Question

I'll rate do all short as questions if you can't do all pass it to someone else please

1. Starlight Company had the following data taken from its most recent financial statements:

Sales	$3,200,000
Interest expense	56,000
Net income	500,000
Total assets	4,000,000
Total liabilities	2,400,000
Total stockholders’ equity	1,600,000

Based on these data, calculate Starlight Company’s return on total assets.

8%

12.5%

27.8%

None of these choices are correct.

b

2. Starlight Company had the following data taken from its most recent financial statements:

Sales	$3,200,000
Interest expense	56,000
Net income	500,000
Total assets	4,000,000
Total liabilities	2,400,000
Total stockholders’ equity	1,600,000

Based on these data, calculate Starlight Company’s return on stockholders’ equity.

2%

32.3%

62.5%

None of these choices are correct.

3. Johnston & Myers Inc. had the following balance sheet data for a recent year:

Current assets	$720,000
Property, plant, and equipment (net)	1,110,000
Current liabilities	230,000
Long-term liabilities	450,000
Common stock, $10 par	250,000
Retained earnings	1,000,000

What is Johnston & Myers Inc.’s ratio of liabilities to stockholders’ equity?

0.5

0.7

0.9

None of these choices are correct.

4. Patton Corporation had the following items on its financial statements for two recent years:

	Year 2		Year 1
Sales	$2,500,000		$2,000,000
Cost of goods sold	1,975,000		1,600,000
Cash	500,000		475,000
Temporary investments	150,000		150,000
Accounts receivable (net)	200,000		175,000
Inventory	325,000		300,000
Accounts payable	450,000		400,000

Based on these data, calculate Patton Corporation’s working capital for Year 2.

$725,000

$1,625,000

$2,050,000

None of these choices are correct.

5. Patton Corporation had the following items on its financial statements for two recent years:

	Year 2		Year 1
Sales	$2,500,000		$2,000,000
Cost of goods sold	1,975,000		1,600,000
Cash	500,000		475,000
Temporary investments	150,000		150,000
Accounts receivable (net)	200,000		175,000
Inventory	325,000		300,000
Accounts payable	450,000		400,000

Based on these data, calculate Patton Corporation’s accounts receivable turnover for Year 2.

6.7

12.5

14.3

None of these choices are correct.

6. Patton Corporation had the following items on its financial statements for two recent years:

	Year 2		Year 1
Sales	$2,500,000		$2,000,000
Cost of goods sold	1,975,000		1,600,000
Cash	500,000		475,000
Temporary investments	150,000		150,000
Accounts receivable (net)	200,000		175,000
Inventory	325,000		300,000
Accounts payable	450,000		400,000

Based on these data, calculate Patton Corporation’s number of days’ sales in inventory for Year 2.

3.2

57.8

5.7

6.3

Answer 1

1
Return on total assets = Net income /Total assets = 500000/4000000= 12.5%
2
Return on stockholders’ equity. = Net income /Total stockholders’ equity = 500000/1600000= 31.3%
3
Ratio of liabilities to stockholders’ equity = (230000+450000)/(250000+1000000)= 0.5
4
Working capital for Year 2 = (500000+150000+200000+325000)-450000= $725000
5
Accounts receivable turnover for Year 2 = 2500000/((200000+175000)/2)= 13.3
6
Inventory turnover = 1975000/((325000+300000)/2)= 6.32
Number of days’ sales in inventory for Year 2 = 365/6.32= 57.8
Note: For Question 2 and 5 the correct option is none of the None of these choices are correct as the answers are different from options