Question 1

The following data were reported for Favre Company: $$\begin{array} { l l } 
\text { Net income } & \$ 275,000 \
\text { Total dividends declared and paid on common stock } & \$ 0.60 \text { per share } \
\text { Common stock, par } \$ 10 & \$ 1,750,000 \
\text { Market price } & \$ 20.00 \text { per share } \
\text { Cash flows from operating activities } & \$ 280,000
\end{array}$$ Required:
Calculate each of the following ratios. Round your answers to two decimal places. 
A. Dividend yield
B. Price/earnings ratio
C. Quality of income

Accepted Answer

The answer of The following data were reported for Favre...

Question 2

Indicate the effect of each item on the particular ratio of that row of the schedule. In the last column of the schedule, place the answer of the effect of the item on the ratio. Use the letter I for increase in the ratio, D for decrease in the ratio, and N for no effect on the ratio. Each item is independent of the others. \(\begin{array}{|l|l|l|l|c|}
\hline\text { Ratio }&&\text { Ratio Value } & \text { Item } &I,D,or,N\
&&\text { Before the } & \
&&\text { Item Occurred } & \
\hline \text { A. } & \text { Current ratio } & 3.0 & \begin{array}{l}
\text { Borrowed money by issuing bonds } \
\text { that mature at the end of } 15 \text { years. }
\end{array} & \
\hline \text { B. } & \text { Quick } & 1.0 & \begin{array}{l}
\text { Returned damaged inventory to the } \
\text { supplier. The goods were not yet } \
\text { paid for. }
\end{array} & \
\hline \text { C. } & \begin{array}{l}
\text { Receivable } \
\text { turnover }
\end{array} & \begin{array}{c}
12 \text { times per } \
\text { year }
\end{array} & \begin{array}{l}
\text { At the beginning of the current year } \
\text { sales terms were changed from } \
\text { terms of "net due in } 30 \text { days" to } \
\text { "net due in } 60 \text { days" }
\end{array} &  \
\hline \text { D. } & \begin{array}{l}
\text { Earnings per } \
\text { share }
\end{array} & \$ 2.00 & \text { Issued a } 50 \% \text { stock dividend. } & \
\hline \text { E. } & \text { Current ratio } & 4.0 & \begin{array}{l}
\text { Sold a short-term investment at a } \
\text { gain. }
\end{array} &  \
\hline \text { F. } & \begin{array}{l}
\text { Fixed asset } \
\text { turnover }
\end{array} & 1.4 & \text { Sold a building at a loss. } & \
\hline \text { G. } & \text { Profit margin } & .25 & \begin{array}{l}
\text { A customer returned goods and } \
\text { received a } \$ 1,000 \text { credit on account. } \
\text { The goods had been sold at a } 30 \% \
\text { gross profit percentage. }
\end{array} &  \
\hline
\end{array}\)

Accepted Answer

The answer of Indicate the effect of each item on...

Question 3

Carolina Company computed the following ratios for a two-year period: $\begin{array}{lcc}\text { Ratio }&2013&2014\
1.\text { Current ratio } & 1.3 & .6 \
2.\text { Return on equity } & 25 \% & 16 \% \
3.\text { Quality of income } & 1.7 & .5 \
4.\text { Cash coverage ratio } & 346 & 122 \
5.\text { Profit margin } & 6 \% & 4 \%
\end{array}$ Required: 
A. Comment on the trend of each of the ratios from 2013 to 2014. State concerns or possible implications brought to light by each ratio.
B. State an overall opinion of the company's near future with suggestions for improvement.

Accepted Answer

The answer of Carolina Company computed the following ratios for...

Question 4

At the end of 2014, Jared Corporation reported a return on assets of 16%; net income of $42,000; average total assets of $365,000, and average total liabilities of $165,000.
Required:
What was Jared's financial leverage percentage?

Accepted Answer

The answer of At the end of 2014, Jared Corporation...

Question 5

At the end of 2014, Doran Corporation reported net income of $70,000, gross sales revenue of $1,525,000, and sales returns of $125,000.
Required:
Calculate the profit margin ratio.

