Question 1
1. Which of the following is a primary market transaction? a. You sell 200 shares of IBM stock on the NYSE through your broker. b. You buy 200 shares of IBM stock from your brother. The trade is not made through a broker--you just give him cash and he gives you the stock. c. IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker. d. One financial institution buys 200,000 shares of IBM stock from another institution. An investment banker arranges the transaction. e. IBM sells 2,000,000 shares of treasury stock to its employees when they exercise options that were granted in prior years. 2. Which of the following statements is CORRECT? a. Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States. b. Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia. c. Hedge funds have more in common with investment banks than with any other type of financial institution. d. Hedge funds have more in common with commercial banks than with any other type of financial institution. e. Hedge funds are not as highly regulated as most other types of financial institutions. The justification for this light regulation is that only "sophisticated" investors (i.e., those with high net worth and high incomes) are permitted to invest in these funds, and such investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator. 3. Beranek Corp has $720,000 of assets, and it uses no debt--it is financed only with common equity. The new CFO wants to employ enough debt to raise the debt/assets ratio to 40%, using the proceeds from borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio? a. $273,600 b. $288,000 c. $302,400 d. $317,520 e. $333,396 4. Royce Corp's sales last year were $280,000, and its net income was $23,000. What was its profit margin? a. 7.41% b. 7.80% c. 8.21% d. 8.63% e. 9.06% 5. How much would $5,000 due in 25 years be worth today if the discount rate were 5.5%? a. $1,067.95 b. $1,124.16 c. $1,183.33 d. $1,245.61 e. $1,311.17 6. Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? a. 4.37% b. 4.86% c. 5.40% d. 6.00% e. 6.60% 7. Ten years ago, Lucas Inc. earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in earnings per share (EPS) over the 10-year period? a. 15.17% b. 15.97% c. 16.77% d. 17.61% e. 18.49% 8. Janice has $5,000 invested in a bank that pays 3.8% annually. How long will it take for her funds to triple? a. 23.99 b. 25.26 c. 26.58 d. 27.98 e. 29.46 9. You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now? a. $11,973 b. $12,603 c. $13,267 d. $13,930 e. $14,626 10. What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5%? a. $16,576 b. $17,449 c. $18,367 d. $19,334 e. $20,352 11. Suppose the real risk-free rate is 3.50% and the future rate of inflation is expected to be constant at 2.20%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average. a. 5.14% b. 5.42% c. 5.70% d. 5.99% e. 6.28% 12. Suppose the real risk-free rate is 3.00%, the average expected future inflation rate is 2.25%, and a maturity risk premium of 0.10% per year to maturity applies, i.e., MRP = 0.10%(t), where t is the years to maturity. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is NOT valid? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average. a. 5.08% b. 5.35% c. 5.62% d. 5.90% e. 6.19% 13. Suppose 10-year T-bonds have a yield of 5.30% and 10-year corporate bonds yield 6.75%. Also, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasury and corporate 10-year bonds is 1.15%. What is the default risk premium on corporate bonds? a. 1.08% b. 1.20% c. 1.32% d. 1.45% e. 1.60% 14. Kay Corporation's 5-year bonds yield 6.20% and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5-year bonds is IP = 1.50%, the default risk premium for Kay's bonds is DRP = 1.30% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t ? 1) ? 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Kay's bonds? a. 0.36% b. 0.41% c. 0.45% d. 0.50% e. 0.55% 15. Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 8.2% on these bonds. What is the bond's price? a. $903.04 b. $925.62 c. $948.76 d. $972.48 e. $996.79 16. Ryngaert Inc. recently issued noncallable bonds that mature in 15 years. They have a par value of $1,000 and an annual coupon of 5.7%. If the current market interest rate is 7.0%, at what price should the bonds sell? a. $817.12 b. $838.07 c. $859.56 d. $881.60 e. $903.64 17. Adams Enterprises? noncallable bonds currently sell for $1,120. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity? a. 5.84% b. 6.15% c. 6.47% d. 6.81% e. 7.17% 18. Dyl Inc.'s bonds currently sell for $1,040 and have a par value of $1,000. They pay a $65 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to maturity (YTM)? a. 5.78% b. 6.09% c. 6.39% d. 6.71% e. 7.05% 19. Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.4% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? a. $1,105.69 b. $1,133.34 c. $1,161.67 d. $1,190.71 e. $1,220.48 20. Dothan Inc.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return? a. 7.72% b. 8.12% c. 8.55% d. 9.00% e. 9.50% 21. Bill Dukes has $100,000 invested in a 2-stock portfolio. $35,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y?s beta is 0.70. What is the portfolio's beta? a. 0.65 b. 0.72 c. 0.80 d. 0.89 e. 0.98 22. Calculate the required rate of return for Climax Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years. a. 10.29% b. 10.83% c. 11.40% d. 12.00% e. 12.60% 23. Porter Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market risk premium? a. 5.80% b. 5.95% c. 6.09% d. 6.25% e. 6.40% 24. A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 11.4%, what is the stock price? a. $16.28 b. $16.70 c. $17.13 d. $17.57 e. $18.01 25. The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price? a. $28.90 b. $29.62 c. $30.36 d. $31.12 e. $31.90 26. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to a. Maximize its expected total corporate income. b. Maximize its expected EPS. c. Minimize the chances of losses. d. Maximize the stock price per share over the long run, which is the stock?s intrinsic value. e. Maximize the stock price on a specific target date.
Question 2
"1. TSW. Inc had the following data for last year: Net income = $800; Net operation profit after taxes (NOPAT)= $700; Total assets= $3000; Total operation capital = $2000. Information for the just-completed year is as follows: Net income = $1000; Net operation profit after taxes (NOPAT) = $925; Total assets = $2600; and Total operation capital = $2500. How much free cash flow did the firm generate during the just-completed year? a. $383 b.$425 c. $468 d.$514 e.$566 2. Edwards Electronics recently reported $11250 of sales, $5500 of operation costs other than depreciation , and $1250 of depreciation. The company had no amortization charges, it had $3500 of bonds that carry a 6.25% interest rate, and its federal plus state income tax rate was 35%. How much was its net cash flow? a.$3284.75 b.$3457.63 c.$3639.61 d.$3831.17 e.$4032.81 3. HHH Inc, reported $12500 of sales and $7025 of operating costs (including depreciation). The company had $18750 of investor-supplied operating assets (or capital), the weighted average cost of that capital (the WACC) was 9.5% and the federal plus state income tax rate was 40%. What was HHH?s Economic Value Added (EVA), i.e., how much value did management add to stockholders wealth during the year? a.$1357.13 b. $1428.56 c.$1503.75 d.$1578.94 e.$1657.88 4. Pace Corp.?s assets are $625,000 and its total debt outstanding is & 185,000. The new CFO wants to employ a debt ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio? a.$158,780 b. $166,688 c.$175,022 d.$183,773 e.$192,962 5. LeCompte Corp. has $312,900 of assets, and it uses only common equity capital(zero debt). Its sales for the last year were $620,000 and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant? a. 7.57% b. 7.95% c. 8.35% d. 8.76% e. 9.20% 6. Last year Altman Corp. had $205,000 of assets, $303,500 of sales, $18250 of net income, and a debt to total assets ratio of 41%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $152,500. Sales, costs, and net income would not be affected, and the firm would maintain the 41% debt ratio. By how much would the reduction in assets improve the ROE? a. 4.69% b. 4.93% c. 5.19% d. 5.45% e. 5.73% 7. Which of the following investments would have the highest future value at the end of 10 years? Assume that the effective annual rate for all investments is the same and is greater than zero. a. investment A pays $250 at the beginning of every year for the next 10 years(a total of 10 payments). b. investment B pays $125 at the end of every 6 month period for the next 10 years(total of 20 payments). c. Investment C pays $125 at the beginning of every 6 months period for the next 10 years(total 20 payments). d. Investment D pays $2500 at the end of 10 years(just 1 payment) e. Investment E pays $250 as the end of every year for the next 10 years(total of 10 payments). 8. You have a chance to buy an annuity that pays $5000 at the beginning of each year for 5 years. You could earn 4.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? a. $20,701 b. $21,791 c. $22,938 d, $24,085 e. $25,289 9. Your grandmother just died and left you $100,000 in a trust fund that pays 6.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account? a. $24,736 b. $26,038 c. $27,409 d. $28,779 e. $30,218 10. You plan to borrow $35,000 at 7.5% annual interest rate. The terms require you to amortize the loan with 7 equal end of year payments. How much interest would you be paying in Year 2? a. $1,99.49 b. 2099.46 c. 2209.96 d. 2326.27 e. 2442.59 11. Your sister turned 35 today, and she is planning to save $7000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund that?s expected to provide a return of 7.5% per year. She plans to retire 30 years from today, when she turns 65 and she expects to live for 25 years after retirement to age 90. Under these assumptions, how much can she spend each year after she retires? Her first withdrawal will be made at the end of her first retirement year. a. $58,601 b. 61,686 c. 64,932 d. 68,179 e. 71,588 12. McCue Inc.?s bonds currently sell for $1250. The pay a $120 annual coupon, have 15 year maturity and a $1000 par value, but they can be called in 5 years at $1050. Assume that no cost other that the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond?s YTM and its YTC?