Question : 21. Which of the following ratios most useful in indicating a : 1224841

 

 

21. Which of the following ratios is most useful in indicating a company’s profitability? A. Operating cash flow ratioB. Profit margin ratioC. Dividend payout ratioD. Dividend yield ratio

 

22. The return on assets ratio: A. considers the investments made by all creditors and stockholders of the company.B. reflects investments made only by creditors of the company.C. is based on average stockholders’ equity as compared to net income for the period.D. is a measure of the company’s liquidity.

 

23. Chartreuse, Inc.Information from the financial statements of Chartreuse, Inc. is provided below. 

 

2012

2011

Net income

$150,000

$120,000

Cash dividends paid on preferred stock

15,000

15,000

Cash dividends paid on common stock

42,000

38,000

Average number of preferred shares outstanding

20,000

20,000

Average number of common shares outstanding

105,000

95,000

Market price per share of common stock at year-end

25.10

22.70

 

 

 

Refer to the information for Chartreuse, Inc. Earnings per share for 2012 would be reported as: A. $1.08.B. $1.20.C. $1.29.D. $1.43.

 

24. Kirby Deuce CorporationSelected data from the financial statements of Kirby Deuce Corporation are presented below. 

 

2012

2011

Net income

$110,000

$123,000

Cash dividends paid on common stock

42,000

38,000

Average number of common shares outstanding

140,000

145,000

Treasury Stock

70,000

0

Market price per share of common stock at year-end

16.00

13.00

 

 

 

Refer to the financial information for Kirby Deuce Corporation. Earnings per share for 2012 is: A. $0.79.B. $0.76.C. $1.57.D. $0.49.

 

25. Kirby Deuce CorporationSelected data from the financial statements of Kirby Deuce Corporation are presented below. 

 

2012

2011

Net income

$110,000

$123,000

Cash dividends paid on common stock

42,000

38,000

Average number of common shares outstanding

140,000

145,000

Treasury Stock

70,000

0

Market price per share of common stock at year-end

16.00

13.00

 

 

 

Refer to the financial information for Kirby Deuce Corporation. The price to earnings ratio for 2012 is: A. 17.77.B. 20.63.C. 20.36.D. 18.97.

 

26. Earnings per share is an indication of how much: A. cash the company has for each share of all outstanding stock.B. earnings the company has for each share of outstanding common stock.C. earnings the company has for each share of all outstanding stock.D. dividends the company paid for each share of outstanding common stock.

 

27. Stanwick, Inc. wants to measure the relationship between profitability and the investment made by stockholders. To measure this Stanwick should use the: A. return on equity ratio.B. earnings per share.C. net profit margin percentage.D. operating margin percentage.

 

28. The following information is available for Gomez Company.: 

 

2011

Market price per share of common stock

$25.00

Earnings per share on common stock

1.25

 

 

Which of the following statements is correct? A. The price to earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2011.B. The price to earnings ratio is 5.0% and a share of common stock was selling for 5.0% more than the amount of earnings per share at the end of 2011.C. The price to earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of 2011.D. The market price per share and the earnings per share are not statistically related to each other.

 

29. The following information pertains to Raleigh 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

 

$ 130,000

Cost of goods sold

 

45,000

Gross margin

 

95,000

Operating expenses

 

20,000

 

Net Income

$ 75,000

 

 

 

 

 

Number of shares of common stock

 

8,000000

Market price of common stock

 

$20

Dividends per share

 

1.00

Cash provided by operations

 

$40,000

 

 

 

What is the earnings per share on common stock? A. $9.38B. $8.38C. $1.00D. $5.00

 

30. The following information pertains to Raleigh 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 to earnings ratio for this company? A. 6.01 timesB. 4.24 timesC. 8.05 timesD. 9.60 times

 

 

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