The Following Are the Income Statements and Balance Sheets for Merkey

question 97

Multiple Choice

The following are the income statements and balance sheets for Merkey Company: $\begin{array}{lr}&20X2\\\text { Sales only credit sales) }&\$1,606.0\\\text {Less cost of goods sold }&1,062.0\\\text {Gross profit }&\$544.0\\\text {Less operating expenses }&322.0\\\text {Operating income }&\$222.0\\\text { Less other expense: Interest}&9.6\\\text {Income before tax }&\$212.4\\\text {Less income tax expense }&85.0\\\text { Net income}&\$127.4\\\end{array}$


$\begin{array}{lrrlrr}&20X2&20X1&&20X2&20X1\\\text { Current assets: } &&&{\text { Current liabilities: }} \\\text { Cash } & \$ 36 & \$ 38 & \text { Accts payable } & \$ 98 & \$ 64 \\\text { Accts receivable } & 180 & 144 & \text { Wages payable } & 18 & 16 \\\text { Inventory } & 120 & 100 & \text { Taxes payable } & 28 & 4 \\\text { Prepaid rent } & 20 & 24 & \text { Current portion } & &\\\text { Total current assets }&\$356&\$306&\text { of long-term debt }&30&6\\\text { Long-term assets: } & & & \text { Total current } & & \\\text { Fixed assets } & \$ 320 & \$ 316 & \text { liabilities } & \$ 174 & \$ 90 \\\text { Accum. deprec. } & \underline{206}) & \underline{180}) & \text { Long-term liabilities } & \underline{66} & \underline{92}\\\text { Total long-term assets }&\$114&\$136&\text { Total liabilities }&\$240&\$182\\&&&\text { Owners' equity: }\\&&&\text { Common stock, } \$ 5 \text { par }&\$80&\$80\\&&&\text { Retained income } & 150 & 180\\&&&\text { Total owners' equity }&\$230&\$260\\\text { Total assets }&\$470&\$442&\text { Total liab. and own. equity }&\$470&\$442\\\\\end{array}$
$\text {December 31 market price per share:}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$120\quad\quad\$106$ The dividend?yield ratio for Merkey Company in 20X2 is _____.

• A)1.6%
• B)4.9%
• C)8.2%
• D)124.5%

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Definitions:

Market Risk

The risk of losses in investments due to factors that affect the entire market, such as economic changes or political events.

Economic Events

Various incidents or transactions that may affect a country's economy, including government policies, market movements, and natural disasters, which can influence financial markets and economic health.

Probability Distribution

A function in mathematics that supplies the likelihoods of various potential outcomes of an experiment.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics and finance to measure risk or volatility.