Question

3. An economist would use financial statements of the company to forecast trends. These financial statements are examples of...
A. Managerial accounting
B.Financial accountign
C.tax accounting
D. none of the above

7. The current market price of the stock will affect the capital stock if...
A. The market price increases
B. the market price decreases
C. The company issues more shares
D. None of the above

26. If L company has net income of 325, depreciation of 120 and changes in current assets and liabilities of -25, then the cash provided by operations is...
A. 420
B.180
C. 470
D. None of the above

29. The average shareholders equity is 100 and the ROE is 0.20, the gross margin is...
A. 20
B. 120
C. 80
D. unable to tell from data given

30. Which of the following is a financial strength ratio
A. Profit margin
B. Gross margin
C. Debit/equity
D. none of the above

32. If the payout ratio is 0.40 and net income is 100 than the stock price is...
A.40
B.60
C.80
D. unable to tell from data given

Answer 1

3

B. Financial accounting.

Financial statements are not examples of Managerial accounting since they doen not reveal the cost relating to production

Even though finanacial statements provide informstion relating to taxation,This can't be termed as an example for tax accounting.

7

C. The company issues more shares

Increase or decrease of market price will not affect the capital.It is usually accounted in the income statement.

26

Cash provided by operation

Net income

325

Depreciation

120

changes in current assets and liabilities

-25

Cash provided by operation

420

29

ROE=Net income/Share holder's equity

Gross margin=Sales-Cost of goods sold

Net income=Gross margin-other expenses

In this case,Using ROE formula we can find out Net income.

But,Due to lack of information relating to other expenses we are unable to find gross margin.

Hence, Answer is

D. unable to tell from data given

30

C. Debit/equity

Profit margin and gross margin are profitability ratios

Debt equity ratio shows the relation ship between debt and equity

More the debt equity ratio, Financial strength is weak

Lesser the debt equity ratio, Financial strength is really good

32

Payout ratio=Dividend/Net income

From the given data we can find Dividend.

But,We cant compute Stock price from the givan data.

Hence, Answer is

D. unable to tell from data given