(subtract the YTC from YTM). a. 2.11% b. 2.32% c. 2.55% d. 2.80% e. 3.09% 13. Moerdyk Corporations bonds have a 10 year maturity, a 6.25% semiannual coupon and a par value of $1000. the going interest rate(RD) is 4.75%, based on semiannual compounding. What is the bonds price? a. 1063.09 b. 1090.35 c. 1118.31 d, 1146.27 e. 1174.93 14. In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures to a market value basis. KJM Corporations balance sheet as of today is as follows: Long term debt(bonds, at par) $10,000,000 Preferred stock 2,000,000 Common stock($10par) 10,000,000 Retained earnings 4,000,000 Total debt and equity $26,000,000 The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firs debt? a. $5,276,731 b. 5,412,032 c. 5,547,332 d. 7,706,000 e. 7,898,650 15. O?Brien Ltd.?s outstanding bonds have a $1000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $850. What is the bond?s nominal(annual) coupon interest rate? a. 6.27% b. 6.60% c. 6.95% d. 7.32% e. 7.70% 16. Maxwell Inc. stock has a 50% chance of producing a 25% return, a 30% chance of producing a 10% return and a 20% chance of producing a -28% return. What is the firms expected rate of return? a. 9.41% b. 9.65% c. 9.90% d. 10.15% e. 10.40% 17. Moerdyk Company?s stock has a beta of 1.40 the risk free rate is 4.25% and the market risk premium is 5.50%. What is the firms required rate of return? a. 11.36% b. 11.65% c. 11.95% d. 12.25% e. 12.55% 18. Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The markets required rate of return is 13.25%, the risk free rate is 7.00% and the Funds assets are as follows: Stock Investment Beta A $200,000 1.50 B $300,000 -0.50 C $500,000 1.25 D $1,000,000 0.75 a. 9.58% b. 10.09% c. 10.62% d. 11.18% e. 11.77% 19. Magee Inc.?s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firms returns will have the probability distribution shown below. What?s the standard deviation of the estimated returns? (hint:use the formula for the standard deviation of a population, not a sample) Economic Conditions Prob. Return Strong 30% 32.0% Normal 40% 10.0% Weak 30% -16.0% a. 17.69% b. 18.62% c. 19.55% d. 20.52% e. 21.55% 20. Whited Inc.?s stock currently sell for $35.25 per share. The dividend is projected to increase at a constant rate of 4.75% per year. The required rate of return on the stock RS is 11.50%. What is the stocks expected price 5 years from now? a. $40.17 b. 41.20 c. 42.26 d. 43.34 e. 44.46 21. The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company?s beta is 1.15, the market risk premium is 5.00% and the risk free rate is 4.00%. What is the company?s current stock price, P0? a. $18.62 b. 19.08 c. 19.56 d. 20.05 e. 20.55 22. Nachman Industries just paid a dividend of D0=$1.32. Analysts expect the company?s dividend to grow by 30% this year, by 10% in Year 2 and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock?s current market value. a. $41.59 b. 42.65 c. 43.75 d. 44.87 e. 45.99 23. If D1=$1.50, g(which is constant)=6.5%, and P0=$56, what is the stocks expected capital gains yield for the coming year? a. 6.50% b. 6.83% c. 7.17% d. 7.52% e. 7.90% 24. the Ramirez Company?s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expedited to grow at a rate of 6% forever. Its required return(rs) is 12%. What is the best estimate of the current stock price? a. $41.58 b. 42.64 c. 43.71 d. 44.80 e. 45.92
Question 3
1. Full costing a) Is the same as absorption costing b) Considers fixed manufacturing overhead as part of the cost of inventory c) Often does not provide the information needed for C-V-P analysis d) All of the above 2. In full costing, when does fixed manufacturing overhead become an expense? a) In the period when other fixed costs are at the highest level b) In the period when the product is sold c) In the period when the expense is incurred d) When the controller decides that the expense should be recognized 3. Cary Company?s fixed manufacturing overhead costs totaled $220,000 and variable selling costs totaled $190,000. Under full