following information: sales = $225,000; cost of goods sold = $135,000; accounts receivable turnover = 3 times; inventory turnover = 1.5 times.
A) $68,000
B) $66,000
C) $64,000
D) $62,000
E) $60,000

Accepted Answer

The accounts receivable turnover is calculated as sales divided by accounts receivable, so accounts receivable = sales / accounts receivable turnover = $225,000 / 3 = $75,000. The inventory turnover is calculated as cost of goods sold divided by inventory, so inventory = cost of goods sold / inventory turnover = $135,000 / 1.5 = $90,000. Therefore, cash = total current assets - (accounts receivable + inventory) = $233,000 - ($75,000 + $90,000) = $68,000.

Question 2

The following statement of financial position and statement of comprehensive income should be used.   How will Woodburn's accounts receivable appear on the statement of cash flows for 2018($ in thousands)?
A) $40 operating activity cash outflow.
B) $40 investment activity cash outflow.
C) $40 operating activity cash inflow.
D) $40 investment activity cash inflow.
E) $40 financing activity cash inflow.

Accepted Answer

The answer of The following statement of financial position and...

Question 3

Etling Eccentricities has 400,000 shares of common stock outstanding, net income after tax of $1.2 million, retained earnings of $17 million, and total equity of $35 million. What is EE's earnings per share?
A) $3.00
B) $4.00
C) $4.25
D) $8.75
E) $13.50

Accepted Answer

Earnings per share (EPS) is calculated by dividing the net income by the number of shares outstanding. Thus, EPS = $1,200,000 / 400,000 = $3.00.

Question 4

The net cash from investment activity for 2018 is ($ in millions):
A) -$1,030
B) -$840
C) -$650
D) $840
E) $1,030

Accepted Answer

The answer of   The net cash from investment...

Question 5

Calculate total current assets given the following information. Cash $10,000; supplies $3,000; average collection period 54.75 days; days' sales in inventory 91.25 days; sales $80,000; COGS $60,000.
A) $42,000
B) $40,000
C) $38,000
D) $36,000
E) $34,000

Accepted Answer

To calculate current assets, we need to add cash, supplies, accounts receivable, and inventory. 
Accounts receivable = (average collection period / 365) * sales = (54.75/365) * $80,000 = $12,150
Inventory = (days' sales in inventory / 365) * COGS = (91.25/365) * $60,000 = $15,125
Total current assets = $10,000 + $3,000 + $12,150 + $15,125 = $40,275, which rounds down to $40,000. Therefore, the best choice is B.

Question 6

Calculate gross profit given the following information: accounts receivable = $40,000; inventory = $80,000; receivable turnover = 25 times; inventory turnover = 6 times.
A) $500,000
B) $520,000
C) $540,000
D) $580,000
E) $620,000

Accepted Answer

The answer of Calculate gross profit given the following information:...

Question 7

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?
A) $2.72
B) $3.40
C) $5.28
D) $6.60
E) $10.00

Accepted Answer

The answer of Jorge Corp. of North Bay has 100,000...

Question 8

How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?
A) $15,000 source; $8,000 use
B) $15,000 use; $8,000 source
C) $7,000 use
D) $23,000 use
E) $23,000 source

Accepted Answer

A decrease in accounts receivable (AR) means that cash is collected, which is a source of cash. An increase in inventory means cash is used to purchase more inventory, which is a use of cash.

Question 9

Calculate total equity value given the following information: ROE = 8%; Total assets = $1,000,000 and ROA = 5%
A) $625,000
B) $650,000
C) $700,000
D) $750,000
E) $800,000

Accepted Answer

To find the total equity value, use the formula ROE = Net Income / Equity. First, find Net Income using ROA = Net Income / Total Assets, which gives Net Income = ROA * Total Assets = 5% * $1,000,000 = $50,000. Then, using ROE = 8%, solve for Equity: $50,000 / Equity = 8%, which gives Equity = $50,000 / 0.08 = $625,000.

Question 10

How would a $5,000 increase in AR and a $2,000 decrease in inventory affect cash?
A) $5,000 source; $2,000 use
B) $2,000 source; $5,000 use
C) $5,000 source; $2,000 source
D) $3,000 source
E) $7,000 source

Accepted Answer

An increase in accounts receivable (AR) is a use of cash because it represents sales made on credit, reducing cash flow by $5,000. A decrease in inventory is a source of cash because it indicates that inventory has been sold, increasing cash flow by $2,000.

Question 11

The Frasier Company has a long-term debt ratio of 0.5 and a current ratio of 1.3. Current liabilities are $900, sales are $6,000, profit margin is 10%, and ROE is 19&. What is the amount of the firm's net fixed assets?
A) $7,546
B) $7,046
C) $6,556
D) $6,046
E) $5,556

Accepted Answer

The answer of The Frasier Company has a long-term debt...