Accepted Answer

The answer of At the end of 2014, Doran Corporation...

Question 6

The following financial data are available for Murphy Company: $$\begin{array} { l r } 
\text { Operating income } & \$ 236,500 \
\text { Net income } & 196,300 \
\text { Earnings per share } & 2.45 \
\text { Dividends paid per share } & 1.25 \
\text { Average common stockholders' equity } & 985,000 \
\text { Average total assets } & 1,870,000 \
\text { Current market price per share } & 24.50 \
\text { Book value per share } & 12.30
\end{array}$$ Required:
Calculate each of the following ratios. Round your answers to two decimal places. 
A. Return on equity
B. Price/earnings ratio
C. Dividend yield

Accepted Answer

The answer of The following financial data are available for...

Question 7

Complete the following income statement for the dollar amounts and the component percentages: $\begin{array}{lrr}&\text { Dollar \$ }&\text {Component }\
&\text { Amount } &\text { Percentages \% }\\hline
\text { Sales revenue } & \
\text { Cost of goods sold } & & 40 \% \
\text { Gross profit } & \$ 120,000 & \
\text { Operating expenses } & \
\text { Interest expense } &  & 2 \% \
\text { Income before income tax } & \
\text { Income tax expense (rate } 20 \%) &  \
\text { Net income } & & 6 \%
\end{array}$

Accepted Answer

The answer of Complete the following income statement for the...

Question 8

Longhorn Company reported the following data at year-end: $$\begin{array} { l r } 
\text { Total stockholders' equity } & \$ 200,000 \
\text { Current liabilities } & 75,000 \
\text { Total assets } & 350,000 \
\text { Current assets } & 80,000 \
\text { Common stock (par } \$ 10 ) & 125,000
\end{array}$$ Required:
Calculate each of the following ratios. Round your answers to two decimal places. 
A. Debt-to-equity ratio
B. Current ratio

Accepted Answer

The answer of Longhorn Company reported the following data at...

Question 9

The 2014 financial statements of Companies Y and Z showed the following: $\begin{array}{lcc}&\text { Company }\\text { Item }&Y&Z\
\text { Net sales revenue } & \$ 150,000 & \$ 200,000 \
\text { Profit margin } & 6 \% & 5 \% \
\text { Total average assets } & \$ 40,000 & \$ 80,000 \
\text { Financial leverage percentage } & -5 \% & +6.5 \% \
\text { Interest expense (net of tax) } & \$ 1,000 & \$ 800
\end{array}$ Required:
Part A: For each company, calculate the items listed in the following tabulation. $\begin{array}{lcc}&\text { Company }\\text { Item }&Y&Z\
1.\text { Net income } & \$  & \$ \
2.\text { Return on assets } &  \% & \% \
3.\text { Return on equity } &  \% & \% \
4.\text { Average stockholders' equity } & \$ & \$
\end{array}$ Part B: Assuming both Company Y and Company Z are in the same industry, which company (Y or Z) appears to be the better investment and why?

Accepted Answer

The answer of The 2014 financial statements of Companies Y...

Question 10

Polk Corporation reported the following information related to its common stock (par $10) outstanding and net income: $$\begin{array} { l r } 
\text { Total stockholders' equity (no preferred stock) } & \$ 125,000 \
\text { Current market price per share of common stock } & \$ 40.00 \
\text { Dividends declared and paid during 2015 } & \$ 10,000 \
\text { Balance in the common stock account } & \$ 40,000 \
\text { Net income } & \$ 35,000
\end{array}$$ Required:
Calculate each of the following ratios. Round your answers to two decimal places. 
A. Price/earnings ratio
B. Dividend yield

Accepted Answer

The answer of Polk Corporation reported the following information related...

Quiz 13: Analyzing Financial Statements

At the end of 2014, Jared Corporation reported a return on assets of 16%; net income of $42,000; average total assets of $365,000, and average total liabilities of $165,000. Required: What was Jared's financial leverage percentage?

At the end of 2014, Doran Corporation reported net income of $70,000, gross sales revenue of $1,525,000, and sales returns of $125,000. Required: Calculate the profit margin ratio.