1. _____. The balance sheets at the end of each of the first two years of operations indicate the following:
2009 2008
Total current assets $500,000 $450,000
Total investments 100,000 50,000
Total plant assets 900,000 600,000
Total current liabilities 200,000 75,000
Total long-term liabilities 400,000 225,000
Preferred 9% stock, $100 par
100,000 100,000
Common stock, $10 par. 500,000 500,000
Paid-in capital in excess of par -common stock. 50,000 50,000
Retained earnings 250,000 150,000
If net income is $120,000 and interest expense is $42,500 for 2009, what is the rate earned on common stockholders equity for 2009 (round percent to one decimal point)?
A. 13.9%
B. 14.8%
C. 15.9%
D. 12.3%
E. None of the above
2. _____. The balance sheets at the end of each of the first two years of operations indicate the following:
2009 2008
Total current assets $500,000 $450,000
Total investments. 100,000 50,000
Total plant assets. 900,000 600,000
Total current liabilities. 200,000 75,000
Total long-term liabilities. 400,000 225,000
Preferred 9% stock, $110 par 100,000 100,000
Common stock, $10 par 500,000 500,000
Paid-in capital in excess of par -common stock 50,000 50,000
Retained earnings 250,000 150,000
If net income is $120,000 and interest expense is $42,500 for 2009, what are the earnings per share on common stock for 2009 (round to two decimal places)?
A. $2.22
B. $2.40
C. $3.25
D. $1.55
E. None of the above
3. _____. An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:
A. increase
B. decrease
C. remain the same
D. either increase or decrease
E. None of the above
4. _____. The ability of a business to pay its debts as they come due is referred to as the factor of:
A. leverage
B. profitability
C. wealth
D. solvency
E. None of the above