Question : 121. The following information pertains to Carlton Company. Assume that all : 1226789

 

 

121. The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales were on credit.                                                              Assets                                                  

Cash and short-term investments

 

$  40,000

Accounts receivable (net)

 

25,000

Inventory

 

20,000

Property, plant and equipment

 

  210,000

 

Total assets

$295,000

 

 

 

 

                                  Liabilities and Stockholders’ Equity                             

Current liabilities

 

60,000

Long-term liabilities

 

85,000

Stockholders’ equity-common

 

  150,000

 

Total liabilities and stockholders’ equity

$295,000

 

 

 

 

                                                 Income Statement                                           

Net sales

 

$ 85,000

Cost of goods sold

 

   45,000

Gross margin

 

40,000

Operating expenses

 

15,000

Interest expense

 

   5,000

 

Net income

$ 20,000

 

 

 

 

 

Number of shares of common stock

 

6,000000

Market price of common stock

 

$20

Total dividends paid

 

$5,400

Cash provided by operations

 

$30,000

 

 

 

What is the price earnings ratio for this company?  Round your answer to one decimal point. A. 8.0 timesB. 2.5 timesC. 4.0 timesD. 6.0 times

 

122. The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales were on credit.                                                 Assets

Cash and short-term investments

 

$  40,000

Accounts receivable (net)

 

30,000

Inventory

 

25,000

Property, plant and equipment

 

  215,000

 

Total Assets

$310,000

 

 

 

 

                             Liabilities and Stockholders’ Equity

Current liabilities

 

60,000

Long-term liabilities

 

95,000

Stockholders’ equity-common

 

  155,000

 

Total Liabilities and stockholders’ equity

$310,000

 

 

 

 

                                             Income Statement

Sales

 

$ 90,000

Cost of goods sold

 

   45,000

Gross margin

 

45,000

Operating expenses

 

   20,000

 

Net income

$ 25,000

 

 

 

 

 

Number of shares of common stock

 

6,000000

Market price of common stock

 

$40

Dividends per share

 

1.00

Cash provided by operations

 

$40,000

 

 

 

What is the rate earned on total assets for this company? A. 8.1%B. 6.8%C. 10.5%D. 16.1%

 

123. The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales were on credit.                                                  Assets

Cash and short-term investments

 

$  40,000

Accounts receivable (net)

 

30,000

Inventory

 

25,000

Property, plant and equipment

 

  215,000

 

Total Assets

$310,000

 

 

 

 

                               Liabilities and Stockholders’ Equity

Current liabilities

 

60,000

Long-term liabilities

 

95,000

Stockholders’ equity-common

 

  155,000

 

Total Liabilities and stockholders’ equity

$310,000

 

 

 

 

                                              Income Statement

Sales

 

$ 90,000

Cost of goods sold

 

   45,000

Gross margin

 

45,000

Operating expenses

 

   20,000

 

Net income

$ 25,000

 

 

 

 

 

Number of shares of common stock

 

6,000000

Market price of common stock

 

$40

Dividends per share

 

1.00

Cash provided by operations

 

$40,000

 

 

 

What is the price earnings ratio for this company? A. 6.0 timesB. 4.2 timesC. 8.0 timesD. 9.6 times

 

124. Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are A. a substitute for sound judgment.B. useful analytical measures.C. enough information for analysis, industry information is not needed.D. unnecessary for analysis, but reaction is better.

 

125. The following information pertains to Auburn Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales were on credit.                                                         Assets

Cash and short-term investments

 

$  40,000

Accounts receivable (net)

 

30,000

Inventory

 

25,000

Property, plant and equipment

 

  280,000

 

Total Assets

$375,000

 

 

 

 

                                                                         Liabilities and Stockholders’ Equity

Current liabilities

 

60,000

Long-term liabilities

 

95,000

Stockholders’ equity-common

 

  220,000

 

Total Liabilities and stockholders’ equity

$375,000

 

 

 

 

                                                  Income Statement

Sales

 

$ 90,000

Cost of goods sold

 

   45,000

Gross margin

 

45,000

Operating expenses

 

   10,000

 

Net income

$ 35,000

 

 

 

 

 

Number of shares of common stock

 

6,000000

Market price of common stock

 

$20

Dividends per share

 

1.00

Cash provided by operations

 

$40,000

 

 

 

What is the rate earned on stockholders’ equity? Round answer to a single decimal point. A. 9.3%B. 15.9%C. 24.0%D. 40.9%

 

126. Corporate annual reports typically do not contain which of the following? A. management discussion and analysisB. SEC statement expressing an opinionC. accompanying foot notesD. auditor’s report

 

127. The independent auditor’s report does which of the following? A. describes which financial statements are covered by the auditB. gives the auditor’s opinion regarding the fairness of the financial statementsC. summarizes what the auditor didD. states that the financial statements are truthful

 

128. The purpose of an audit is to A. determine whether or not a company is a good investment.B. render an opinion on the fairness of the statements.C. determine whether or not a company complies with income tax regulations.D. determine whether or not a company is a good credit risk.

 

129. Which of the following is required by the Sarbanes-Oxley Act of 2002? A. A price-earnings ratio.B. A report on internal control.C. A vertical analysis.D. A  common-sized statement.

 

130. All of the following are typically included in the Management’s Discussion and Analysis in annual reports except: A. explanations of any significant changes between the current and prior years’ financial statements.B. management’s assessment of liquidity.C. journal entries.D. off-balance-sheet arrangements

 

 

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