Question

16. True and false Year-end #1: Sales 200 with Cash 100 = + long-term debt 100...

16. True and false

Year-end #1: Sales 200 with Cash 100 = + long-term debt 100 + capital stock 100 + opening retained earnings 0 + net income 50 + accounts payable 100 – accounts receivable 100 – inventory 50 - fixed assets 100. Year-end #2: Sales 400 with Cash 100 = + long-term debt 200 + capital stock 100 + opening retained earnings 50 + net income 50 + accounts payable 200 – accounts receivable 100 – inventory 100 - fixed assets 300. The company pays dividends instead of investing cash in its business.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

True. The company should pay dividends instead of investing cash in its business. Because net profit ratio as well as return on asset is reduced, if the company pays dividend investor will invest the money where they get more return.

Total assets in year 1 = accounts receivable+cash+inventory+fixed assets = 100+100+50+100 = 350

Net profit ratio in year 1 = Net income/Sales = 50/200 = 25%

Return on asset in year 1 = Net income/Total assets = 50/350 = 14.29%

Total assets in year 2 = accounts receivable+cash+inventory+fixed assets = 100+100+100+300 = 600

Net profit ratio in year 2 = Net income/Sales = 50/400 = 12.5%

Return on asset in year 2= Net income/Total assets = 50/600 = 8.33%

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600...
Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600 Inventory 380 Long-term Debt 4,640 Net Income 280 Property, Plant, and Equipment (net) 1,400 Retained Earnings (220) Sales 3,000 Note: The retained earnings amount reported is as of the END of the year (after the closing entries have been made). In this problem, the retained earnings amount is NEGATIVE. Compute DEBT-TO-EQUITY RATIO. Group of answer choices 232.0 0.05 253.0 0.98 1.09
uestion 1 Below is the balance sheet of ABC Company at the end of 2010: Assets...
uestion 1 Below is the balance sheet of ABC Company at the end of 2010: Assets Liab. & Owners Equity Cash $11,300 Accounts payable $500 Account receivable $1,000 Long - term debt $8,000 Inventory 6,600 Common stock (par value = $2) $4,000 Additional paid - in capital $5,000 Retained earnings $1,400 Total Assets $18,900 Liab. & Owners Equity $18,900 Its net income for year 2011 is $569. The dividend payout ratio (dividends/Net Income) is 28% . Also, 200 new shares...
For the next two questions suppose the following balance sheet: Cash $20 Accounts payable $30 Short-term...
For the next two questions suppose the following balance sheet: Cash $20 Accounts payable $30 Short-term inevstments 20 Accruals 50 Accounts receivable 50 Notes payable 10 Inventory 60      Current liabilities 100      Current assets 160 Long-term debt 70 Net fixed assets 100 Common equity 30 Retained earnings 60 Total assets 250 Total liab. & equity $250 What is its total net operating working capital? $40 $50 $60 $130 $160 What is its total net operating capital? $140 $150 $160...
Which Accounts get closed at the end of the year? Cash Petty Cash Accounts Receivable Allowance...
Which Accounts get closed at the end of the year? Cash Petty Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Interest Receivable Inventory Supplies Inventory Prepaid Insurance Prepaid Rent Debt Investments Equity Investments Land Buildings Accum. Depr. - Buildings Equipment Accum. Depr. - Equipment Notes Payable Accounts Payable Salaries and Wages Payable Interest Payable Dividends Payable Long-term Notes Payable Common Stock Retained Earnings Dividends Income Summary Sales Revenue Sales Returns and Allowances Sales Discounts Cost of Goods Sold Advertising...
A company has the following income statement and balance sheet: INCOME STATEMENT Sales $1,000 Costs 600...
A company has the following income statement and balance sheet: INCOME STATEMENT Sales $1,000 Costs 600 Depreciation 240 EBIT $ 160 Interest expenses 60 EBT $ 100 Taxes (40%) 40 Net income $ 60 BALANCE SHEET Cash $ 20 Accounts payable $ 30 Short-term investments 30 Accruals 50 Accounts receivable 20 Notes payable 10 Inventory 60 Current liabilities 90 Current assets 130 Long-term debt 70 Gross fixed assets 140 Common stock 30 Accumulated deprec. 40 Retained earnings 40 Net fixed...
2014 2015 Accounts payable 440 380 Accounts receivable, net 1,810 2,040 Accruals 95 120 Cash 120...
2014 2015 Accounts payable 440 380 Accounts receivable, net 1,810 2,040 Accruals 95 120 Cash 120 100 Capital surplus 1,120 1,290 Common stock 1,000 1,100 Cost of Goods Sold 6,610 6,420 Depreciation expense 1,550 1,650 Interest expense 140 170 Inventory (end of year) 5,720 5,530 Long-term debt 3,890 4,150 Net fixed assets 7,530 8,050 Net sales 10,750 11,050 Notes payable 800 740 Operating expenses (excluding depreciation) 1,680 1,780 Retained earnings 7,835 7,940 Taxes 250 360 22. Cash flow from operating...
Orange Company provided the following fiscal year end figures: Cash $1,234, inventory $13,480, Equity $36,008, Accounts...
Orange Company provided the following fiscal year end figures: Cash $1,234, inventory $13,480, Equity $36,008, Accounts Receivable $7,789, Net Fixed Assets $42,331, Other Long-term Assets $1,822, Accounts Payable $9,558, and Accruals $2,756. How much long-term debt does the company have? What is the company's Net Working Capital?
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet...
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $55,900; total assets, $169,400; common stock, $86,000; and retained earnings, $47,625.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 452,600 Cost of goods sold 298,450 Gross profit 154,150 Operating expenses 98,800 Interest expense 4,400 Income before taxes 50,950 Income taxes 20,525 Net income $ 30,425 CABOT CORPORATION Balance Sheet December 31, 2017 Assets...
In its closing financial statements for its first year in business, ABC Enterprises, had cash of...
In its closing financial statements for its first year in business, ABC Enterprises, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of $3,408, accounts payable of $700, short-term notes payable of $740, long-term liabilities of $1,100, common stock of $1,160, retained earnings of $1,620, net sales of $2,768, cost of goods sold of $1,210, depreciation of $160, other operating expenses of $200, interest expense of $160, taxes of $312, addition to retained earnings of...
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet...
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $55,900; total assets, $169,400; common stock, $86,000; and retained earnings, $47,625.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 452,600 Cost of goods sold 298,450 Gross profit 154,150 Operating expenses 98,800 Interest expense 4,400 Income before taxes 50,950 Income taxes 20,525 Net income $ 30,425 CABOT CORPORATION Balance Sheet December 31, 2017 Assets...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT