Question : 51. Solvency measures a company’s ability: A. to meet long-term obligations as they : 1291642

 

51. Solvency measures a company’s ability: A. to meet long-term obligations as they become due.B. to meet short-term obligations as they become due.C. to make a profit in the short-run.D. to make a profit in the long-run.

 

52. Which of the following ratios would be the best measure of solvency? A. Return on assets ratioB. Price earnings ratioC. Current ratioD. Times-interest-earned ratio

 

53. Which of the following ratios would not be the best measure of solvency? A. Return on assets ratioB. Debt-to-equity ratioC. Debt service coverage ratioD. Times-interest-earned ratio

 

54. Which of the following statements would be the best interpretation of a company’s low debt-to-equity ratio? A. The company chooses to pay cash for most of its major purchases.B. The company is not liquid.C. The company prefers to pay stockholders high dividends out of their retained earnings.D. The company prefers to raise funds by issuing capital stock than long-term borrowing.

 

55. Which ratio would be best for measuring a company’s ability to repay both principal and interest on outstanding loans from cash generated from operating activities? A. Current ratioB. Times-interest-earned ratioC. Debt service coverage ratioD. Debt-to-equity ratio

 

56. During 2012, Mark Walker, Inc. had cash flow from operations of $330,000, dividends paid totaling $15,000, and equipment purchases of $120,000. The ratio of cash flow from operations to capital expenditures is: A. 2.63.B. 0.36.C. 2.75.D. 2.88.

 

57. Hardister Corp.Hardister Corp. has the following information available from its financial statements for 2012: 

Balance sheet information:

 

Income statement information:

Assets

 

 

 

 

 

Current assets

$   400,000

 

Sales (all on account)

$3,000,000

 

Long-term assets

     600,000

 

Cost of goods sold

1,500,000

 

Total assets

$1,000,000

 

Salary expense

200,000

 

 

 

Miscellaneous expenses

400,000

Liabilities

 

 

Interest expense

     100,000

 

Current liabilities

$   200,000

 

Income before taxes

$   800,000

 

Long-term liabilities

     100,000

 

Income tax expense

     300,000

 

Total liabilities

$   300,000

 

Net income

$   500,000

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Capital stock

$   300,000

 

 

 

 

Retained earnings

     400,000

 

 

 

 

Total Stockholders’ Equity

$   700,000

 

 

 

 

 

 

 

 

 

Refer to the Hardister Corp. information above. Hardister’s current ratio is: (round to two decimal places) A. 3.33.B. .67.C. .50.D. 2.00.

 

58. Hardister Corp.Hardister Corp. has the following information available from its financial statements for 2012: 

Balance sheet information:

 

Income statement information:

Assets

 

 

 

 

 

Current assets

$   400,000

 

Sales (all on account)

$3,000,000

 

Long-term assets

     600,000

 

Cost of goods sold

1,500,000

 

Total assets

$1,000,000

 

Salary expense

200,000

 

 

 

Miscellaneous expenses

400,000

Liabilities

 

 

Interest expense

     100,000

 

Current liabilities

$   200,000

 

Income before taxes

$   800,000

 

Long-term liabilities

     100,000

 

Income tax expense

     300,000

 

Total liabilities

$   300,000

 

Net income

$   500,000

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Capital stock

$   300,000

 

 

 

 

Retained earnings

     400,000

 

 

 

 

Total Stockholders’ Equity

$   700,000

 

 

 

 

 

 

 

 

 

Refer to the Hardister Corp. information above. Hardister’s debt-to-equity ratio is: (round to two decimal places) A. .50.B. .43.C. .75.D. .25.

 

59. Hardister Corp.Hardister Corp. has the following information available from its financial statements for 2012: 

Balance sheet information:

 

Income statement information:

Assets

 

 

 

 

 

Current assets

$   400,000

 

Sales (all on account)

$3,000,000

 

Long-term assets

     600,000

 

Cost of goods sold

1,500,000

 

Total assets

$1,000,000

 

Salary expense

200,000

 

 

 

Miscellaneous expenses

400,000

Liabilities

 

 

Interest expense

     100,000

 

Current liabilities

$   200,000

 

Income before taxes

$   800,000

 

Long-term liabilities

     100,000

 

Income tax expense

     300,000

 

Total liabilities

$   300,000

 

Net income

$   500,000

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Capital stock

$   300,000

 

 

 

 

Retained earnings

     400,000

 

 

 

 

Total Stockholders’ Equity

$   700,000

 

 

 

 

 

 

 

 

 

Refer to the Hardister Corp. information above. Hardister’s times-interest-earned ratio is: (round to two decimal places) A. 8.00.B. 9.00.C. 6.00.D. 5.00.

 

60. Hardister Corp.Hardister Corp. has the following information available from its financial statements for 2012: 

Balance sheet information:

 

Income statement information:

Assets

 

 

 

 

 

Current assets

$   400,000

 

Sales (all on account)

$3,000,000

 

Long-term assets

     600,000

 

Cost of goods sold

1,500,000

 

Total assets

$1,000,000

 

Salary expense

200,000

 

 

 

Miscellaneous expenses

400,000

Liabilities

 

 

Interest expense

     100,000

 

Current liabilities

$   200,000

 

Income before taxes

$   800,000

 

Long-term liabilities

     100,000

 

Income tax expense

     300,000

 

Total liabilities

$   300,000

 

Net income

$   500,000

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Capital stock

$   300,000

 

 

 

 

Retained earnings

     400,000

 

 

 

 

Total Stockholders’ Equity

$   700,000

 

 

 

 

 

 

 

 

 

Refer to the Hardister Corp. information above. Assuming Hardister has no preferred stock and the average number of common shares outstanding was 10,000, what would be earnings per share for 2012? (round to two decimal places) A. $  80.00B. $      .02C. $  50.00D. $300.00

 

 

 

 

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