91.The number of times interest expense is earned is computed as
a.net income plus interest expense, divided by interest expense
b.income before income tax plus interest expense, divided by interest expense
c.net income divided by interest expense
d.income before income tax divided by interest expense
92.Balance sheet and income statement data indicate the following:
Bonds payable, 10% (due in two years)
|
$1,000,000
|
Preferred 5% stock, $100 par (no change during year)
|
300,000
|
Common stock, $50 par (no change during year)
|
2,000,000
|
Income before income tax for year
|
550,000
|
Income tax for year
|
80,000
|
Common dividends paid
|
50,000
|
Preferred dividends paid
|
15,000
|
Based on the data presented above, what is the number of times bond interest charges were earned (round to onedecimal point)?
a. 1.5
b. 6.4
c. 6.5
d. 5.5
93.The current ratio is
a.used to evaluate a company's liquidity and short-term debt paying ability
b.a solvency measure that indicates the margin of safety of a bondholder
c.calculated by dividing current liabilities by current assets
d.calculated by subtracting current liabilities from current assets
94.A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As aresult of this transaction, the current ratio and working capital will
a.both decrease
b.both increase
c.increase and remain the same, respectively
d.remain the same and decrease, respectively
95. Hsu Company reported the following on its income statement:
|
|
Income before income taxes
|
$420,000
|
Income tax expense
|
120,000
|
Net income
|
$300,000
|
Interest expense was $80,000. Hsu Company's times interest earned is
a.8 times
b.6.25 times
c.5.25 times
d.5 times
96.Brock Company's financial information is listed below. 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
|
$ 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
|
95,000
|
Stockholders’ equity—Common
|
155,000
|
Total liabilities and stockholders’ equity
|
$310,000
|
Income Statement
|
Sales
|
$90,000
|
Cost of goods sold
|
45,000
|
Gross margin
|
$45,000
|
Operating expenses
|
20,000
|
Net income
|
$25,000
|
|
|
Number of shares of common stock6,000
Market price of common stock$20
What is the current ratio?
a. 1.42
b. 0.78
c. 1.58
d. 0.67
97.Based on the above data, what is the amount of quick assets?
a. $168,000
b. $96,000
c. $60,000
d. $61,000
98.Based on the above data, what is the amount of working capital?
a. $213,000
b. $113,000
c. $153,000
d. $39,000
99.Based on the above data, what is the quick ratio, rounded to one decimal point?
a. 1.7
b. 2.9
c. 1.1
d. 1.0
100.The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on totalassets is
a.leverage
b.solvency
c.yield
d.quick assets
The balance sheets at the end of each of the first two years of operations indicate the following:
|
Year 2
|
Year 1
|
Total current assets
|
$600,000
|
$560,000
|
Total investments
|
60,000
|
40,000
|
Total property, plant, and equipment
|
900,000
|
700,000
|
Total current liabilities
|
125,000
|
65,000
|
Total long-term liabilities
|
350,000
|
250,000
|
Preferred 9% stock, $100 par
|
100,000
|
100,000
|
Common stock, $10 par
|
600,000
|
600,000
|
Paidin capital in excess of par—Common stock
|
75,000
|
75,000
|
Retained earnings
|
310,000
|
210,000
|