| $780 | C. | $990 | D. | $2,430 | E. | $2,640 | | 2 | D | A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity? A. $6,900B. $15,300C.$18,700D $23,700E.
A. $16,500 B. $9,000 C. $25,500 D. $7,500 E. $50,000 Difficulty: Easy 2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2008, Dew reported income of $250,000 and paid dividends of $80,000.
Answer: $235,000 6. Corporation P owns 85 percent of Corporation S1; Corporation S1 owns 60 percent of Corporation S2; Corporation S2 owns 90 percent of S3; Corporation S3 owns 60 percent of Corporation S4 and 15 percent of Corporation S2; Corporation S4 owns 100 percent of Corporation S5. Identify the consolidated group of corporations. Answer: P, S1, S2, S3, S4, S5 7. Corporation P files a consolidated return with Corporation S. In preparing a consolidated return, their accountant finds the following: Separate taxable income (loss) P= $500,000 S= ($200,000) Capital gain (loss)
Ans: DSO (Days Sales Outstanding) = Accounts Receivables/Average Sales per day Accounts Receivables = 20 * 20000 = $400,000 (3-2) Debt Ratio Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debtratio? Ans: Equity Multiplier = 2.5 Therefore Equity Ratio = 1/EM Equity Ratio = 1/2.5 = 0.40 Debt Ratio + Equity Ratio = 1 Therefore Debt Ratio = 1 - Equity Ratio = 1 - 0.40 = 0.60 = 60% (3-3) Market/Book Ratio Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets.
4. Which of the following includes operating income in the ratio’s numerator? A. Times interest earned B. Debt-to-equity ratio C. Acid-test ratio D. Gross margin percentage Use the following information for the next 2 questions. Tedi Co. had net sales of $1,000,000; inventory of $230,000; cost of goods sold of $700,000; average accounts receivable of $25,000; and average total assets of $750,000.
(0.5 points) 50% c. A company has $1,400 in liabilities and $1,500 in assets. Calculate the company's debt ratio as a percentage. (0.5 points) 93.3% d. A company has $1,400 in liabilities and $1,500 in equity. Calculate the company's debt to equity ratio as a percentage. (0.5 points) 93.3% e. A company's current assets are $30,000 and current liabilities are
In 1987, WPP acquired JWT and Knowlton. They paid goodwill of £465 million. This left the balance sheet of WPP with negative assets. They eventually valued the brand value of a JWT's Hill and Knowlton at £175 million. In 1989, the firm bought O&M for $ 862 million.
Which of the following statements is CORRECT? Answer: e. If the interest rate the companies pay on their debt is less than their earning power. (BEP), then Company HD will have the higher ROE. 4. Muscarella Inc. has the following balance sheet and income statement data: Cash $ 14,000 Accounts payable $ 42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 210,000 Total CL $ 70,000 Total CA $294,000 Long-term debt 70,000 Net fixed assets 126,000 Common equity $280,000 Total Assets $420,000 Total liab.