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Multiple Choice Question 119

The following information pertains to Sampson Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

Assets
Cash and short-term investments		$ 45,000
Accounts receivable (net)		25,000
Inventory		20,000
Property, plant and equipment		210,000
	Total Assets	$300,000
Liabilities and Stockholders Equity
Current liabilities		$ 50,000
Long-term liabilities		90,000
Stockholders equitycommon		160,000
	Total Liabilities and Stockholders Equity	$300,000
Income Statement
Sales		$ 120,000
Cost of goods sold		66,000
Gross profit		54,000
Operating expenses		30,000
	Net income	$ 24,000
Number of shares of common stock		6,000
Market price of common stock		$20
Dividends per share		.50

What is the current ratio for Sampson?

1.40

1.80

.64

1.30

Multiple Choice Question 123

The following information pertains to Sampson Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

Assets
Cash and short-term investments		$ 45,000
Accounts receivable (net)		25,000
Inventory		20,000
Property, plant and equipment		310,000
	Total Assets	$400,000
Liabilities and Stockholders Equity
Current liabilities		$ 50,000
Long-term liabilities		90,000
Stockholders equitycommon		260,000
	Total Liabilities and Stockholders Equity	$400,000
Income Statement
Sales		$300,000
Cost of goods sold		66,000
Gross profit		234,000
Operating expenses		30,000
	Net income	$204,000
Number of shares of common stock		6,000
Market price of common stock		$20
Dividends per share		.50

What is the profit margin for Sampson?

68%

115%

51%

	28.2%

Multiple Choice Question 129

The following information pertains to Eura Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

Assets
Cash and short-term investments		$ 40,000
Accounts receivable (net)		30,000
Inventory		25,000
Property, plant and equipment		215,000
	Total Assets	$310,000
Liabilities and Stockholders Equity
Current liabilities		$ 60,000
Long-term liabilities		75,000
Stockholders equitycommon		175,000
	Total Liabilities and Stockholders Equity	$310,000
Income Statement
Sales		$ 90,000
Cost of goods sold		45,000
Gross profit		45,000
Operating expenses		25,000
	Net income	$ 20,000
Number of shares of common stock		5,000
Market price of common stock		$22
Dividends per share		1.00

What is the price-earnings ratio for Eura?

7.3 times

4.0 times

5.5 times

	5 times

Multiple Choice Question 134

The following amounts were taken from the financial statements of Plant Company:

	2013		2012
Total assets	$800,000		$1,000,000
Net sales	720,000		650,000
Gross profit	352,000		320,000
Net income	150,000		117,000
Weighted average number of common shares outstanding	60,000		90,000
Market price of common stock	$67.50		$39

The price-earnings ratio for 2013 is

27 times.

11 times.

2.5 times.

	45 times.

Multiple Choice Question 164

In vertical analysis, the base amount for each income statement item is

sales.

gross profit.

net income.

net sales.

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