Question

1--Presented below are select financial data from Major Drug’s annual report:

Amounts in millions	Year 1	Year 2
Balance sheet
Accounts receivable (net)	$9,367	$13,765
Inventory	6,860	6,239
Income statement
Net sales	$52,716	$61,498
Cost of goods sold	7,541	8,525

What can be said about Major Drug’s accounts receivable turnover for Year 2?

1. It improved from Year 1 to Year 2
2. Major Drug collected receivables less effectively in Year 2 as compared to Year 1
3. Fewer customers purchased items on account during Year 2 as compared to Year 1
4. Customers paid their account balances more quickly during Year 2 as compared to Year 1

2--Presented below are the consolidated balance sheets for B&B Company, Inc. at December 31:

Amounts in thousands
Current assets
Cash	$ 24,600
Accounts receivable	29,500
Inventory	33,400
Marketable securities	25,900
Total current assets	113,400
Equipment, net	145,000
Total assets	$258,400
Current liabilities
Accounts payable	$ 21,000
Income taxes payable	10,000
Current portion of long-term debt	13,000
Total current liabilities	44,000
Long-term obligations	75,400
Common stock	55,000
Retained earnings	84,000
Total liabilities & shareholders' equity	$258,400

How does B&B current ratio compare to the industry average of 1.8?

1. B&B will likely have a more difficult time servicing it current liabilities as compared to its competition.
2. B&B is significantly more liquid than other companies in the same industry.
3. B&B current ratio is significantly lower than the benchmark.
4. B&B current ratio implies it is more risky than other companies in the same industry.

3--B&B Physicians of Texas reported total retained earnings at December 31, Year 2 of $300,000. It provided the following information for Year 1 and Year 2:

	Year 2	Year 1
Retained earnings (beginning)	$265,000	$125,000
Revenues	900,000	870,000
Expenses	800,000	625,000
Dividends	?	105,000

How much dividends did the company pay in Year 2?

1. $75,000
2. $65,000
3. $82,000
4. $100,000

4--B&B reported net income totaling $400,000. Depreciation expense for the year was $122,000. Accounts receivable decreased by $2,300, inventory increased by $4, 500, accounts payable increased by $5,000, and taxes payable increased by $7,000. B&B also purchased a main frame for $100,000.

How much is the company’s cash flow from operations?

1. $531,800
2. $431,800
3. $418,200
4. $417,800

23. B&B Hospitals of Plano. has the following asset account balances:

Buildings and equipment	$5,622,500
Accumulated depreciation	622,500
Patents	375,000
Goodwill	525,000
Accounts receivable	115,000
Land	3,507,500

What is the total amount that should be reported on Madison, Inc.’s balance sheet under Property, plant, & equipment, net?

1. $7,752,500
2. $8,507,500
3. $7,830,000
4. $7,507,500

Answer 1

Please comment for any explanation ,

Thanks,