Question 1
Bethesda Mining Company reports the following balance sheet information for 2018 and 2019.
Prepare the 2018 and 2019 common-size balance sheets for Bethesda Mining. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Question 2
Bethesda Mining Company reports the following balance sheet information for 2018 and 2019.
BETHESDA MINING COMPANY
Balance Sheets as of December 31, 2018 and 2019
2018 2019 2018 2019
Assets Liabilities and Owners’ Equity
Current assets Current liabilities
Cash $ 26,530 $ 34,778 Accounts payable $ 194,422 $ 202,111
Accounts receivable 57,781 78,139 Notes payable 89,520 141,088
Inventory 134,324 201,260 ________________________________________ ________________________________________ ________________________________________ ________________________________________
________________________________________ ________________________________________ ________________________________________ ________________________________________ Total $ 283,942 $ 343,199
Total $ 218,635 $ 314,177 ________________________________________ ________________________________________ ________________________________________ ________________________________________
________________________________________ ________________________________________ ________________________________________ ________________________________________ Long-term debt $ 246,000 $ 182,750
Owners’ equity
Common stock and paid-in surplus $ 209,000 $ 209,000
Accumulated retained earnings 136,940 168,456
Fixed assets ________________________________________ ________________________________________ ________________________________________ ________________________________________
Net plant and equipment $ 657,247 $ 589,228 Total $ 345,940 $ 377,456
________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________
Total assets $ 875,882 $ 903,405 Total liabilities and owners’ equity $ 875,882 $ 903,405
________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________
________________________________________
Calculate the following financial ratios for each year:
a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
d. Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Question 3
Assume the total cost of a college education will be $340,000 when your child enters college in 18 years. You presently have $54,000 to invest.
What annual rate of interest must you earn on your investment to cover the cost of your child’s college education? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Question 4
Assume that in 2018, a copper penny struck at the Philadelphia mint in 1796 was sold for $495,000.
What was the rate of return on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Question 5
Which one of the following is a measure of long-term solvency?
Multiple Choice
Price-earnings ratio
Profit margin
Cash coverage ratio
Receivables turnover
Quick ratio
Question 6
Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0.
Multiple Choice
Cash purchase of inventory
Cash payment on an account receivable
Cash payment of an account payable
Credit sale of inventory at cost
Cash sale of inventory at a loss
Question 7
The interest rate used to compute the present value of a future cash flow is called the:
Multiple Choice
prime rate.
current rate.
discount rate.
compound rate.
simple rate.
Question 8
Tomas earned $89 in interest on his savings account last year and has decided to leave the $89 in his account this coming year so it will earn interest. This process of earning interest on prior interest earnings is called:
Multiple Choice
discounting.
compounding.
duplicating.
multiplying.
indexing.
Question 9
The cash ratio is used to evaluate the:
Multiple Choice
liquidity of a firm.
speed at which a firm generates cash.
length of time that a firm can pay its bills if no additional cash becomes available.
ability of a firm to pay the interest on its debt.
relationship between the firm's cash balance and its current liabilities.
Question 10
If a firm has an inventory turnover of 15, the firm:
Multiple Choice
sells its entire inventory every 15 days.
stocks its inventory only once every 15 days.
delivers inventory to its customers every 15 days.
sells its inventory by granting customers 15 days' of free credit.
sells its entire inventory an average of 15 times each year.
Question 11
By definition, a bank that pays simple interest on a savings account will pay interest:
Multiple Choice
only at the beginning of the investment period.
on interest.
only on the principal amount originally invested.
on both the principal amount and the reinvested interest.
only if all previous interest payments are reinvested.
Question 12
Financial statement analysis:
Multiple Choice
is primarily used to identify account values that meet the normal standards.
is limited to internal use by a firm's managers.
provides useful information that can serve as a basis for forecasting future performance.
provides useful information to shareholders but not to debt holders.
is enhanced by comparing results to those of a firm's peers but not by comparing results to prior periods.
Question 13
Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing?
Multiple Choice
DuPont rate
External growth rate
Sustainable growth rate
Internal growth rate
Cash flow rate
Question 14
Which one of the following will increase the profit margin of a firm, all else held constant?
Multiple Choice
Increase in interest paid
Increase in fixed costs
Increase in depreciation expense
Decrease in the tax rate
Decrease in sales
Question 15
Katlyn needs to invest $5,318 today in order for her savings account to be worth $8,000 six years from now. Which one of the following terms refers to the $5,318?
Multiple Choice
Present value
Compound value
Future value
Complex value
Factor value
Question 16
Given an interest rate of zero percent, the future value of a lump sum invested today will always:
Multiple Choice
remain constant, regardless of the investment time period.
decrease if the investment time period is shortened.
decrease if the investment time period is lengthened.
be equal to $0.
be infinite in value.
Question 17
You need to have $32,000 in 14 in years. You can earn an annual interest rate of 3 percent for the first 4 years, 3.6 percent for the next 3 years, and 4.3 percent for the final 7 years. How much do you have to deposit today?
Multiple Choice
$16,732.56
$18,032.49
$21,155.77
$19,042.84
$18,889.81
Question 18
You have just deposited $8,500 into an account that promises to pay you an annual interest rate of 6 percent each year for the next 6 years. You will leave the money invested in the account and 10 years from today, you need to have $19,320 in the account. What annual interest rate must you earn over the last 4 years to accomplish this goal?
Multiple Choice
12.51%
11.55%
11.37%
14.07%
10.01%
Question 19
A firm has total debt of $1,370 and a debt–equity ratio of .22. What is the value of the total assets?
Multiple Choice
$3,014.00
$6,227.27
$7,597.27
$2,200.00
$1,671.40
Question 20
Lee Sun's has sales of $4,100, total assets of $3,800, and a profit margin of 6 percent. The firm has a total debt ratio of 42 percent. What is the return on equity?
Multiple Choice
11.16 percent
8.96 percent
6.00 percent
5.86 percent
6.47 percent
ANSWER WILL BE SENT BY EMAIL.
