QUESTION 1 Use the following financial statements to answer Questions 1 – 16. Kr
ID: 2591155 • Letter: Q
Question
QUESTION 1
Use the following financial statements to answer Questions 1 – 16.
Kramerica Industries (KI)
2016 Income Statement
Sales
$678,240
Cost of goods sold
328,830
Selling & administrative expenses
149,680
Depreciation
65,491
Earnings before interest and taxes
Interest expense
23,155
Earnings before taxes
Taxes
38,879
Net income
Dividends
Additions to retained earnings
Kramerica Industries (KI)
2015 and 2016 Balance Sheets
2015
2016
2015
2016
Cash
$15,979
$17,167
Accounts payable
$28,875
$37,692
Accounts receivable
16,553
19,318
Long-term debt
164,200
187,400
Inventory
22,798
27,305
Common stock
45,000
45,000
Net fixed assets
413,311
494,573
Retained earnings
230,566
288,271
Total assets
Total liabilities and equity
KI's cash flow from assets in 2016 is _____.
$29,300
$7,241
$47,600
$14,455
2 points
QUESTION 2
KI's cash flow to stockholders in 2016 is _____.
$19,500
-$29,300
$14,500
$31,000
2 points
QUESTION 3
KI's cash flow to creditors in 2016 is _____.
$23,900
-$45
$3,010
$16,600
2 points
QUESTION 4
KI's internal growth rate in 2016 is _____.
5.19%
1.88%
7.34%
11.53%
2 points
QUESTION 5
KI's current ratio in 2016 is _____.
1.99
1.69
2.85
2.55
2 points
QUESTION 6
KI's profit margin in 2016 is _____.
10.65%
13.82%
6.66%
8.94%
2 points
QUESTION 7
KI's equity multiplier in 2016 is _____.
1.68
2.91
2.02
3.45
2 points
QUESTION 8
If KI has 100,000 shares outstanding and the stock is sold for $28.25 per share at the end of the year, its PE ratio is _____.
39.12
86.01
50.86
103.65
2 points
QUESTION 9
KI's quick ratio in 2016 is _____.
0.78
0.97
0.60
1.32
2 points
QUESTION 10
KI's total asset turnover in 2016 is _____.
1.15
1.21
0.90
0.82
2 points
QUESTION 11
If KI has 100,000 shares outstanding and the stock is sold for $28.25 per share at the end of the year, its market-to-book ratio is _____.
8.48
12.38
10.43
17.82
2 points
QUESTION 12
KI's sustainable growth rate in 2016 is _____.
20.94%
4.26%
3.87%
16.85%
2 points
QUESTION 13
KI's total debt ratio in 2016 is _____.
50.45%
32.98%
40.31%
55.07%
2 points
QUESTION 14
KI's times interest earned ratio in 2016 is _____.
9.43%
5.80
5.80%
9.43
2 points
QUESTION 15
KI's operating cycle in 2016 is _____.
42.38 days
53.85 days
37.46 days
24.99 days
2 points
QUESTION 16
KI's cash cycle in 2016 is _____.
-4.59 days
-21.69 days
0.51 day
36.94 days
Kramerica Industries (KI)
2016 Income Statement
Sales
$678,240
Cost of goods sold
328,830
Selling & administrative expenses
149,680
Depreciation
65,491
Earnings before interest and taxes
Interest expense
23,155
Earnings before taxes
Taxes
38,879
Net income
Dividends
Additions to retained earnings
Explanation / Answer
1. Cash flows from assets = cash flow to creditors + cash flow to stockholders
Cash flow to stockholders = Dividend paid - (ending common stock - beginning common stock)
Ending retained earnings = Beginning retained earnings + net income - dividend paid
Dividend paid = Beginning retained earnings + net income - ending retained earnings
= $230566 + $72205 - $288271
= $14500
Cash flows to stock holders = $14500 - ($45000 - $45000)
= $14500.
Cash flows to creditors = Interest paid - (Ending long term debt - beginning long term debt)
= $23155 - ($187400 - $164200)
= $23155 - $23200
= ($45).
Cash flows from assets = ($45) + $14500
= $14455.
Answer : d. $14455.
2.
Answer : c. $14500
3.
Answer : b. ($45)
5.
Current ratio = current assets / current liabilities
= $63790 / $37692
= 1.69 times.
Answer : b. 1.69 times.
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