Question :
111. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
: 1245958
111. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
Cash
$ 60
$ 50
Marketable securities (at market)
40
30
Accounts receivable (net)
90
60
Inventories (at lower of cost or market)
120
100
Prepaid items
Total current assets
Long-term investments (at cost)
50
40
Land (at cost)
150
150
Building (net)
160
180
Equipment (net)
190
200
Patents (net)
70
34
Goodwill (net)
Total long-term assets
Total assets
Notes payable
$ 46
$ 24
Accounts payable
94
56
Accrued interest
Total current liabilities
Notes payable, 10% due 12/31/Year 12
20
20
Bonds payable, 12% due 6/30/Year 15
Total long-term debt
Total liabilities
Preferred stock-5% cumulative, $100 par, non-participating, authorized, issued and outstanding, 2,000 shares
200
200
Common stock-$10 par, 40,000 shares authorized, 30,000 shares issued and outstanding
300
300
Additional paid-in capital–common
150
150
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
King Products CorporationIncome StatementFor the year ended June 30(in thousands)
Net sales
$600
Costs and expenses
Cost of goods sold
440
Selling, general, and administrative
60
Interest expense
Income before taxes
$ 90
Income taxes
Net income
(CMA adapted, Dec 96 #17) Refer to the King Products Corporation example. King Products Corporation’s average collection period for the fiscal year ended at June 30, Year 6, using a 360-day year, was. A. 36 days 45 daysC. 54 daysD. 61 daysE. none of the above
112. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
Cash
$ 60
$ 50
Marketable securities (at market)
40
30
Accounts receivable (net)
90
60
Inventories (at lower of cost or market)
120
100
Prepaid items
Total current assets
Long-term investments (at cost)
50
40
Land (at cost)
150
150
Building (net)
160
180
Equipment (net)
190
200
Patents (net)
70
34
Goodwill (net)
Total long-term assets
Total assets
Notes payable
$ 46
$ 24
Accounts payable
94
56
Accrued interest
Total current liabilities
Notes payable, 10% due 12/31/Year 12
20
20
Bonds payable, 12% due 6/30/Year 15
Total long-term debt
Total liabilities
Preferred stock-5% cumulative, $100 par, non-participating, authorized, issued and outstanding, 2,000 shares
200
200
Common stock-$10 par, 40,000 shares authorized, 30,000 shares issued and outstanding
300
300
Additional paid-in capital–common
150
150
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
King Products CorporationIncome StatementFor the year ended June 30(in thousands)
Net sales
$600
Costs and expenses
Cost of goods sold
440
Selling, general, and administrative
60
Interest expense
Income before taxes
$ 90
Income taxes
Net income
(CMA adapted, Dec 96 #18) Refer to the King Products Corporation example. King Products Corporation’s quick (acid test) ratio at June 30, Year 6, was A. 0.6 1.1 C. 1.8D. 2.0E. none of the above
113. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
Total assets
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
Total liabilities
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
Income before taxes
$ 90
$ 85
Income taxes
Net income
(CMA adapted, Jun 97 #13) Refer to the Devlin Company example. Devlin Company’s acid-test ratio at May 31, Year 7, was A. 0.60 to 1B. 0.90 to 1 1.14 to 1D. 1.86 to 1E. 2.14 to 1
114. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
Total assets
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
Total liabilities
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
Income before taxes
$ 90
$ 85
Income taxes
Net income
(CMA adapted, Jun 97 #14) Refer to the Devlin Company example. Assuming there are no preferred stock dividends in arrears, Devlin Company’s return on common shareholders’ equity for the year ended May 31, Year 7, was A. 6.3 percentB. 7.5 percentC. 7.8 percent 10.5 percent E. 15.5 percent
115. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
Total assets
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
Total liabilities
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
Income before taxes
$ 90
$ 85
Income taxes
Net income
(CMA adapted, Jun 97 #18) Refer to the Devlin Company example. Devlin Company’s times interest earned for the year ended May 31, Year 7, was A. 6.75 timesB. 11.25 times 12.25 timesD. 18.75 timesE. 20.75 times
116. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
Total assets
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
Total liabilities
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
Income before taxes
$ 90
$ 85
Income taxes
Net income
(CMA adapted, Jun 97 #15) Refer to the Devlin Company example. Devlin Company’s inventory turnover for the year ended May 31, Year 7, was A. 3.67 times 3.88 timesC. 5.33 timesD. 5.65 timesE. 5.95 times
117. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
Total assets
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
Total liabilities
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
Income before taxes
$ 90
$ 85
Income taxes
Net income
(CMA adapted, Jun 97 #16) Refer to the Devlin Company example. Devlin Company’s asset turnover for the year ended May 31, Year 7, was A. 0.08 timesB. 0.46 times 0.67 timesD. 0.73 timesE. 0.93 times
118. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
Total assets
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
Total liabilities
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
Income before taxes
$ 90
$ 85
Income taxes
Net income
(CMA adapted, Jun 97 #17) Refer to the Devlin Company example. Devlin Company’s rate of return on assets for the year ended May 31, Year 7, was A. 7.2 percentB. 7.5 percent 8.2 percentD. 11.2 percentE. 11.9 percent
119. A firm desires to increase its ratio of cash flow from operations divided by average current liabilities from its anticipated level of 30 percent for the coming year to a more desirable level of 40 percent. Which of the following actions is consistent with this increase? A. increase short-term bank borrowing decrease the number of days that accounts receivable are outstandingC. decrease the number of days accounts payable are outstandingD. increase the number of days inventories are heldE. none of the above
120. A steel manufacturer experienced a decrease in its fixed asset turnover from .9 in Year 5 to .7 in Year 6. This change is consistent with which of the following explanations? A. The firm sold a fully-depreciated factory on January 1, Year 6 that had been closed in Year 4 and held for sale since then.B. The steel industry operated at capacity during Year 6, permitting all firms to raise selling prices.C. The firm recognized an impairment loss on a factory that became obsolete during Year 6 because of new environmental regulations. The firm decreased the number of units produced and sold because of an inability to obtain needed raw materials. E. none of the above
