1 The market price of the common stock of Stem Company dropped from $550 to $325 per share. The dividend paid per share remained unchanged. The company's dividend payout ratio would: A) be unchanged. B) increase. C) decrease. D) be impossible to det

1	The market price of the common stock of Stem Company dropped from $550 to $325 per share. The dividend paid per share remained unchanged. The company's dividend payout ratio would:
	[removed]A)	be unchanged.
	[removed]B)	increase.
	[removed]C)	decrease.
	[removed]D)	be impossible to determine without additional information.



2	The records of Kaboom Enterprises include the following account balances as of the end of the most recent year: The book value per share of the company's common stock is:
	[removed]A)	$28.
	[removed]B)	$25.
	[removed]C)	$22.
	[removed]D)	$20.



3	The following data have been taken from Muncie Company's financial records for the current year: The price-earnings ratio is:
	[removed]A)	15.0 to 1.
	[removed]B)	9.0 to 1.
	[removed]C)	7.0 to 1.
	[removed]D)	1.67 to 1.



4	Selected financial data for Thorogood Company appear below: During the year, the company paid dividends of $20,000 on its preferred stock. The company's net income for the year was $240,000. The company's return on common stockholders' equity for the year is closest to:
	[removed]A)	25%.
	[removed]B)	23%.
	[removed]C)	19%.
	[removed]D)	17%.



5	Financial leverage is negative when:
	[removed]A)	the return on total assets is less than the rate of return on common stockholders' equity.
	[removed]B)	the return on total assets is less than the rate of return demanded by creditors.
	[removed]C)	total liabilities are less than stockholders' equity.
	[removed]D)	total liabilities are less than total assets.



6	Theatricaility Company reported net income of $150,000 and interest expense of $20,000. Total assets were $1,300,000 at the beginning of the year and $1,220,000 at the end of the year. The company's income tax rate was 30%. The company's return on total assets for the year was closest to:
	[removed]A)	13.5%.
	[removed]B)	13.0%.
	[removed]C)	12.4%.
	[removed]D)	11.9%.



7	Assume that a company reports accounts receivable, inventory, and prepaid expenses on its balance sheet. Which of those accounts should be included in the calculation of the company's acid-test ratio?
	[removed]A)	Accounts receivable and prepaid expenses, but not inventory
	[removed]B)	Accounts receivable, but not inventory or prepaid expenses
	[removed]C)	Inventory and prepaid expenses, but not accounts receivable
	[removed]D)	Inventory, but not accounts receivable or prepaid expenses



8	If Alejandro Company converts a short-term note payable into a long-term note payable, this transaction would:
	[removed]A)	decrease the current ratio and decrease the acid-test ratio.
	[removed]B)	decrease working capital and increase the current ratio.
	[removed]C)	decrease working capital and decrease the current ratio.
	[removed]D)	increase working capital and increase the current ratio.



9	Fiona Company had $360,000 in sales on account last year. The beginning accounts receivable balance was $20,000 and the ending accounts receivable balance was $36,000. The company's average collection period (age of receivables) was closest to:
	[removed]A)	20.28 days.
	[removed]B)	28.39 days.
	[removed]C)	36.50 days.
	[removed]D)	56.78 days.



10	Selected year-end data for Turow Company are presented below: The company has no prepaid expenses and inventories remained unchanged during the year. Based on these data, the company's inventory turnover ratio for the year was closest to:
	[removed]A)	1.20 times.
	[removed]B)	1.67 times.
	[removed]C)	2.33 times.
	[removed]D)	2.40 times.

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