Question 1

The Simmons Company reported retained earnings in 2013 of $4750.In 2014,Simmons earned $1120 before taxes and paid a dividend of $730.Simmon's tax rate is 34%.What is Simmons' retained earnings?

Accepted Answer

The answer of The Simmons Company reported retained earnings in...

Question 2

The Lo-Gro Co.in 2014 had equity of $15 million,net income of $1,800,000 of which 60% was paid out as dividends.The sustainable growth rate for the Lo-Gro Co.is:
A) 0.48%.
B) 4.80%.
C) 0.72%.
D) 7.20%.

Accepted Answer

The sustainable growth rate can be calculated using the formula: Sustainable Growth Rate = ROE * (1 - dividend payout ratio). Here, ROE (Return on Equity) = Net Income / Equity = $1,800,000 / $15,000,000 = 0.12 or 12%, and the dividend payout ratio is 60%, so the retention ratio (b) is 1 - 0.60 = 0.40. Thus, Sustainable Growth Rate = 0.12 * 0.40 = 0.048 or 4.80%.

Question 3

Pion Inc.reported current assets of $80 and fixed assets of $150 as of December 31.The company,as of December 31,also reports current liabilities of $72 and long-term liabilities of $149.Calculate Pion's shareholder's equity.

Accepted Answer

The answer of Pion Inc.reported current assets of $80 and...

Question 4

What is the cash flow of the firm for 2014?

Accepted Answer

The answer of What is the cash flow of the...

Question 5

Pete's Boats has beginning long-term debt of $180 and ending long-term debt of $210.The beginning and ending total debt balances are $340 and $360,respectively.The interest paid is $20.What is the amount of the cash flow to creditors?
A) -$10.
B) $0.
C) $10.
D) $40.
Cash flow to creditors = $20 - ($210 - $180) = -$10

Accepted Answer

Cash flow to creditors is calculated as interest paid minus the net increase in long-term debt. Here, it is $20 - ($210 - $180) = $20 - $30 = -$10.

Question 6

The Paymore Co.reported the following long-term liabilities and stockholder's equity for 2014:

Accepted Answer

The answer of The Paymore Co.reported the following long-term liabilities...

Question 7

Logit Co.paid dividends of $400.And retained 33.33% of their earnings.The sales for the year were $12,000 and total assets of 10,000.What was the rate of return on assets?
A) 5%.
B) 6%.
C) 10%.
D) 12%.

Accepted Answer

The rate of return on assets (ROA) is calculated as net income divided by total assets. Given that Logit Co. retained 33.33% of its earnings, it implies that 66.67% of its earnings were paid out as dividends. With $400 paid in dividends, this represents 66.67% of earnings, meaning total earnings were $600 ($400 / 0.6667). The ROA is then $600 (net income) / $10,000 (total assets) = 0.06 or 6%.

Question 8

The Lo-Gro Co.in 2014 had equity of $15 million,net income of $1,800,000 of which 60% was paid out as dividends.The ROE and retained earnings for the Lo-Gro Co.are:
A) 1.2%; $720,000.
B) 4.8%; $720,000.
C) 12%; $1,080,000.
D) 12%; $720,000.

Accepted Answer

ROE is calculated as Net Income / Equity. For Lo-Gro Co., this is $1,800,000 / $15,000,000 = 0.12 or 12%. Retained earnings are the portion of net income not paid out as dividends, which is 40% of $1,800,000 (100% - 60% = 40%), equaling $720,000.

Question 9

Grady's Candies paid a total of $32 million in dividends in 2014.In addition,the company issued $22.5 million in new stock in that year.What was Grady's cash flow to stockholder's in 2014?

Accepted Answer

The answer of Grady's Candies paid a total of $32...

Question 10

What is the change in the net working capital from 2013 to 2014?

Accepted Answer

The answer of What is the change in the net...

Question 11

Based on the following information,calculate stockholders equity:
cash = $5.00
accounts payable = $12.00
other current liabilities = $65.00
accounts receivable = $20.00
inventory = $50.00
net fixed assets = $175.00
long-term debt = $40.00

Accepted Answer

The answer of Based on the following information,calculate stockholders equity:
cash...

