Financial Statements for Oratz Company Appear Below Total Dividends During Year 2 Were

question 151

Multiple Choice

Financial statements for Oratz Company appear below:

$\begin{array}{|l|r|}\hline&\text { Oratz Company } \\&\text { Income Statement } \\&\text { For the Year Ended December 31, Year } \\&2\\&\text { (dollars in thousands) }\\\hline \text { Sales (All on Account) } & \$ 1630 \\\hline \text { Costs of Goods Sold } & \$ 1140 \\\hline \text { Gross Margin } & \$ 490 \\\hline \text { Operating Expenses } & \$ 190 \\\hline \text { Net Operating Income } & \$ 300 \\\hline \text { Interest Expense } & \$ 30 \\\hline \text { Net Income before Taxes } & \$ 270 \\\hline \text { Income Taxes (30\%) } & \$ 81 \\\hline \text { Net Income } & \$ 189\\\hline\end{array}$

Total dividends during Year 2 were $\$ 139,000$ , of which $\$ 6,000$ were preferred dividends. The market price of a common share on December 31, Year 2 was $\$ 260$ .


-Oratz Company's times interest earned for Year 2 was closest to which of the following?

• A) 6.3 times.
• B) 9.0 times.
• C) 10.0 times.
• D) 16.3 times.

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Definitions:

Bank Robber

An individual who illegally steals money or valuables from a bank, typically through the use of force, threat, or deceit.

Past Actions

Refers to actions or decisions taken in the past that have potential implications or effects in the present or future.

Valid Consideration

A necessary element in the formation of a contract, referring to something of value that is exchanged between the parties.

Sham

A pretense or fake transaction intended to deceive others or for a purpose contrary to law or public policy.