Question

OSHUA COMPANY Comparative Balance Sheets December 31, 2016 and 2017

	2017		2016
Current assets:
Cash and cash equivalents	$ 204		$ 133
Accounts receivable	267		157
Inventories	131		264
Prepaid insurance	12		42
Total current assets	614		596
Long term assets:
Property, plant, and equipment	245		260
Less accumulated depreciation	- 140		- 125
Property, plant, and equipment, net	105		135
Total assets	$ 719		$ 731
Current liabilities:
Accounts payable	$ 97		$ 83
Wages payable	20		17
Current portion of long term notes	132		33
Total current liabilities	249		133
Long term liabilities:
Notes payable	98		198
Total liabilities	347		331
Stockholders' equity:
Common stock	103		117
Retained earnings	269		283
Total Stockholders' equity	372		400
Total liabilities and stockholders' equity	$ 718		$ 731

In the judgment of the credit analysts of Joshua Company, what issue would be of most concern or source of optimism?

Select one:

A. Cash and accounts receivable increased 53.4 percent and 70.1 percent, respectively.

B. The current portion of long-term notes payable increased by 300 percent.

C. Both common stock and retained income decreased by the same dollar amount.

D. Fixed assets decreased 22.2 percent.

Presented below are selected data from the financial statements of Hamilton Corp. for 2017 and 2016.

	2017	2016
Net income	$150,000	$175,000
Cash dividends paid on common stock	$21,000	$19,000
Weighted average number of common shares outstanding	52,000	47,000

Earnings per share (EPS) is reported on the 2017 income statement as:

Select one:

A. $2.88

B. $1.80

C. $2.10

D. $2.90

Answer 1

Solution 1:

The issue that is most concern or source of optimism is "The current portion of long-term notes payable increased by 300 percent."

Hence option B is correct.

Solution 2:

Earning per share = Net Income / Weighted average number of common shares outstanding

= $150,000 / 52000 = $2.88 per share