The Following Is a Summary of Information Presented on the Financial

question 95

Multiple Choice

The following is a summary of information presented on the financial statements of The Cake Company on December 31, 2014.
$\begin{array}{|l|r|c|}\hline \text { Account }&2014&2013\\\hline \text { Current assets } & \$ 65,000 & \$ 50,000 \\\hline \text { Accounts receivable } & 80,000 & 75,000 \\\hline \text { Merchandise inventory } & 50,000 & 40,000 \\\hline \text { Current liabilities } & 75,000 & 50,000 \\\hline \text { Long-term liabilities } & 30,000 & 50,000 \\\hline \text { Common stock } & 50,000 & 40,000 \\\hline \text { Retained earnings } & 40,000 & 25,000\\\hline \\\hline \text { Net sales revenue } & \$ 525,000 & \$ 500,000 \\\hline \text { Cost of goods sold } & 400,000 & 395,000 \\\hline \text { Gross profit } & \$ 125,000 & \$ 105,000 \\\hline \text { Selling and general expenses } & 45,000 & 50,000 \\\hline \text { Net income before income tax expense } & \$ 80,000 & \$ 55,000 \\\hline \text { Income tax expense } & \$ 24,000 & 16,500 \\\hline \text { Net income } & \$ 56,000 & \$ 38,500 \\\hline\end{array}$


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What would horizontal analysis report with respect to net sales revenue?

• A) A 5% increase in net sales revenue
• B) A dividend yield of $8.20
• C) That cost of goods sold is 79.19% of net sales revenue
• D) An accounts receivable turnover of 7.24 times

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Definitions:

Temporal Lobes

Regions of the cerebral cortex located beneath the temples, involved in processing auditory information, memory storage, and managing emotional responses.

Senile Plaques

Protein deposits found in the brains of people with Alzheimer's disease, characterized by clusters of beta-amyloid protein that disrupt cell function.

Neurofibrillary Tangles

Twisted protein fibers found within the brain's cells that are one of the hallmark physical characteristics of Alzheimer's disease.

Beta-Amyloid Protein

A small molecule that forms sphere-shaped deposits called senile plaques, linked to aging and to Alzheimer’s disease.