CHAPTER 18 FINANCIAL STATEMENT ANALYSIS

137. The following financial statement information is available for Buil Corporation:

2014 2013

Inventory $ 44,000 $ 43,000

Current assets 80,000 106,000

Total assets 432,000 358,000

Current liabilities 25,000 36,000

Total liabilities 102,000 88,000

The current ratio for 2014 is

a. .31:1.

b. 3.2:1.

c. 1.5:1.

d. 4.24:1.

138. The following financial statement information is available for James Corporation:

2014 2013

Net sales $780,000 $697,000

Cost of goods sold 406,000 377,000

Net income 120,000 80,000

Tax expense 48,000 29,000

Interest expense 14,000 14,000

The profit margin ratio for 2014 is

a. 15.4%.

b. 47.9%.

c. 32.1%.

d. 13.5%.

139. The following financial statement information is available for Penn Corporation:

2014 2013

Stockholders' equity - common $350,000 $270,000

Net sales 784,000 697,000

Cost of goods sold 406,000 377,000

Net income 115,000 80,000

Inc tax expense 48,000 29,000

Interest expense 14,000 14,000

Dividends paid to preferred

stockholders 24,000 20,000

Dividends paid to common

stockholders 15,000 10,000

The return on common stockholders’ equity for 2014 is

a. 21.7%.

b. 32.9%.

c. 28.6%.

d. 26%.

140. The following financial statement information is available for Long Corporation:

2014 2013

Net income $115,000 $ 80,000

Income tax expense 30,000 29,000

Interest expense 18,000 14,000

Dividends paid to preferred

stockholders 22,000 20,000

Dividends paid to preferred

stockholders 15,000 10,000

MC 140. (Cont.)

The times interest earned for 2014 is

a. 7.4 times.

b. 6.4 times.

c. 9.1 times.

d. 7.8 times.

141. Dean Corporation reported net income $58,000, net sales $500,000, and average assets $800,000 for 2014. The 2014 profit margin was:

a. 5.8%.

b. 11.6%.

c. 62.5%.

d. 160%.

142. North Company reports the following amounts for 2014:

Net income $ 160,000

Average stockholders’ equity 2,000,000

Preferred dividends 45,000

Par value preferred stock 250,000

The 2014 rate of return on common stockholders’ equity is:

a. 5.8%.

b. 6.6%.

c. 8.0%.

d. 9.1%.

143. Proctor Corporation had beginning inventory $100,000, cost of goods sold $750,000, and ending inventory $150,000. What was Proctor's inventory turnover?

a. 3 times.

b. 6 times.

c. 7.5 times.

d. 5 times.

144. In 2014 Rome Corporation reported income from operations $190,000, interest expense $60,000, and income tax expense $40,000. Rome’s times interest earned ratio was:

a. 4.2 times.

b. 3.8 times.

c. 3.2 times.

d. 4.8 times.

145. Wrapp Company has income before taxes of $350,000 and an extraordinary loss of $70,000. If the income tax rate is 30% on all items, the income statement should show income before irregular items and an extraordinary loss, respectively, of:

a. $350,000 and ($70,000)

b. $245,000 and ($24,000)

c. $245,000 and ($49,000)

d. $105,000 and ($21,000)

146. All of the following statements regarding changes in accounting principles are true except:

a. Most changes in accounting principles are only reported in current periods when the principle change takes place.

b. Changes in accounting principles are allowed when new principles are preferable to old ones.

c. Most changes in accounting principles are retroactively reported.

d. Consistency is one of the biggest concerns when a change in accounting principle is undertaken.