11. At the end of the most current year, B&B reported the following key performance indicators:

Return on Assets	14.21%
Return on Equity	21.11%

Which statement provides an accurate interpretation of one of these ratios?

1. Each dollar invested in B&Bs assets generated about 14 cents of profit.
2. For every dollar of sales revenue, B&B generated about 14 cents of profit.
3. The profit margin ratio is about 21 cents of every dollar of revenue.
4. B&B generated about 21 cents of profit for every share of common stock owned by investors.

12. B&B Corporation reported the following amounts in its comparative balance sheets:

Amounts in thousands	Dec. 31, Yr 2	Dec. 31, Yr 1
Current assets	$ 32,000	$ 30,000
Non-current assets	178,000	174,000
Total assets	$210,000	$204,000
Current liabilities	$35,000	$26,000
Non-current liabilities	31,000	38,000
Shareholders equity	144,000	140,000

Its income statement reported sales revenue of $210,000,000 for Year 2.

How much sales revenue did B&B generate for every dollar invested in the business assets?

1. $0.10
2. $0.50
3. $1.00
4. $2.00

13. Presented below are Income Statement data for B&B:

Operating expenses $ 62,000

Other expenses 11,000

Income taxes 10,500

Cost of goods sold 25,200

Net revenue 200,000

What is the companys return on sales?

1. 23.86 percent
2. 26.92 percent
3. 35.28 percent
4. 45.65 percent

14. B&B provided the following information:

Depreciation expense	$ 30,000
Funds borrowed from the bank	200,000
Dividends paid to shareholders	100,000
Proceeds from sale of building	750,000
Purchase of inventories	600,000
Purchase of equipment	200,000

How much is the net cash from (for) investing activities?

1. $400,000
2. $550,000
3. ($200,000)
4. $330,000

15. B&B reported net income totaling $300,000. Depreciation expense for the year was $122,000. Accounts receivable decreased by $2,300, inventory increased by $4,500, dividends paid totaled $10,000, accounts payable increased by $5,000, and taxes payable increased by $7,000.

How much is the companys cash flow from operations?

1. $431,800
2. $421,800
3. $418,200
4. $417,800

16. B&B presented the following income statement for the year:

Sales	$4,400,000
Cost of goods sold	2,140,000
Restructuring charges	548,000
Litigation settlement	75,000
Other operating expenses	870,000
Income before taxes and extraordinary loss	767,000
Income taxes expense	198,450
Income after taxes	568,550
Extraordinary loss, net of $77,000 taxes	(143,000)
Net income	$ 425,550

B&B has a 30% income tax rate. How much are B&B's sustainable earnings?

1. $ 767,000
2. $ 903,500
3. $ 773,500
4. $ 973,000

17. B&B statement of cash flow appears below:

Operating activities
	Net income	$20,400
	Depreciation expense	7,500
	Accounts receivable	2,200
	Inventory	(4,100)
	Accounts payable	1,000
Cash flow from operations		27,000
Investing activities
	Equipment	(6,500)
Cash flow from investing		(6,500)
Financing activities
	Common stock issued	10,200
	Long-term note payable	(16,600)
	Dividends paid	(13,200)
Cash flow from financing		(19,600)
Net decrease in cash		900
Cash, beginning of year		16,500
Cash, end of year		$17,400

What can be said about B&Bs discretionary cash flow for the year?

1. B&B has a strong discretionary cash flow.
2. B&B is unable to undertake discretionary, value-creating actions.
3. B&B has very little cash available for corporate use.
4. B&B has $27,000 generated from operations to use to pay it obligations.

18. The income statement for B&B, Inc. appears below:

Revenue	$75,000
Cost of goods sold	25,000
Depreciation expense	16,000
Other operating expenses	4,000
Income tax expense	7,000
Net income	$23,000

During the year, B&Bs cash increased by $2,100, accounts receivable increased by $600, inventory decreased by $1,900, accounts payable increased by $200 and dividends were paid of $2,000.

How much is the companys cash flow from operations?

1. $29,000
2. $30,500
3. $40,500
4. $38,500

19. What requirement did the U.S. Securities and Exchange Commission mandate for reporting pro forma earnings?

1. Companies may not report pro forma earnings.
2. Companies may report pro forma earnings only with their audited financial statements.
3. Companies must report GAAP-based earnings first in their public earnings announcements and must reconcile pro forma earnings amounts with their GAAP-based earnings.
4. Companies may report pro forma earnings only if the pro forma earnings amount is greater than GAAP-based earnings.

20. The following information is available from the financial statements of B&B for the year ended December 31:

	Net Income	$520,000
	Increase in Accounts Payable	$10,000
	Depreciation Expense	$20,000
	Payment of Dividends	$5,000
	Decrease in Accounts Receivable	$15,000
	Increase in Inventories	$10,000
	Decrease in Income Taxes Payable	$20,000

What are B&Bs Cash Flows from Operating Activities?

1. $485,000
2. $495,000
3. $535,000
4. $515,000

21. Presented below is information from B&B, Inc.:

Amounts in millions		Year 2	Year 1
Balance sheet
	Total assets	$17,155	$16,377
	Shareholders' equity	3,152	3,939
Income statement
	Net sales	$15,560	$17,517
	Net income	3,000	1,965

During the year, B&B paid preferred dividends totaling $960 million. What percentage of B&Bs Year 2 net income remains from each dollar of sales after subtracting all expenses?

1. 87.37%
2. 12.33%
3. 19.28%
4. 33.01%

22. Presented below are select financial data from B&Bs annual report:

Amounts in millions	Year 1	Year 2
Balance sheet
Accounts receivable (net)	$9,367	$10,250
Inventory	6,860	6,239
Income statement
Net sales	$52,716	$41,948
Cost of goods sold	7,541	8,525

How many days, on average, did it take Pfizer to collect an outstanding receivable during Year 2?

1. 89.2 days
2. 77.2 days
3. 37.7 days
4. 64.5 days

23. Presented below are select financial data from B&Bs annual report:

Amounts in millions	Year 1	Year 2
Balance sheet
Accounts receivable (net)	$9,367	$13,765
Inventory	6,860	6,500
Income statement
Net sales	$52,716	$62,800
Cost of goods sold	7,541	9,525

If B&B were to allow its inventory level to drop to zero units on hand at December 31, Year 2, and its sales remained steady, how long would it take to sell its entire inventory?

1. 158.1 days
2. 188.5 days
3. 249.1 days
4. 365.0 days

24. Which of the following statements is true?

1. The current ratio is a measure of firm solvency.
2. The current ratio is a measure of firm liquidity.
3. The debt-to-total assets ratio is a measure of firm liquidity.
4. None of the above is true.

25. B&B Company has net sales of $190,000, an ending balance in accounts receivable of $18,000 and accounts payable of $15,000. What is the companys receivable turnover?

A. 13.97

B. 12.67

C. 10.55

D. 19.23