TWO SHORT PROBLEMS

TWO SHORT ANSWER PROBLEMS

SUPPORTING CALCULATIONS MUST BE PROVIDED

PROBLEM 1

Assume that XYZ Company has no opening inventory. The following purchases of inventory occurred during the year:

Date Purchases (units) Purchase price per unit

Jan. 2 2 $3

Feb. 15 3 $4

March 30 4 $5

July 29 6 $6

Oct. 30 5 $7

Assume XYZ Company sells 8 items on October 31 and uses the FIFO method of inventory valuation. What amount would appear as cost of goods sold on the income statement?

a. $33

b. $53

c. $76

d. $56

e. None of the above. The correct calculation is shown below.

PROBLEM 2

Paul is a day trader. He is interested in the common stock of XYZ Limited. The following data are available for the company:

2012

2013

2014

Dividends paid per share*

$4

$3

$2.50

Dividend yield ratio

5.5%

5.5%

5.5%

Dividend payout ratio

40%

40%

40%

Return on total assets

10%

12%

8%

Return on common stockholders’ equity

8%

14.5%

9%

*There were no changes in common stock outstanding over the three-year period.

Paul would like answers to the following questions:

1. Is the market price of the company’s stock going up or down?

2. Is the company employing financial leverage to the advantage of the common stockholders?

Our Essay Format
  • Times New Roman, 12 pt
  • 1 Inch Margins
  • Double/ Single Spacing
  • 275/ 550 Words Per Page
  • MLA/ APA/ Turabian/ Chicago style, etc

A standard double-spaced page contains 275 words

Free Features
  • Hiring a preferred expert
  • Bibliography & cover page
  • Revisions within 14-30 days
  • 24/7 customer support
payments

Team of Professional Essay Writers

With our essay service, you'll find an essay writer for any task. Their rating is based on previous customer reviews and successful orders. Before you hire a writer, you can familiarize yourself with their track record in detail.