111.Short-term creditors are typically most interested in analyzing a company's
a.marketability
b.profitability
c.operating results
d.solvency
112.A common measure of liquidity is
a.the ratio of sales to assets
b.dividends per share of common stock
c.the accounts receivable turnover
d.the profit margin
113.Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000. It had50,000 shares of common stock outstanding during the entire year. Richards Corporation's common stock is sellingfor $35 per share. The price-earnings ratio is
a.7 times
b.14 times
c.2 times
d.5 times
114.Leverage implies that a company
a.contains debt financing
b.contains equity financing
c.has a high current ratio
d.has a high earnings per share
The following information pertains to Diane Company. Assume that all balance sheet amounts represent bothaverage and ending balance figures and that all sales were on credit.
Assets
Cash and short-term investments
|
$ 30,000
|
Accounts receivable (net)
|
20,000
|
Inventory
|
15,000
|
Property, plant, and equipment
|
185,000
|
Total assets
|
$250,000
|
Liabilities and Stockholders’ Equity
Current liabilities
|
$ 45,000
|
Long-term liabilities
|
70,000
|
Stockholders’ equity—Common
|
135,000
|
Total liabilities and stockholders’ equity
|
$250,000
|
Income Statement
Sales
|
$85,000
|
|
Cost of goods sold
|
45,000
|
Gross margin
|
$40,000
|
Operating expenses
|
(15,000)
|
Interest expense
|
(5,000)
|
Net income
|
$20,000
|
Number of shares of common stock outstanding
|
|
6,000
|
Market price of common stock
|
|
$20
|
Total dividends paid
|
|
$9,000
|
Cash provided by operations
|
|
$30,000
|
115.What is the ratio of sales to total assets for Diane Company?
a. 1.00
b. 2.94
c. 0.18
d. 0.34
116.What is the rate earned on total assets for Diane Company?a. 10.0%
b. 8.0%
c. 0.10%
d. 1.0%
117.What are the dividends per common share for Diane Company?
a. $20.00
b. $3.00
c. $0.67
d. $1.50
118.What is the dividend yield for Diane Company?
a. 7.5%
b. 0.75%
c. 13.3%
d. 1.3%
119.What is the rate earned on common stockholders’ equity for Diane Company?
a. 6.75%
b. 14.8%
c. 7.4%
d. 13.5%
120.What is the price earnings ratio for Diane Company?
a.8.0 times
b.2.5 times
c.4.0 times
d.6.0 times