Solution-Is the market price of the company stock going up

Is the market price of the company stock going up or down

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Reference no: EM13495279

PROBLEM 1

Assume that XYZ Company has no opening inventory. The following purchases of inventory occurred during the year:

Date Purchases (units) