| VILLA TOOL COMPANY | ||||
| Income Statement | ||||
| For the Year Ended December 31 | ||||
| 2012 | 2011 | |||
| Net sales | $1,818,500 | $1,750,500 | ||
| Cost of goods sold | 1,011,500 | 996,000 | ||
| Gross profit | 807,000 | 754,500 | ||
| Selling and administrative expense | 516,000 | 479,000 | ||
| Income from operations | 291,000 | 275,500 | ||
| Other expenses and losses | ||||
| Interest expense | 18,000 | 14,000 | ||
| Income before income taxes | 273,000 | 261,500 | ||
| Income tax expense | 81,000 | 77,000 | ||
| Net income | $ 192,000 | $ 184,500 | ||
| VILLA TOOL COMPANY | ||||
| Balance Sheets | ||||
| December 31 | ||||
| Assets | 2012 | 2011 | ||
| Current assets | ||||
| Cash | $ 60,100 | $ 64,200 | ||
| Short-term investments | 69,000 | 50,000 | ||
| Accounts receivable (net) | 117,800 | 102,800 | ||
| Inventory | 123,000 | 115,500 | ||
| Total current assets | 369,900 | 332,500 | ||
| Plant assets (net) | 600,300 | 520,300 | ||
| Total assets | $970,200 | $852,800 | ||
| Liabilities and Stockholders’ Equity | ||||
| Current liabilities | ||||
| Accounts payable | $160,000 | $145,400 | ||
| Income taxes payable | 43,500 | 42,000 | ||
| Total current liabilities | 203,500 | 187,400 | ||
| Bonds payable | 200,000 | 200,000 | ||
| Total liabilities | 403,500 | 387,400 | ||
| Stockholders’ equity | ||||
| Common stock ($5 par) | 280,000 | 300,000 | ||
| Retained earnings | 286,700 | 165,400 | ||
| Total stockholders’ equity | 566,700 | 465,400 | ||
| Total liabilities and stockholders’ equity | $970,200 | $852,800 |
Compute the following ratios for 2012. (Weighted average common shares in 2012 were 57,000, and all sales were on account.)(Round earnings per share, current ratio and acid-test ratio to 2 decimal places, e.g. 10.50. Round other answers to 1 decimal place, e.g. 10.5.)
(a)Earnings per share$(b)Return on common stockholders’ equity%(c)Return on assets%(d)Current:1(e)Acid-test:1(f)Receivables turnovertimes(g)Inventory turnovertimes(h)Times interest earnedtimes(i)Asset turnovertimes(j)Debt to total assets%
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D) necessary unemployment. E) structural unemployment.. 27. The recession of 2001 was caused by A) the events of 9/11. B) a decline in consumer spending. C) a decline in investment spending. D) the war in Iraq. 28. A budget deficit is the A) annual excess of government spending over revenue raised by taxes, fees, and charges. B) shortfall of Social Security collections toward payment of benefits. C) amount by which tax revenues and borrowed funds fall short of government expenditures. D) excess of tax revenues over expenditures. E) amount by which tax revenues exceed borrowed funds. 29. The consumer price index is created by A) calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year. B) the Congressional Budget Office. C) averaging the price increases for all consumer goods in the GDP and adding 100. D) dividing nominal dollar consumer expenditures by base year consumer expenditures. 30. Statement I: When equilibrium GDP and full employment GDP are equal, there is no inflationary gap and no deflationary gap.Statement II: Equilibrium GDP is an ideal goal that can never be attained. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 31. When government expenditures in a given year are less than tax receipts, there exists A) a budget deficit. B) public revenue. C) full-employment taxation. D) a budget surplus .32. As price rises, the quantity ______________ rises. A) demanded B) supplied C) demanded and supplied 33. If the MPC were .75, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to fall by 100? A) A decrease of 25. B) A decrease of 50. C) A decrease of 75. D) A decrease of 100. E) A decrease of 125. (I will send the image) 34. When price is $8 A) quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium price. B) quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium price. C) quantity supplied is greater than quantity demanded and, therefore, price must fall to get to equilibrium price. D) quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium price. 35. Usury is considered the charging of A) higher interest rates than people are willing to pay. B) lower interest rates than people are willing to pay C) unconscionably high interest rates. D) extremely low rates of interest. 36. The present value of a dollar rises as A) the interest rate declines and the number of years you wait for your money declines. B) the interest rate rises and the number of years you wait for your money rises. C) the interest rate declines and the number of years you wait for your money rises. D) the interest rate rises and the number of years you wait for your money declines. 37. In economics we say the amount of land is A) fixed. B) variable. C) both fixed and variable. D) neither fixed nor variable. 38. Which is not determined by supply and demand? A) The wage rate B) The interest rate C) Rent D) Profits 39. Which of the following is false? A) The supply of land is fixed. B) When the demand for a plot of land rises, its supply will rise. C) Land is most efficiently used in cities. D) The rent on a particular piece of land is based on the MRP schedule of the highest bidder. 40. If you knew that interest rates would be rising, then you would predict that the present value of $1 received 5 years from now A) would be higher. B) would be about the same. C) would be lower. D) could be higher or lower. 41. Changes in rent on a plot of land are chiefly due to A) changes in demand. 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A) Most economists support rent control laws. B) Usury laws and rent control are price ceilings. C) Usury laws have never had any effect because they are set well above interest rates. D) None of the choices. (I will send the image) 56. If price were set by the government at $3, there would be a price _____________, that would cause a ___________ of _______ units. A) floor, surplus, 12 B) floor, shortage, 12 C) ceiling, surplus, 14 D) ceiling, shortage, 14 57. Sue Ann Buchanan, can make $800,000 on the pro tennis tour, but would be willing to do it for $200,000. Her economic rent is A) $200,000. B) $600,000. C) $800,000. D) $1,000,000. 58. Despite their fantastic employment gains, African American men earn ____% of what white men earn. A) 65 B) 55 C) 60 D) 76 59. Since 1996, productivity growth has ________ and real wages have ______. A) risen; risen B) fallen; fallen C) risen; fallen D) fallen; risen. 60. Which statement is false? 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