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The 2008 balance sheet of The Washington Post Comp...

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The 2008 balance sheet of The Washington Post Company shows average shareholders' equity of $3,171,176 thousand, net operating profit after tax of $79,895 thousand, net income of $65,722 thousand, and average net operating assets of $3,279,742 thousand. The company's return on net operating assets (RNOA) for the year is: Answer A. 2.5% B. 2.4% C. 2.1% D. 2.0% E. There is not enough information to calculate the ratio When considering the results of an Altman Z-Score analysis a score of 4.20 would suggest? Answer A. The company is healthy and there is a low bankruptcy potential in the short-term B. The company is healthy and there is a low bankruptcy potential in both the short and long-term C. The company is exposed to some risk of bankruptcy D. The company is in financial distress and there is a high probability of bankruptcy in the short term future Generally Accepted Accounting Principles (GAAP) are created by: (select all that apply) Answer A. The Securities and Exchange Commission B. The Generally Accepted Accounting Principles Task Force C. The Sarbanes Oxley Act D. The Financial Accounting Standards Board E. The Emerging Issues Task Force During the month of March 2010, Weaver World, a tax-preparation service, had the following transactions. ? Billed $74,000 in revenues on credit ? Received $41,000 from customers' accounts receivable ? Incurred expenses of $33,500 but only paid $19,425 cash for these expenses ? Prepaid $5,555 for computer services to be used next month What was the company's net cash flow from operations for the month? Answer A. $16,020 B. $10,465 C. $74,000 D. None of the above Selected balance sheet income statement data follow for Harley Davidson, Inc for the year ended December 31, 2008 (in thousands). What is the company's times interest earned ratio? Income before provision for income taxes Interest expense Statutory tax rate Provision for income taxes Net income $1,033,977 $4,542 36.6% $379,259 $654,718 Answer A. 1.004 B. 144.1 C. 228.6 D. 360.0 E. None of the above Covenants represent: Answer A. The maximum that a creditor will allow a customer to owe at any point in time B. Promises the company makes to the creditor C. Terms and conditions set forth in a lending agreement to reduce the probability of nonpayment D. The property that a company pledges to guarantee repayment A letter of credit: Answer A. Provides a guarantee of payment from the buyer, reducing the credit risk to the seller B. Ensures a company that funds will be available when needed C. Is analogous to a credit card that companies can draw on as needed D. Is a representation that a company has a high credit rating Which of the following items would not be found on a balance sheet? (Select all that apply) Answer A. Nonowner financing B. Sales C. Stockholders' Equity D. Property, plant and equipment E. Cost of Goods Sold The current ratio is a measure of: Answer A. Solvency B. Leverage C. Short-term debt paying ability D. Bankruptcy position An accrual of wages expense would have what effect on the balance sheet? Answer A. Decrease liabilities and increase equity B. Increase assets and increase liabilities C. Increase liabilities and decrease equity D. Decrease assets and decrease liabilities E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's liabilities to equity ratio in 2007 was: Answer A. 1.12 B. 1.05 C. 1.68 D. 1.85 The ratio of net income to equity is also known as: Answer A. Total net equity ratio B. Profit margin C. Return on equity D. Net income ratio E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's quick ratio in 2008 was: Answer A. 1.35 B. 1.00 C. 0.89 D. 0.75 The overarching purpose of credit risk analysis is to: Answer A. Quantify potential credit losses B. Determine a company's optimal capital structure C. Identify credit opportunities D. Provide information to banks about credit losses The audit report is addressed to: Answer A. The board of directors and the shareholders B. The shareholders C. The audit committee D. The Securities and Exchange Commission (SEC) E. The board of director A company's net cash flow will equal its net income ? Answer A. Only when the company has no investing cash flow for the period B. Occasionally C. Only when the company has no investing or financing cash flow for the period D. Rarely E. Almost always During fiscal 2008, Black & Decker Corporation reported Net income of $293.6 million and paid dividends of $101.8 million. Which of the following describes how these transactions would affect Black and Decker's equity accounts? (in millions) Answer A. Increase contributed capital by $293.6 and decrease earned capital by $101.8 B. Decrease contributed capital by $101.8 and increase earned capital by $293.6 C. Increase contributed capital by $191.8 D. Increase earned capital by $191.8 E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's current ratio in 2008 was: Answer A. 1.35 B. 1.00 C. 2.02 D. 1.50 A list of assets, liabilities and equity can be found on which of the following? Answer A. Statement of Assets and Liabilities B. Income Statement C. Balance Sheet D. Statement of Cash Flows E. Statement of Stockholders' Equity Which of the following statements are correct (select all that apply): Answer A. A balance sheet reports