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Exam 14: Financial Statement Analysis

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Question 51

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Financial statements for Harwich Company for the most recent year appear below: The balances in the Cash, Accounts Receivable, Inventory, Bonds Payable, Common Stock, and Additional Paid-In Capital accounts are unchanged from the beginning of the year. A $0.75 per share dividend was declared and paid during the year. On December 31, Harwich Company's common stock was trading at $24.00 per share. -Harwich Company's average collection period for the year was closest to:

A) 72 days
B) 8 days
C) 120 days
D) 46 days

E) All of the above
F) B) and C)

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Question 52

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Lunghofer Corporation's net income for the most recent year was $3,189,000.A total of 300,000 shares of common stock and 100,000 shares of preferred stock were outstanding throughout the year.Dividends on common stock were $4.90 per share and dividends on preferred stock were $1.95 per share. Required: Compute the earnings per share of common stock.Show your work!

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Earnings per share = (Net Inco...

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Question 53

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Hartzog Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share. -The return on common stockholders' equity for Year 2 is closest to:

Boggs Company has 40,000 shares of common stock outstanding.The book value per share of this stock was $60.00 and the market value per share was $75.00 at the end of the year.Net income for the year was $400,000.Interest on long term debt was $40,000.Dividends paid to common stockholders were $3.00 per share.The tax rate was 30%.The company's price-earnings ratio at the end of the year was:

Drama Company's working capital is $16,000 and its current liabilities are $94,000.The company's current ratio is closest to:

Renbud Computer Services Co.(RCS)specializes in customized software development for the broadcast and telecommunications industries.The company was started by three people in 1973 to develop software primarily for a national network to be used in broadcasting national election results.After sustained and manageable growth for many years,the company has grown very fast over the last three years,doubling in size. This growth has placed the company in a challenging financial position.Within thirty days,RCS will need to renew its $300,000 loan with the Third State Bank of San Marcos.This loan is classified as a current liability on RCS's balance sheet.Harvey Renbud,president of RCS,is concerned about renewing the loan.The bank has requested RCS's most recent financial statements which appear below,including balance sheets for this year and last year.The bank has also requested four ratios relating to operating performance and liquidity. Renbud Computer Services Co. Income Statement For the Year Ended December 31 (in thousands) Required: a.Explain why the Third State Bank of San Marcos would be interested in reviewing Renbud Computer Services Co.'s comparative financial statements and its financial ratios before renewing the loan. b.Calculate the following financial ratios for Renbud Computer Services Co.: 1.The current ratio for both this year and last year. 2.Accounts receivable turnover for this year. 3.Return on common stockholders' equity for this year. 4.The debt-to-equity ratio for both this year and last year. c.Discuss briefly the limitations and difficulties that can be encountered in using ratio analysis.

Financial statements for Narita Company appear below: -Narita Company's times interest earned for Year 2 was closest to:

Financial statements for Larned Company appear below: Dividends during Year 2 totaled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $160. -Larned Company's dividend yield ratio on December 31,Year 2 was closest to:

Schiff Corporation has provided the following data from its most recent balance sheet: Required: Compute the debt-to-equity ratio.Show your work!

Selected year-end data for the Brayer Company are presented below: $\begin{array}{lr}\text { Current liabilities.. }&\$600,000\\\text { Acid-test ratio }&2.5\\\text { Current ratio }&3.0\\\text { Cost of goods sold }&\$500,000\end{array}$ The company has no prepaid expenses and inventories remained unchanged during the year.Based on these data,the company's inventory turnover ratio for the year was closest to:

Financial statements for Larned Company appear below: Dividends during Year 2 totaled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $160. -Larned Company's book value per share at the end of Year 2 was closest to:

At the beginning of the year,a company's current ratio is 2.2.At the end of the year,the company has a current ratio of 2.5.Which of the following could help explain the change in the current ratio?

Malbrough Corporation's most recent balance sheet and income statement appear below: Required: Compute the following for Year 2: a.Working capital. b.Current ratio. c.Acid-test ratio. d.Accounts receivable turnover. e.Average collection period. f.Inventory turnover. g.Average sale period.

Selected financial data for Bragg Company appear below: -Bragg Company's inventory turnover ratio for Year 2 was closest to:

Excerpts from Tigner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,230 and the cost of goods sold was $820. -The current ratio at the end of Year 2 is closest to:

The following account balances have been provided for the end of the most recent year: $\begin{array}{lr}\text { Total assets }&\$150,000\\\text { Total stockholders' equity. }&\$120,000\\\text { Total common stock ( } 5,000 \text { shares }) &\$50,000\\\text { Total preferred stock }(1,000 \text { shares }) &\$10,000\end{array}$ The book value per share of common stock is:

Data from Kempen Corporation's most recent balance sheet and the company's income statement appear below: -The debt-to-equity ratio at the end of Year 2 is closest to:

Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share. -The dividend payout ratio for Year 2 is closest to:

Excerpts from Zorra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850. -The average collection period for Year 2 is closest to:

Data from Concepcion Corporation's most recent balance sheet and income statement appear below: $\begin{array} { l r r } & \text { This Year } & \text { Last Year } \\\text { Accounts receivable......... } & \$ 120,000 & \$ 118,000 \\\text { Inventory ..................... } & \$ 193,000 & \$ 183,000 \\\text { Sales on account ............ } & \$ 800,000 & \\\text { Cost of goods sold ........... } & \$ 512,000 &\end{array}$ The average collection period for this year is closest to: