Question 1

Julie's Market Place has earnings per share of $.35, a book value of $2.10 per share, and a market- to-book ratio of 3. What is the ﬁrm's price-earnings ratio?

Accepted Answer

The answer of Julie's Market Place has earnings per share...

Question 2

Katrina's Fury has $697,400 in sales. The proﬁt margin is 3.4 % and the ﬁrm has 12,500 shares of stock outstanding. The market price per share is $33. What is the price-earnings ratio?

Accepted Answer

The answer of Katrina's Fury has $697,400 in sales. The...

Question 3

Bandras Company has a debt-equity ratio of 0.85. Return on assets is 10.5 %. What is the return on equity?

Accepted Answer

The answer of Bandras Company has a debt-equity ratio of...

Question 4

Using the Du Pont Identity Method, calculate return on equity given the following information. Proﬁt margin 18%; total asset turnover 0.70; equity multiplier 1.1.

Accepted Answer

ROE = Profit margin * Total asset turnover * Equity multiplier
ROE = 0.18 * 0.7 * 1.1 = 0.1386 or 13.86%

Question 5

Syed's Industries has accounts receivable of $700, inventory of $1,200, sales of $4,200, and cost of goods sold of $3,400. How long does it take Syed's to both sell its inventory and then collect the
Payment on the sale?

Accepted Answer

The answer of Syed's Industries has accounts receivable of $700,...

Question 6

What is the current ratio for 2015?

Accepted Answer

The answer of   What is the current ratio...

Question 7

Ajax Company has a debt-equity ratio of 0.75. Return on assets is 9.5 %. What is the return on equity?

Accepted Answer

The answer of Ajax Company has a debt-equity ratio of...

Question 8

Patti's Pizza has net income of $218,490, a price-earnings ratio of 14.6, and earnings per share of $1.32. How many shares of stock are outstanding?

Accepted Answer

The answer of Patti's Pizza has net income of $218,490,...

Question 9

If cash inﬂows for the company cease, the ﬁrm will be able to stay in business for about:

Accepted Answer

The answer of 
 If cash inﬂows for the company...

Question 10

Water Forms, Inc. has sales of $268,900, net income of $34,800, net ﬁxed assets of $146,700, and current assets of $98,200. The ﬁrm has $46,900 in inventory. What is the common-size statement
Value of inventory?

Accepted Answer

The answer of Water Forms, Inc. has sales of $268,900,...

Question 11

Theodore's Corner Market has a debt-equity ratio of 60 %, sales of $318,000, net income of $24,900, and total debt of $112,500. What is the return on equity?

Accepted Answer

The answer of Theodore's Corner Market has a debt-equity ratio...

Question 12

The following statement of ﬁnancial position and statement of comprehensive income should be used.   What is Woodburn's return on assets for 2015?

Accepted Answer

The answer of The following statement of ﬁnancial position and...

Question 13

A Vancouver ﬁrm has sales of $1,640, net income of $135, net ﬁxed assets of $1,200, and current assets of $530. The ﬁrm has $280 in inventory. What is the common-size statement value of
Inventory?

Accepted Answer

The answer of A Vancouver ﬁrm has sales of $1,640,...

Question 14

Calculate the current ratio given the following information: cash = $4,000; total current assets = $21,000; cash ratio = 0.40.

Accepted Answer

Current Ratio = Total Current Assets / Current Liabilities
Cash Ratio = Cash / Current Liabilities
Cash Ratio = 0.40 = $4,000 / Current Liabilities
Therefore, Current Liabilities = $10,000
Using the formula for Current Ratio:
Current Ratio = $21,000 / $10,000 = 2.10

Question 15

Taylor's Men's Wear has a debt-equity ratio of 55 %, sales of $587,000, net income of $63,400, and total debt of $196,000. What is the return on equity?

Accepted Answer

The return on equity (ROE) can be calculated by dividing the net income by the shareholder's equity. Given the debt-equity ratio is 55%, we can express equity as a percentage of debt, which is 100% / 55% = 181.82%. Therefore, the equity is 181.82% of the total debt, which is $196,000 * 1.8182 = $356,365.20. The ROE is then $63,400 / $356,365.20 = 0.1779 or 17.79%.