on investing and financing activities. B. An income statement reports on financing activities. C. The statement of equity reports on changes in the accounts that make up equity. D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time. E. A balance sheet reports on a company's assets and liabilities over a period of time. Selected ratios follow for BJ Services for the year ended September 31, 2008 (in millions). What is the company's return on equity (ROE) for the year? Return on net operating assets (RNOA) Profit margin (PM) Net operating profit margin (NOPM) Asset turnover (AT) Financial leverage (FL) 17.10% 11.23% 11.69% 1.081 1.595 Answer A. 12.64% B. 19.36% C. 20.16% D. 27.27% E. None of the above Procter & Gamble's June 30, 2008 financial statements reported the following (in millions): Cash, beginning of year $ 5,354 Cash, end of year 3,313 Cash from operating activities 15,814 Cash from investing activities $(2,549) What did Procter & Gamble report for Cash from financing activities for the year ended June 30, 2008? Answer A. $(13,265) million B. $(21,932) million C. $(15,306) million D. $15,306 million E. $13,265 million Commercial paper is issued with maturities of less than 270 days because: Answer A. Usually the collateral consists of short-term assets B. It exempts the borrowing from SEC regulation C. Companies use it to fund working capital needs D. Companies do not want to pay high interest rates Arizona Company currently has a current ratio of 0.9. The company decides to borrow $1,000,000 from First Granite Bank for a period of nine months. After the borrowing Arizona's current ratio will be: Answer A. 0.9 B. Unable to determine without more information C. Less than 0.9 D. Greater than 0.9 In its 2007 annual report, Caterpillar, Inc. reported the following (in millions): 2007 2006 Sales $44,958 $41,517 Cost of goods sold $32,626 $29,549 As a percentage of Sales, did Caterpillar's Gross profit increase or decrease during 2007? Answer A. Gross profit increased from 27% to 29% B. Gross profit decreased from 29% to 27% C. Gross profit increased from 71% to 73% D. Gross profit decreased from 73% to 71% E. There is not enough information to answer the question. Which of the following concepts is not captured by one of the variables in Altman's Z-Score? Answer A. Current level of efficiency B. Current level of profitability C. Current level of liquidity D. Current level of net operating assets Liquidity refers to: Answer A. The life cycle of the company B. The amount of receivables the company has in the balance sheet C. The amount of financial leverage D. None of the above The variable EBIT divided by Total Assets in the Altman Z-Score measures which of the following concepts? Answer A. Current level of liquidity B. Current level of net operating assets C. Current level of profitability D. Current level of efficiency The 2008 financial statements of The Washington Post Company reveal average shareholders' equity of $3,171,176 thousand, net operating profit after tax of $79,895 thousand, net income of $65,722 thousand, and average net operating assets of $ 3,279,742 thousand. The company's return on equity (ROE) for the year is: Answer A. 2.00% B. 2.07% C. 2.44% D. 2.52% E. There is not enough information to calculate the ratio Which of the following is a measure of liquidity? Answer A. Liabilities-to-Equity Ratio = Total Liabilities / Stockholder's Equity B. Times Interest Earned = Earning before interest and taxes / Interest Expense C. Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities D. Return on net operating assets (RNOA) E. All of the above The 2008 balance sheet of E.I. DuPont et Nemours and Company shows average shareholders' equity of $9,131 million, net operating profit after tax of $2,254 million, net income of $2,007 million, and common shares issued of 867 million. The company has no preferred shares issued. DuPont's return on equity (ROE) for the year is: Answer A. 21.98% B. 24.68% C. 231% D. 18.98% E. There is not enough information to calculate the ratio Cash collected on accounts receivable would produce what effect on the balance sheet? Answer A. Increase liabilities and decrease equity B. Decrease liabilities and increase equity C. Increase assets and decrease assets D. Decrease assets and decrease liabilities E. None of the above How would a purchase $100 of inventory on credit affect the income statement? Answer A. It would increase liabilities by $100 B. It would decrease liabilities by $100 C. It would increase non-cash assets by $100 D. Both A and C E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's Times interest earned ratio in 2008 was: Answer A. 1.00 B. 0.05 C. 21.5 D. 20.5 The fiscal 2008 balance sheet for Whole Foods Market reports the following data (in thousands). What is the company's current ratio? Cash and cash equivalents Accounts receivable Merchandise inventories Current assets Current liabilities $30,534 $115,424 $327,452 $622,606 $666,177 Answer A. 0.22 B. 0.93 C. 1.08 D. 1.65 E. None of the above The fiscal 2008 balance sheet for Whole Foods Market reports the following data. What is the company's quick ratio? Cash and cash equivalents Accounts receivable Merchandise inventories Current assets Current liabilities $30,534 $115,424 $327,452 $622,606 $666,177 Answer A. 0.05 B. 0.22 C. 0.71 D. 0.93 E. None of the above

 

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