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Chapter 05 MC

# Chapter 05 MC - CHAPTER FIVE Multiple Choice Questions...

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CHAPTER FIVE Multiple Choice Questions Table 5-1 Income Statement Balance Sheet Sales \$20,000,000 Assets: Cost of Goods Sold 8,000,000 Cash \$ 5,000,000 Gross Profit 12,000,000 Marketable Securities 12,500,000 Selling and Administrative 1,600,000 Accounts Receivable, net 2,500,000 Depreciation 3,000,000 Inventory 30,000,000 7,400,000 Prepaid Expenses 5,000,000 Interest 2.000,000 30,000,000 5,400,000 Taxes (40%) 2,160,000 Total Assets 85,000,000 Net Income 3,240,000 Preferred Stock Div. 500,000 Liabilities and Equity : 2,740,000 Accounts Payable \$20,000,000 Common Stock Div. 600,000 Notes Payable 5,000,000 \$ 2,140,000 Accrued Expenses 5,000,000 Bonds Payable 20,000,000 Preferred Stock 15,000,000 Common Stock 5,000,000 Capital in Excess of Par 10,000,000 Retained Earnings 5,000,000 Total Liabilities and Equity \$85,000,000 Shares outstanding of common stock = 1,000,000 Shares outstanding of preferred stock = 500,000 Market price of common stock = \$18. Use Table 5-1 for questions 5-1 through 5-15. 5-1. The Current Ratio is: a. 0.55 b. 1.83 c. 0.183 d. 0.35 5-2. The Net Profit margin is: a. 16.2% b. 37% c. 60% d. 13.7% 5-3. The Quick Ratio is: a. 0.667 50

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b. 1.20 c. 8.33 d. 0.29 5-4. The Times Interest Earned ratio is: a. 3.7 b. 0.27 c. 2.7 d. 0.62 5-5. The Earnings Per Share is: a. \$2.14 b. \$3.24 c. \$1.83 d. \$2.74 5-6. The Gross Profit Margin is: a. 40% b. 60% c. 16.2% d. 37% 5-7. The Total Debt to Total Asset ratio is: a. 1.31 b. 58.82% c. 0.7647% d. 0.59 5-8. Return on Assets ratio is: a. 0.162% b. 3.81% c. 16.2% d. 13.7% 51
5-9. The Total Asset Turnover ratio is: a. 0.235 times b. 4.25 times c. 2.35 times d. 4.25% 5-10. The Operating Profit Margin is: a. 13.6% b. 16.2% c. 60% d. 37% 5-11. The Average Collection Period (365 day year) is: a. 45.63 days b. 12.5 days c. 12.5% d. 4.563 days 5-12. The Market to Book ratio (treat PS as debt) is: a. 6.57 b. 0.90 c. 0.15 d. 0.51 5-13. The Debt to Equity ratio (treat PS as debt) is:

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Chapter 05 MC - CHAPTER FIVE Multiple Choice Questions...

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