Holy Trinity College of General Santos City

College of Business Management & Accountancy

Financial Management 101 Quiz 4 Part 2

Instruction: Write your final answer in ½ cw. Common stock (no par, 20,000 shares issued
Answer only. and outstanding) ……………………....... 140,000
Retained earnings ............................... 160,000
Total liabilities and stockholders’ equity .... $600,000
Problem 1

Falmouth Company's debt to equity ratio is 0.6.

Current liabilities are $120,000, long term Mince Company Income Statement For the Year
liabilities are $360,000, and working capital is Ended December 31
$140,000.
Sales (all on account) ...................... $2,700,000
1. Total assets of the company must be: Cost of goods ................................... 1,680,000
Gross margin ................................... 1,020,000
Operating expenses .............................. 790,000
Net operating income ........................... 230,000
Problem 2 Interest expense .................................... 20,000
Net income before taxes ........................ 210,000
Houston Company has a times interest earned Income taxes (30%) ................................ 63,000
ratio of 2.5. The company's tax rate is 40% and Net income ....................................... $ 147,000
its interest expense is $20,000.
There was no change in the number of common
2. The company's after-tax net income is: shares outstanding during the year. The
beginning balances of assets, inventory and
receivables were P500,000, P120,000 and
P90,000 respectively.
Problem 3
Required: Determine the following: (use 360
The Carney, Inc. has sales of $5 million per year days)
(all credit) and an average collection period of 35
days. 5. Working capital.
6. Acid-test (quick) ratio.
3. What is its average amount of accounts 7. Current ratio.
receivable outstanding? 8. Earnings per share of common stock.
9. Book value per share.
10. Times interest earned.
11. Debt-to-equity ratio.
Problem 4 12. Asset turnover
13. Inventory turnover
Selected data from Perry Corporation's financial 14. Receivable turnover
statements follow: 15. Debt ratio
Current ratio ............................................. 2.0 16. Equity ratio
Acid-test ratio ........................................... 1.5 17. Payable turnover
Current liabilities ............................... $120,000 18. Payment period
Inventory turnover ..................................... 8 19. Inventory days
Gross profit margin as a percentage of sales.. 20. Collection period
40%

4. The company has no prepaid expenses

and there were no changes in
inventories during the year. Perry
Corporation's net sales for the year
were:

Problem 5

Mince Company's condensed financial

statements appear below:

Mince Company Balance Sheet December 31

Cash and marketable securities.......... $100,000

Accounts receivable .............................. 120,000
Inventories............................................ 170,000
Prepaid expenses .................................. 10,000
Plant and equipment (net).................... 200,000
Total assets ....................................... $600,000

Accounts payable ....................... $150,000

Taxes payable .................................. 45,000
Interest payable ...................................... 5,000
Long-term bonds payable ..................... 100,000