costing, how should these costs be classified? Period cost product cost a) $190,000 $220,000 b) 410,000 $0 c) $0 $410,000 d) $220,000 $190,000 4. Data from the William Company for 2008 is as follows: Sales $20/unit Variable cost of goods sold ?? Fixed manufacturing overhead 92,000 Variable selling & administrative ?? Fixed selling & administrative 103,000 The company produced 148,000 units during the year and sold 120,000 units. Variable production costs and fixed costs have remained constant all year. Net income for the year was $900,000. What was the company?s contribution margin? a) $2,205,000 b) 1,305,000 c) 1,003,000 d) 1,095,000 5) If a company?s levels of fixed and variable costs remain unchanged from one year to the next, under which costing method is it possible for income to increase when sales decrease? a) variable costing b) full costing c) both variable and full costing d) neither variable nor full costing 6) Indirect costs occur when a) Resources are shared by more than one product or service. b) costs cannot be directly traced to products or services c) multiple departments share a piece of equipment d) all of the above 7. The overriding concern in forming a cost pool is to ensure that a) a)there are no variable costs in the cost pool b) b)the total amount in the cost pool is less than the direct costs for the product c) only costs which have been budgeted are included in the cost pool d) d)the costs in the pool are homogeneous or similar 8. An allocation base a) Is the minimum amount to be allocated to a cost object b) Coordinates the manufacturing overhead costs as they are incurred c) Will always be less than the variable costs for a product d) Relates the cost pool to the cost objectives 9. When activity based costing is implemented, the initial outcome is normally that: a) the cost of all products will be higher b) the cost of all products will be lower c) the cost of low volume products will be higher and the cost of high volume products will be lower d) the cost of low volume products will be lover and the cost of high volume products will be higher 10) Frio Company uses ABC costing. Which of the following is most likely to be the cost driver for the cost of ordering parts? a) Weight of parts ordered b) Direct labor cost c) Depreciation expense d) Number of orders placed 11) Yesteryear Gift Shop produces pottery figurines. Utility costs are allocated to products based on the amount of time spent on the pottery wheel. Utility costs of $3,000 per month are budgeted and the store anticipates spending, 7500 minutes on the pottery wheel each month. If a vase uses 18 minutes on the pottery wheel how much of the utility costs will be allocated to each vase? a) $72.00 b) $4.50 c) $45.00 d) $7.20 12) Sweeper Company produces brooms. Utility costs are allocated to products based on a percentage of material costs. Utility costs of $15,000 per month are budgeted and the store anticipates spending $30,000 in materials. If the company spends $8.50 per broom for materials, how much of the utility costs will be allocated to each broom? a) $4.25 b) $2.00 c) $17.00 d) $8.50 13) The Jefferson Supply Company experienced the following costs in 2007 Direct material $3.50/unit Direct labor $2.65/unit Manufacturing Overhead Costs Variable $1.50/unit Fixed $20,000 Selling & Administrative Cost Variable selling $2.25/unit Fixed selling $8,000 Fixed administrative $7,000 During the year the company manufactured 92,000 units and sold 85,000 units. If the Average selling price per unit was $19.50 what was the company?s contribution margin? a) $1,007,250 b) $824,500 c) $987,250 d) $789,500 14) The Crider Company experienced the following costs in 2007: Direct material $2.65/unit Direct labor $1.80/unit Manufacturing Overhead Costs Variable $3.25/unit Fixed $1.15/unit Selling & Administrative Cost Variable selling $94,000 Fixed selling $35,000 Fixed administrative $10,000 During the year the company manufactured 47,000 units and sold 40,000 units. The average unit product cost using full costing would be: a) $7.70 b) $9.70 c) $8.85 d) $10.85 15) Tyler?s Consulting Company has purchased a new $15,000 