Question 12

A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?
A) $480
B) $530
C) $560
D) $580
E) $600

Accepted Answer

To calculate the net cash from operating activity, start with the net income of $530. Add back the non-cash expense of depreciation ($60). Changes in working capital need to be accounted for: accounts payable decreased ($40) which is a use of cash, accounts receivable decreased ($30) which is a source of cash, and inventory increased ($20) which is a use of cash. The decrease in net fixed assets and dividends paid are not considered in operating activities. Therefore, the calculation is $530 + $60 - $40 + $30 - $20 = $560.

Question 13

A firm has a profit margin of 9% on sales of $400,000. There are 10,000 shares of common stock outstanding. What is the earnings per share?
A) $1.80
B) $3.60
C) $4.00
D) $36.00
E) $40.00

Accepted Answer

The profit margin is 9%, so the profit is 9% of $400,000, which is $36,000. With 10,000 shares outstanding, the earnings per share (EPS) is $36,000 / 10,000 = $3.60.

Question 14

Calculate net income given the following information: fixed asset turnover = 8 times; profit margin = 18.75%; net fixed assets = $30,000.
A) $42,000
B) $43,000
C) $44,000
D) $45,000
E) $46,000

Accepted Answer

The answer of Calculate net income given the following information:...

Question 15

Calculate the value of long-term debt given the following information: total debt = $100,000; debt/equity ratio = 0.40; long-term debt ratio = 0.2308.
A) $75,000
B) $70,000
C) $65,000
D) $60,000
E) $55,000

Accepted Answer

Long-term debt = Total debt * Long-term debt ratio = $100,000 * 0.2308 = $23,080

Question 16

The net cash from financing activity for 2018 is ($ in millions):
A) -$975
B) -$775
C) -$475
D) $475
E) $775

Accepted Answer

The answer of   The net cash from financing...

Question 17

Calculate the value of total equity given the following information: total debt ratio = 0.76; total assets = $1,250.
A) $300
B) $325
C) $350
D) $375
E) $400

Accepted Answer

The total debt ratio is defined as total debt divided by total assets. If the total debt ratio is 0.76, it means that 76% of the assets are financed by debt, leaving 24% (100% - 76%) financed by equity. Therefore, the total equity can be calculated as 24% of total assets: 0.24 * $1,250 = $300.

Question 18

The sources of cash include ($ in millions):
A) $220 from accounts payable and $840 from fixed assets.
B) $840 from fixed assets and $70 from accounts receivable.
C) $70 from accounts receivable and $1,540 from common stock.
D) $1,540 from common stock and $220 from accounts payable.
E) $2,125 from long term debt and $1,540 from common stock.

Accepted Answer

The answer of   The sources of cash include...

Question 19

If the firm is currently carrying a price/earnings ratio of 2, what is the firm's approximate market price per share?
A) $8
B) $11
C) $56
D) $78
E) $129

Accepted Answer

The answer of   If the firm is currently...

Question 20

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?
A) $2,568
B) $3,819
C) $4,186
D) $6,283
E) $6,420

Accepted Answer

Net income can be calculated using the return on equity (ROE) formula, where ROE = Net Income / Equity. Given ROE is 12% and total equity is $21,400, the net income = 0.12 * $21,400 = $2,568.

Quiz 3: Working With Financial Statements

The following statement of financial position and statement of comprehensive income should be used. How will Woodburn's accounts receivable appear on the statement of cash flows for 2018($ in thousands) ?

Etling Eccentricities has 400,000 shares of common stock outstanding, net income after tax of $1.2 million, retained earnings of $17 million, and total equity of $35 million. What is EE's earnings per share?

The net cash from investment activity for 2018 is ($ in millions) :

Calculate total current assets given the following information. Cash $10,000; supplies $3,000; average collection period 54.75 days; days' sales in inventory 91.25 days; sales $80,000; COGS $60,000.

Calculate gross profit given the following information: accounts receivable = $40,000; inventory = $80,000; receivable turnover = 25 times; inventory turnover = 6 times.

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?

Calculate total equity value given the following information: ROE = 8%; Total assets = $1,000,000 and ROA = 5%

How would a $5,000 increase in AR and a $2,000 decrease in inventory affect cash?

The Frasier Company has a long-term debt ratio of 0.5 and a current ratio of 1.3. Current liabilities are $900, sales are $6,000, profit margin is 10%, and ROE is 19&. What is the amount of the firm's net fixed assets?

A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?

A firm has a profit margin of 9% on sales of $400,000. There are 10,000 shares of common stock outstanding. What is the earnings per share?

Calculate net income given the following information: fixed asset turnover = 8 times; profit margin = 18.75%; net fixed assets = $30,000.

Calculate the value of long-term debt given the following information: total debt = $100,000; debt/equity ratio = 0.40; long-term debt ratio = 0.2308.

The net cash from financing activity for 2018 is ($ in millions) :

Calculate the value of total equity given the following information: total debt ratio = 0.76; total assets = $1,250.

The sources of cash include ($ in millions) :

If the firm is currently carrying a price/earnings ratio of 2, what is the firm's approximate market price per share?

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?