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

question 26

Multiple Choice

Financial statements for Orantes Company appear below:

$\begin{array}{|l|r|}\hline&\text { Orange Company } \\&\text { Income Statement } \\&\text { For the Year Ended December 31, Year } \\&2\\&\text { (dollars in thousands) }\\\hline\text { Sales (All on Account) } & \$ 2510 \\\hline \text { Costs of Goods Sold } & \$ 1750 \\\hline \text { Gross Margin } & \$ 760 \\\hline \text { Operating Expenses } & \$ 300 \\\hline \text { Net Operating Income } & \$ 460 \\\hline \text { Interest Expense } & \$ 30 \\\hline \text { Net Income before Taxes } & \$ 430 \\\hline \text { Income Taxes (30\%) } & \$ 129 \\\hline \text { Net Income } & \$ 301\\\hline\end{array}$

Total dividends during Year 2 were $\$ 181,000$ , of which $\$ 12,000$ were preferred dividends. The market price of a common share on December 31, Year 2 was $\$ 280$ .
-Orantes Company's current ratio at the end of Year 2 was closest to which of the following?

• A) 0.35 to 1.
• B) 0.54 to 1.
• C) 1.19 to 1.
• D) 1.50 to 1.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Extraction Costs

The expenses associated with the process of removing raw materials from the earth for use in production or consumption.

Fishery Collapse

A rapid decline in a fishery’s population because its fish are being harvested faster than they can reproduce.

Harvesting Rates

The speed at which natural resources are extracted or harvested, impacting sustainability and future availability.