1. Assume the following sales data for a company: What is the percentage increas
ID: 2401332 • Letter: 1
Question
1. Assume the following sales data for a company:
What is the percentage increase in sales from Year 1 to Year 2 (to the nearest percent)?
a.80%
b.25%
c.125%
d.20%
2 Based on the following data, what is the amount of quick assets?
a.$65,000
b.$101,000
c.$175,000
d.$173,000
3 Duke Company has income before income tax of $100,000, interest expense of $20,000, and total stockholders' equity of $100,000. Duke's times interest earned ratio is
a.6.
b.0.2.
c.1.2.
d.4.
4 The balance sheets at the end of each of the first two years of operations indicate the following:
5 If net income is $125,000 and preferred dividends are $9,000 for Year 2, what is the earnings per share on common stock for Year 2? (Round to two decimal places.)
a.$0.19
b.$1.75
c.$2.08
d.$1.93
Year 2 $562,500 Year 1 450,000Explanation / Answer
1
Answer: percentage increase in sales from Year 1 to Year 2 =25%
Working notes for the above answer is as under
Calculation for the percentage increase in sales from Year 1 to Year 2
Year 2
$562,500
Year 1
450,000
Year2-year1
112,500
% increse
=112500/450,000
25.0%
_________________________________________________
2
Answer: Quick Assets =$101,000
Working notes for the above answer is as under
Calculation for Quick Assets
Quick Assets
Accounts receivable
45,000
Cash
20,000
Marketable securities
36,000
Total Quick Assets
101,000
______________________________________________
3
Answer: Times Interest earned ratio=6
Working notes for the above answer is as under
Times Interest earned ratio
=(Income before tax+ Interest expanses) /Interest expanses
=(100,000+20,000) /20,000
=120,000/20,000
=6
________________________________________
4
Answer: Earnings per share for the year2 =$1.93
Working notes for the above answer is as under
Earnings per share for the year2
EPS
= Net Income - Preferred dividend /Weighted Average Common Shares Outstanding
Weighted Average Common Shares outstanding = 600000/10 = 60000 shares
Preferred Dividend = $9000
Earnings per share = (125000-9000)/60000
Earnings per share
= 116000/60000
= $1.93
Year 2
$562,500
Year 1
450,000
Year2-year1
112,500
% increse
=112500/450,000
25.0%
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