Question 16

The proﬁt margin of Marble Comics Group is:

Accepted Answer

The answer of 
 The proﬁt margin of Marble Comics...

Question 17

The component values used in the Du Pont analysis for 2015 are:

Accepted Answer

The Du Pont analysis formula is:
ROE = Net profit margin x Asset turnover x Equity multiplier
Using the given values for ROE (12.8%), net profit margin (2.2%), and asset turnover (0.57), we can solve for the equity multiplier:
12.8% = 2.2% x 0.57 x EM
EM = 1.77
Therefore, the answer is B, which includes the correct values for net profit margin (2.2%), asset turnover (0.57), and equity multiplier (1.77).

Question 18

Baker's Used Autos has sales of $638,400, total assets of $524,200, and a proﬁt margin of 9.8 %. The ﬁrm has a total debt ratio of 35 %. What is the return on equity?

Accepted Answer

Return on equity (ROE) is calculated as (Net Income / Equity). First, calculate Net Income: $638,400 * 9.8% = $62,563.20. Total equity is Total Assets * (1 - Total Debt Ratio): $524,200 * (1 - 0.35) = $340,730. ROE = $62,563.20 / $340,730 = 0.1836 or 18.36%.

Question 19

What was the average collection period for 2015?

Accepted Answer

To calculate the average collection period, we use the formula: 
Average Collection Period = (Accounts Receivable / Credit Sales) x Number of Days in the Period

For 2015: 
Accounts Receivable = $171,000 
Credit Sales = $5,340,000 
Number of Days in the Period = 365

So, Average Collection Period = (171,000 / 5,340,000) x 365 = 11.72

Rounding to the nearest whole number, the average collection period for 2015 is 112 days, which is option B.

Question 20

The following statement of ﬁnancial position and statement of comprehensive income should be used.    Woodburn, Inc. has a proﬁt margin of _____ %, a total asset turnover of _____, an equity multiplier
Of _____, and a return on equity of _____ %. (Use 2015 values.)

Accepted Answer

To calculate the proﬁt margin, we need to divide net income by total revenue. 
Net income = $74,400
Total revenue = $887,400
Proﬁt margin = (74,400/887,400) x 100 = 8.4%

Total asset turnover = revenue/total assets
Total assets = $2,239,500
Total asset turnover = 887,400/2,239,500 = 0.396

Equity multiplier = total assets/total equity
Total equity = $1,207,750
Equity multiplier = 2,239,500/1,207,750 = 1.85

Return on equity = net income/total equity
Return on equity = 74,400/1,207,750 = 6.15%

Therefore, the answer is D, which is 18.89% for proﬁt margin, 1.07 for total asset turnover, 1.68 for equity multiplier, and 33.94% for return on equity.

Quiz 3: Working With Financial Statements

Julie's Market Place has earnings per share of $.35, a book value of $2.10 per share, and a market- to-book ratio of 3. What is the ﬁrm's price-earnings ratio?

Katrina's Fury has $697,400 in sales. The proﬁt margin is 3.4 % and the ﬁrm has 12,500 shares of stock outstanding. The market price per share is $33. What is the price-earnings ratio?

Bandras Company has a debt-equity ratio of 0.85. Return on assets is 10.5 %. What is the return on equity?

Using the Du Pont Identity Method, calculate return on equity given the following information. Proﬁt margin 18%; total asset turnover 0.70; equity multiplier 1.1.

Syed's Industries has accounts receivable of $700, inventory of $1,200, sales of $4,200, and cost of goods sold of $3,400. How long does it take Syed's to both sell its inventory and then collect the Payment on the sale?

What is the current ratio for 2015?

Ajax Company has a debt-equity ratio of 0.75. Return on assets is 9.5 %. What is the return on equity?

Patti's Pizza has net income of $218,490, a price-earnings ratio of 14.6, and earnings per share of $1.32. How many shares of stock are outstanding?

If cash inﬂows for the company cease, the ﬁrm will be able to stay in business for about:

Water Forms, Inc. has sales of $268,900, net income of $34,800, net ﬁxed assets of $146,700, and current assets of $98,200. The ﬁrm has $46,900 in inventory. What is the common-size statement Value of inventory?

Theodore's Corner Market has a debt-equity ratio of 60 %, sales of $318,000, net income of $24,900, and total debt of $112,500. What is the return on equity?

The following statement of ﬁnancial position and statement of comprehensive income should be used. What is Woodburn's return on assets for 2015?

A Vancouver ﬁrm has sales of $1,640, net income of $135, net ﬁxed assets of $1,200, and current assets of $530. The ﬁrm has $280 in inventory. What is the common-size statement value of Inventory?

Calculate the current ratio given the following information: cash = $4,000; total current assets = $21,000; cash ratio = 0.40.

Taylor's Men's Wear has a debt-equity ratio of 55 %, sales of $587,000, net income of $63,400, and total debt of $196,000. What is the return on equity?

The proﬁt margin of Marble Comics Group is:

The component values used in the Du Pont analysis for 2015 are:

Baker's Used Autos has sales of $638,400, total assets of $524,200, and a proﬁt margin of 9.8 %. The ﬁrm has a total debt ratio of 35 %. What is the return on equity?

What was the average collection period for 2015?

The following statement of ﬁnancial position and statement of comprehensive income should be used. Woodburn, Inc. has a proﬁt margin of ___ %, a total asset turnover of _, an equity multiplier Of _, and a return on equity of ___ %. (Use 2015 values.)

Quiz 3: Working With Financial Statements

Julie's Market Place has earnings per share of $.35, a book value of $2.10 per share, and a market- to-book ratio of 3. What is the ﬁrm's price-earnings ratio?

Katrina's Fury has $697,400 in sales. The proﬁt margin is 3.4 % and the ﬁrm has 12,500 shares of stock outstanding. The market price per share is $33. What is the price-earnings ratio?

Bandras Company has a debt-equity ratio of 0.85. Return on assets is 10.5 %. What is the return on equity?

Using the Du Pont Identity Method, calculate return on equity given the following information. Proﬁt margin 18%; total asset turnover 0.70; equity multiplier 1.1.

Syed's Industries has accounts receivable of $700, inventory of $1,200, sales of $4,200, and cost of goods sold of $3,400. How long does it take Syed's to both sell its inventory and then collect the Payment on the sale?

What is the current ratio for 2015?

Ajax Company has a debt-equity ratio of 0.75. Return on assets is 9.5 %. What is the return on equity?

Patti's Pizza has net income of $218,490, a price-earnings ratio of 14.6, and earnings per share of $1.32. How many shares of stock are outstanding?

If cash inﬂows for the company cease, the ﬁrm will be able to stay in business for about:

Water Forms, Inc. has sales of $268,900, net income of $34,800, net ﬁxed assets of $146,700, and current assets of $98,200. The ﬁrm has $46,900 in inventory. What is the common-size statement Value of inventory?

Theodore's Corner Market has a debt-equity ratio of 60 %, sales of $318,000, net income of $24,900, and total debt of $112,500. What is the return on equity?

The following statement of ﬁnancial position and statement of comprehensive income should be used. What is Woodburn's return on assets for 2015?

A Vancouver ﬁrm has sales of $1,640, net income of $135, net ﬁxed assets of $1,200, and current assets of $530. The ﬁrm has $280 in inventory. What is the common-size statement value of Inventory?

Calculate the current ratio given the following information: cash = $4,000; total current assets = $21,000; cash ratio = 0.40.

Taylor's Men's Wear has a debt-equity ratio of 55 %, sales of $587,000, net income of $63,400, and total debt of $196,000. What is the return on equity?

The proﬁt margin of Marble Comics Group is:

The component values used in the Du Pont analysis for 2015 are:

Baker's Used Autos has sales of $638,400, total assets of $524,200, and a proﬁt margin of 9.8 %. The ﬁrm has a total debt ratio of 35 %. What is the return on equity?

What was the average collection period for 2015?

The following statement of ﬁnancial position and statement of comprehensive income should be used. Woodburn, Inc. has a proﬁt margin of _____ %, a total asset turnover of _____, an equity multiplier Of _____, and a return on equity of _____ %. (Use 2015 values.)

The following statement of ﬁnancial position and statement of comprehensive income should be used. Woodburn, Inc. has a proﬁt margin of ___ %, a total asset turnover of _, an equity multiplier Of _, and a return on equity of ___ %. (Use 2015 values.)