Question 12

Peggy Grey's Cookies has net income of $360.The firm pays out 40% of the net income to its shareholders as dividends.During the year,the company sold $80 worth of common stock.What is the cash flow to stockholders?
A) $64.
B) $136.
C) $144.
D) $224.
Cash flow to stockholders = .40($360) - $80 = $64

Accepted Answer

We can use the formula for cash flow to stockholders, which is dividends paid out (0.40 x net income) minus any new equity raised (in this case, $80 from selling common stock). Plugging in the values given, we get: 
Cash flow to stockholders = (0.40 x $360) - $80 
Cash flow to stockholders = $144 - $80 
Cash flow to stockholders = $64 
Therefore, the answer is choice A, $64.

Question 13

Cos Co.'s after-tax net income was $120.Their interest paid was $50.Assuming the corporate tax is 40%,what is Cos CO.'s interest coverage ratio?
A) 6.7.
B) 2.4.
C) 1.44.
D) 5.0.

Accepted Answer

The answer of Cos Co.'s after-tax net income was $120.Their...

Question 14

Assuming that the current ratio is currently 2,which of the following actions will increase it?
A) Purchasing inventory with cash.
B) Purchasing inventory on short-term credit.
C) Paying off a short-term bank loan with long-term debt.
D) A customer paying an overdue bill.

Accepted Answer

The answer of Assuming that the current ratio is currently...

Question 15

The Hi-Lite Corp.had a profitable year and their ROE was 14.4%.The company paid out $1.20 of their earnings of $3.00 for the year.The market price of their stock at year end was $28.What was Hi-Lite's price-earnings ratio?
A) 23.33.
B) 9.33.
C) 4.03.
D) 12.10.

Accepted Answer

The price-earnings (P/E) ratio is calculated by dividing the market price per share by the earnings per share (EPS). Here, EPS = $3.00, and the market price = $28. So, P/E ratio = $28 / $3.00 = 9.33.

Question 16

Discuss the difference between book values and market values on the Statement of Financial Position and explain which is more important to the financial manager and why.

Accepted Answer

The answer of Discuss the difference between book values and...

Quiz 2: Accounting Statements and Cash Flow

The Simmons Company reported retained earnings in 2013 of $4750.In 2014,Simmons earned $1120 before taxes and paid a dividend of $730.Simmon's tax rate is 34%.What is Simmons' retained earnings?

The Lo-Gro Co.in 2014 had equity of $15 million,net income of $1,800,000 of which 60% was paid out as dividends.The sustainable growth rate for the Lo-Gro Co.is:

Pion Inc.reported current assets of $80 and fixed assets of $150 as of December 31.The company,as of December 31,also reports current liabilities of $72 and long-term liabilities of $149.Calculate Pion's shareholder's equity.

What is the cash flow of the firm for 2014?

Pete's Boats has beginning long-term debt of $180 and ending long-term debt of $210.The beginning and ending total debt balances are $340 and $360,respectively.The interest paid is $20.What is the amount of the cash flow to creditors?

The Paymore Co.reported the following long-term liabilities and stockholder's equity for 2014:

Logit Co.paid dividends of $400.And retained 33.33% of their earnings.The sales for the year were $12,000 and total assets of 10,000.What was the rate of return on assets?

The Lo-Gro Co.in 2014 had equity of $15 million,net income of $1,800,000 of which 60% was paid out as dividends.The ROE and retained earnings for the Lo-Gro Co.are:

Grady's Candies paid a total of $32 million in dividends in 2014.In addition,the company issued $22.5 million in new stock in that year.What was Grady's cash flow to stockholder's in 2014?

What is the change in the net working capital from 2013 to 2014?

Based on the following information,calculate stockholders equity: cash = $5.00 accounts payable = $12.00 other current liabilities = $65.00 accounts receivable = $20.00 inventory = $50.00 net fixed assets = $175.00 long-term debt = $40.00

Peggy Grey's Cookies has net income of $360.The firm pays out 40% of the net income to its shareholders as dividends.During the year,the company sold $80 worth of common stock.What is the cash flow to stockholders?

Cos Co.'s after-tax net income was $120.Their interest paid was $50.Assuming the corporate tax is 40%,what is Cos CO.'s interest coverage ratio?

Assuming that the current ratio is currently 2,which of the following actions will increase it?

The Hi-Lite Corp.had a profitable year and their ROE was 14.4%.The company paid out $1.20 of their earnings of $3.00 for the year.The market price of their stock at year end was $28.What was Hi-Lite's price-earnings ratio?

Discuss the difference between book values and market values on the Statement of Financial Position and explain which is more important to the financial manager and why.