ACCT 2302 CHAPTER 13 SAMPLE QUESTIONS

Student: ___________________________________________________________________________

1. Arston Company's net income last year was $300,000. The company has 150,000 shares of common stock
and 60,000 shares of preferred stock outstanding. There was no change in the number of common or
preferred shares outstanding during the year. The company declared and paid dividends last year of $1.50
per share on the common stock and $0.60 per share on the preferred stock. The earnings per share of
common stock is closest to: 
 

A. $2.00
B. $1.76
C.  $0.50
D. $2.24
 
2. The following data have been taken from your company's financial records for the current year:

   

The price-earnings ratio is: 

 

A. 1.67
B. 15.0
C.  9.0
D. 7.0
 
3. The total assets of the Philbin Company on January 1 were $2.3 million and on December 31 were $2.5
million. Net income was $188,000. Dividends totaled $75,000, interest expense totaled $70,000, and the tax
rate was 30%. The return on total assets was closest to: 
 

A. 9.5%
B. 6.8%
C.  9.9%
D. 10.8%
 
4. Iffert Corporation's net income last year was $4,040,000. The dividend on common stock was $6.40 per
share and the dividend on preferred stock was $2.30 per share. The market price of common stock at the
end of the year was $43.30 per share. Throughout the year, 300,000 shares of common stock and 100,000
shares of preferred stock were outstanding. The dividend payout ratio is closest to: 
 

A. 0.50
B. 0.91
C.  1.02
D. 0.48
 
5. Last year, Bartberger Corporation's dividend on common stock was $10.20 per share and the dividend on
preferred stock was $3.60 per share. The market price of common stock at the end of the year was $51.70
per share. The dividend yield ratio is closest to: 
 

A. 0.74
B. 0.07
C.  0.20
D. 0.27
 
6. Montgomery Corporation's most recent income statement appears below:

   

The beginning balance of total assets was $720,000 and the ending balance was $730,000. The return on
total assets is closest to: 
 

A. 17.4%
B. 21.2%
C.  24.8%
D. 30.3%
 
7. Eradicate Company has $16,000 in cash, $8,000 in marketable securities, $29,000 in account receivable,
$30,000 in inventories, and $34,000 in current liabilities. The company's current assets consist of cash,
marketable securities, accounts receivable, and inventory. The company's acid-test ratio is closest to: 
 

A. 0.85
B. 2.44
C.  1.56
D. 1.32
 
8. Harrison Company, a retailer, had cost of goods sold of $180,000 last year. The beginning inventory
balance was $26,000 and the ending inventory balance was $24,000. The company's inventory turnover
was closest to: 
 

A. 7.20
B. 6.92
C.  3.60
D. 7.50