Question

Deacon Corporation has provided the following financial data from its balance sheet and income statement: Year...

Deacon Corporation has provided the following financial data from its balance sheet and income statement: Year 2 Year 1 Total assets $ 1,210,000 $ 1,173,000 Total liabilities $ 471,000 $ 467,000 Total stockholders' equity $ 739,000 $ 706,000 Net operating income (income before interest and taxes) $ 68,351 Interest expense $ 21,000 The company’s times interest earned ratio for Year 2 is closest to:

Multiple Choice

0.66

4.25

3.25

2.25

2. Falmouth Corporation's debt to equity ratio is 0.6. Current liabilities are $120,000, long term liabilities are $360,000, and working capital is $140,000. Total assets of the corporation must be:

Multiple Choice

$600,000

$1,200,000

$1,280,000

$800,000

3. Doonan Corporation has provided the following financial data from its balance sheet and income statement: Year 2 Year 1 Total assets $ 1,489,000 $ 1,440,000 Stockholders' equity: Common stock, $4 par value $ 360,000 $ 360,000 Additional paid-in capital $ 70,000 $ 70,000 Retained earnings $ 570,000 $ 550,000 Total stockholders' equity $ 1,000,000 $ 980,000 Interest expense $ 15,000 Income taxes (35%) $ 14,162 Net income $ 26,300 The market price of common stock at the end of Year 2 was $4.79 per share. The company’s price-earnings ratio for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.) Garrison 16e Rechecks 2017-10-04

Multiple Choice

16.52

0.76

10.64

7.73

4. Karma Corporation has total assets of $190,000 and total liabilities of $90,000. The corporation's debt-to-equity ratio is closest to:

Multiple Choice

0.53

0.47

0.90

0.32

The market price of Friden Company's common stock increased from $15 to $18. Earnings per share of common stock remained unchanged. The company’s price-earnings ratio would:

Multiple Choice

decrease.

impossible to determine.

remain unchanged.

increase.

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Homework Answers

Answer #1
Q1.
Answer is 3.25
Explanation:
Net Income before interest 68351
Divide: Interest expense 21000
Times interest earned 3.25
Q2.
Answer is $ 1280000
Explanation:
Total Debts (120000+360000) 480000
Debt-Equity ratio 0.6
Equity (480000/0.6) 800000
Total Assets (480000+800000) 1280000
Q3.
Answer is 16.52
Explanantion:
Market price per share 4.79
Divide: Earning per share:
Net income after tax 26300
Divide: Number of shares 90000 0.29
PE ratio 16.52
Q4.
Answer is 0.90
Explanation:
Total Liabilities (Debts) 90000
Divide: Total Equity (190000-90000) 100000
Debt-Equty ratio 0.9
Q5.
Answer is Increase
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