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those are the only departments which will be able to access the machine. The company has decided to allocate the cost based on the number of copies made by each department. The copier is estimated to provide 1 million copies over its life. Each division has estimated the number of copies which will be made in their department over the life of the copier. Purchasing 350,000 Accounting 200,000 Information tech 400,000 Note: Cost allocations are computed to 4 significant digits. How much overhead will be allocated each time a copy is made? a) $63.3333 b) $.0158 c) $66.6667 d) $.0150
Question 4
(TCO 3) If you borrow $50,000 today at 10% interest for eight years. How much of your second payment will be applied to interest? (Points : 3) $5,000 $4,562 $4,809 can not be determined with the information given (TCO 3) Match the following terms with the examples as appropriate: (Points : 4) Answer Potential Matches: : Pure discount loan 1 : You obtained a business loan for four months. The loan will allow you to paid $300 in interest for three months and a final payment of interest and principal at the end of the four month. : Amortized Loan 2 : You obtained a mortgage to buy a home. You will pay $800 per month to cover both interest and principal. : Interest-only Loan 3 : a way used by the US government to borrow money on short-term basis. : Treasury Bill 4 : You borrow $1,000 from your best friend. In return, you will give him back $1150 in 3 months. (TCO 3) You are interested in saving to buy a new machine that costs $3,700. You can deposit $1,941 in your bank today. If your bank pays 5% annual interest on its accounts, how long will it take you to save for the new machine? (Points : 4) about 13 years about 4.5 years about 2 years Can not be determined
Question 5
Stein Hardware Store completed these merchandising transactions in the month of May. At the beginning of May, Stein's ledger showed Cash of $8,000 and Common Stock of $8,000. May 1 Purchased merchandise on account from Hilton Wholesale Supply $8,000, terms 2/10, n/30. 2 Sold merchandise on account $4,400, terms 3/10, n/30. The cost of the merchandise sold was $3,300. 5 Received credit from Hilton Wholesale Supply for merchandise returned $200. 9 Received collections in full, less discounts, from customers billed on on May 2. 10 Paid Hilton Wholesale Supply in full, less discount. 11 Purchased supplies for cash $900. 12 Purchased merchandise for cash $2,700. 15 Received $230 refund for return of poor-quality merchandise from supplier on cash purchase. 17 Purchased merchandise from Northern Distributors $2,500, terms 2/10, n/30. 19 Paid freight on May 17 purchase $250. 24 Sold merchandise for cash $5,400. The cost of the merchandise sold was $4,020. 25 Purchased merchandise from Toolware Inc. for $800, terms 3/10, n/30. 27 Paid Northern Distributors in full, less discount. 29 Made refunds to cash customers for returned merchandise $124. The returned merchandise had cost $90. 31 Sold merchandise on account $1,280, terms n/30. The cost of the merchandise sold was $830. Journalize the transactions using a perpetual inventory system. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Date Account/Description Debit Credit May 1 May 2 (To record the sale.) (To record the cost of inventory sold.) May 5 May 9 May 10 May 11 May 12 May 15 May 17 May 19 May 24 (To record the sale.) (To record the cost of inventory.) May 25 May 27 May 29 (To record refund of cash.) (To record return of inventory.) May 31 (To record the sale.) (To record the cost of inventory.) Post the transactions to T accounts. Be sure to enter the beginning cash and common stock balances. Then complete the income statement through gross profit for the month of May 2012 below. (List multiple entries from largest to smallest amounts, e.g. 10, 5, 1.) STEIN HARDWARE STORE Income Statement (Partial) Sales revenues $ Less: $ Net Sales Gross profit $ Calculate the profit margin ratio and the gross profit rate. (Assume operating expenses were $1,400.) (Round answer to 2 decimal places, e.g. 0.25.) Profit margin ratio Gross profit rate
