Management Services II

Final Examination

Name: Date:

Multiple Choice: Encircle the letter of the correct answer

Floyd Co. plans to sell 200 units using P20,000 of assets. The company incurs total costs of P8,000 for these
units. If the return on investment of 10% is targeted, how much should be the selling price?
P50 P30
P40 Cannot be determined from given information
Horizontal and vertical analysis are techniques used by analysts in understanding the financial statements of
companies. Which of the following is an example of a vertical , common-size analysis?
Commission expense in 2018 is 10% greater than it was in 2015 which serves as base year
A comparison in financial ratio between two or more firms in the same industry
A comparison in financial ratio between two or more firms in different industries
Commission expense in 2018 is 5% of sales
Short-term solvency is another term for
Liquidity Profitability
Stability A deduction from income
Which of the following ratios best measures short-term solvency?
Current ratio AR turnover
Acid-test ratio Age of AR
Selected data from starbucks company are presented below. The difference between average and ending
inventory is immaterial. Current assets are comprised mainly of cash ,receivable and inventories
Current ratio 2.0
Acid-test ratio 1.5
Current liabilities P600,000
Inventory turnover 8 times
Gross profit margin 40%
What were Starbuck’s net sales for the year?
P2.4 million P1.2 million
P4.0 million P6.0 million
The following ratios were computed from Dads Company’s financial statements for 2016
Return on asset 24% Asset turnover 1.6 times
What was the company’s profit margin ratio?
38.4% 15%
24% 6%
National Company’s return on equity is 12% and debt ratio is .40. Determine the return on assets.
5.35% 6.60%
8.4% 7.20%
A company has net income of P250,000 and dividends of P50,000 on its convertible preferred stock. There were
400,000shares of common stock outstanding and the preferred is convertible into 125,000 shares of common
stock. Diluted earning per share were:
P0.48 P0.60
P0.50 P2.50
The following information is given
Operating income P900,000
Interest expense 100,000
Income before 40% income tax 800,000
Net income 480,000
Preferred stock dividend 200,000
Net income available to common shares holder 280,000
Common shares outstanding 120,000
What is the times interest earned ratio?
2.8 8.0
4.8 9.0
What is the times preferred dividend earned (TPDE) ratio? Based on number 9
1.4 2.4
1.7 4.0
 What is the Basic EPS? Based on number 9
2.3 3.0
2.6 4.1
Dividend yield is 10% price earnings ratio is 4 times, what is the plowback ratio?
2.5% 60%
40% Cannot be determined.
The issuance of new shares in a five for one split of common stock
Decreases the book value per share of common stock
Increases the book value per share of common stock
Increases total stockholders’ equity
Decreases total stockholder’s equity
Wilco Company reports the following:

Dividend payout ratio for 2005 was:

A. 27%
B. 12%
C. 22.2%
D. Not determinable

Following is some financial information for Dell Inc.

What is Dell's profit margin for 2005?

A. 6.27%
B. 6.18%
C. 6.38%
D. 6.86%
What is Dell's profit margin for 2006?
A. 6.27%
B. 6.18%
C. 6.38%
D. 6.86%
What is Dell's P/E ratio for 2006?
A. 27.63
B. 12.81
C. 23.65
D. 9.70
What is Dell's asset turnover for 2006?
A. 2.12
B. 3.58
C. 3.65
D. 2.31
 You have been provided the following information about Wert Inc.

Return on Assets for 2006 is:

A. 13.71%
B. 12.68%
C. 10.77%
D. 13.21%

You have been provided the following information about High Inc.

. Working Capital for 2005 is:

A. $56,000
B. $20,000
C. $151,000
D. $207,000
Owner's Equity for 2006 is:
A. $20,000
B. $154,000
C. $174,000
D. $207,000

Current Ratio for 2005 is:

A. 1.55
B. 1.51
C. 1.50
D. 1.14
Return on Common Equity for 2006 is:
A. 15.46%
B. 24.14%
C. 16.79%
D. 22.04%
. Which of the following statements is correct?
A. The more efficiently a company utilizes its assets, the greater its return on investment, all other things being
equal.
B. If return on equity increases, the return on assets must have also increased.
C. If the number of days inventory is held increases, the return on assets will increase, all other things being
equal.
D. If the gross margin decreases, the inventory turnover must have increased, all other things being equal.
Which of the following statistics would be the most useful in determining the efficiency of a car rental
company?
A. Inventory turnover
B. Number of employees per car rental
C. Average length of car rental
D. Number of days cars are rented as a percentage of number of days available for rent
Problem (25 pts)

The following information is available concerning Yambao Company’s expected results in 2019 (in thousands). Turnovers are based
on year-end values;

Required: Fill in the blanks

Return on sales 6%
Gross profit percentage 40%
Receivables turnover 5 times
Inventory turnover 4 times
Current ratio 3:1
Ratio to total debt to total assets 40%
Condensed Income statement
Sales P900
Cost of sales ____
Gross profit ____
Operating expenses ____
Net income ____

Condensed Balance Sheet

Cash P30 Current liabilities _______

Receivable ____ Long-term Debt _______

Inventory ____ Shareholders’ Equity _______

Plant and equipment 180,000

Total ____ Total _______