QUESTION 1

Based on the following data for the current year, determine the accounts receivable turnover?

Net sales on account during the year $ 550,000

Cost of merchandise sold during the year 350,000

Accounts receivable, beginning of year 35,000

Accounts receivable, end of year 25,000

Inventory, beginning of year 80,000

Inventory, end of year 125,000

a.9.2

b.7.5

c.11.7

d.18.3

QUESTION 2

The balance sheets at the end of each of the first two years of operations indicate the following:

Total current assets
2015- $600,000

2016-$560,000

Total investments
2015-60,000

2016-40,000

Total property, plant, and equipment
2015-900,000

2016-700,000

Total current liabilities
2015-125,000

2016-80,000

Total long-term liabilities
2015-350,000

2016-250,000

Preferred 9% stock, $100 par
2015-100,000

2016-100,000

Common stock, $10 par
2015-600,000

2016-600,000

Paid-in capital in excess of par–common stock
2015-60,000

2016-60,000

Retained earnings
2015-325,000

2016-210,000

Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2016, what is the rate earned on common stockholders’ equity for 2016 (round to one decimal place)?

a.17.4%

b.12.3%

c.14.0%

d.13.0%

QUESTION 3

The independent auditor’s report does which of the following?

a.States that the financial statements are effective.

b.Describes that the common-sized statements are covered by the audit.

c.Summarizes what the auditor did.

d.Gives the auditor’s opinion regarding the fairness of the financial statements.

QUESTION 6

Based on the following data, what is the quick ratio, rounded to one decimal place?

Accounts payable$ 32,000

Accounts receivable64,000

Accrued liabilities7,000

Cash20,000

Intangible assets40,000

Inventory72,000

Long-term investments100,000

Long-term liabilities75,000

Marketable securities35,000

Notes payable (short-term)25,000

Property, plant, and equipment625,000

Prepaid expenses2,000

a.1.9

b.2.1

c.1.4

d.3.2

Which of the following is included in the computation of the quick ratio?

a.Accounts receivable

b.Working capital

c.Net Sales

d.Average daily sales

QUESTION 11

Sarbanes-Oxley Act of 2002 requires which of the following report to be prepared by the management of the company?

a.A report showing management’s assessment of internal control.

b.A report identifying the competency of the company’s board of directors.

c.A report evaluating the probability that the company will remain in business.

d.A report assessing the market value of the company’s current stock price.

QUESTION 13

Which of the following is an analysis used in assessing solvency?

a.Accounts receivable analysis

b.Fixed assets turnover

c.Earning per share

d.P/E ratio

QUESTION 14

The relationship of $320,000 to $200,000, expressed as a ratio, is:

a.3.5 to 2.

b.3.8 to 2.

c.3.2 to 2.

d.3.0 to 2.

QUESTION 16

Univeo Company reported the following on its income statement:

Income before income taxes$210,000
Income tax expense60,000
Net income$150,000

An analysis of the income statement revealed that interest expense was $35,000. Univeo Company’s number of times interest charges are earned was:

a.4 times.

b.7 times.

c.7.7 times.

d.4.1 times.

QUESTION 19

The following information is available for Morgan Corporation:
2015

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-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 2015.

b.The price-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 2015.

c.The price-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 2015.

d.The market price per share and the earnings per share are not statistically related to each other.

QUESTION 18

The balance sheets at the end of each of the first two years of operations indicate the following:

Total current assets
2015-$600,000

2016-$560,000

Total investments
2015-60,000

2016-40,000

Total property, plant, and equipment
2015-900,000

2016-700,000

Total current liabilities
2015-125,000

2016-80,000

Total long-term liabilities
2015-350,000

2016-250,000

Preferred 9% stock, $100 par
2015-100,000

20161100,000

Common stock, $10 par
2015-600,000

2016-600,000

Paid-in capital in excess of par–common stock
2015-60,000

2016-60,000

Retained earnings
2015-325,000

2016-210,000

Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2016, and the market price is $40, what is the price-earnings ratio on common stock (round to one decimal place)?

a.14.9

b.18.4

c.17.3

d.19.8

5 points