The statement of financial position for Paragon Corporation at November 30, 2009, the end of its current fiscal year, follows. The market price of the company’s common stock was $4 per share on November 30, 2009.All items are to be considered independent of one another, and any transactions given in the items are to be considered the only transactions to affect Paragon Corporation during the just-completed current or coming fiscal year. Average balance sheet account balances are used in computing ratios involving income statement accounts. Ending balance sheet account balances are used in computing ratios involving only balance sheet items.Required Answer the following multiple-choice questions:a. If Paragon paid back all of the deposits received from customers, its current ratio would be1. 2.50-to-1.00.2. 2.80-to-1.00.3. 2.33-to-1.00.4. 3.00-to-1.00.5. 2.29-to-1.00.b. If Paragon paid back all of the deposits received from customers, its quick (acid-test) ratio would be1. 1.06-to-1.00.2. 1.00-to-1.00.3. 0.88-to-1.00.4. 1.26-to-1.00.5. 1.20-to-1.00.c. A 2-for-1 common stock split by Paragon would1. Result in each $1,000 bond being convertible into 600 new shares of Paragon common stock.2. Decrease the retained earnings due to the capitalization of retained earnings.3. Not affect the number of common shares outstanding.4. Increase the total paid-in capital.5. Increase the total stockholders’ equity.d. Paragon Corporation’s building is being depreciated using the straight-line method, salvage value of $6,000,000, and life of 20 years. The number of years the building has been depreciated by Paragon as of November 30, 2009 is1. 7.5 years.2. 12.5 years.3. 9.0 years.4. 15.0 years.5. None of these.e. Paragon’s book value per share of common stock as of November 30, 2009 is1. $4.00.2. $1.61.3. $1.00.4. $2.41.5. None of these.f. If, during the current fiscal year ending November 30, 2009, Paragon had sales of $90,000,000 with a gross profit of 20% and an inventory turnover of five times per year, the merchandise inventory balance on December 1, 2008 was1. $14,400,000.2. $12,800,000.3. $18,000,000.4. $20,000,000.5. $16,000,000.g. If Paragon has a payout ratio of 80%and declared and paid $4,000,000 of cash dividends during the current fiscal year ended November 30, 2009, the retained earnings balance on December 1, 2008 was1. $20,000,000.2. $17,000,000.3. $15,000,000.4. $11,000,000.5. None ofthese.
View Solution:
The statement of financial position for Paragon Corporation at N



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *