Table 3-1 Jones Company Financial Information Based on the information in Table

Question

Table 3-1
Jones Company
Financial Information

Based on the information in Table 3-1, calculate the amount of dividends paid by Jones Company in 2010 (no assets were disposed of during the year, and there was no change in interest payable or taxes payable).

Select one:

a. $2,500

b. $4,000

c. $2,000

d. $3,500

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Please refer to Table 4-1 for the following questions.

Table 4-1
  Stewart Company
Balance Sheet

Based on the information in Table 4-1, the OROA is

Select one:

a. 24.73%.

b. 52.78%.

c. 46.54%.

d. 39.50%.

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Please refer to Table 4-1 for the following questions.

Table 4-1
  Stewart Company
Balance Sheet

XYZ Corporation has a P/E ratio of 20 and EFG Corporation has a P/E ratio of 10. It is likely that

Select one:

a. XYZ's earnings per share are twice the earnings per share of EFG.

b. investors believe that for the same level of earnings growth, XYZ is a higher risk company.

c. investors believe XYZ stock is overvalued.

d. investors expect XYZ's earnings to grow faster than EFG's earnings.

December 2009 December 2010 Net Income $2,000 $4,000 Accounts receivable 750 950 Accumulated depreciation 1,000 1,500 Common stock 4,500 5000 Paid-in capital 7,500 8500 Retained earnings 1,500 3,500 Accounts payable 750 750

Explanation / Answer

Answer to Table 3-1

Thus answer will be C.

Opening retained earnings 1500 Add: Income during the year 4000 Less: closing balance 2500 Dividend 2000

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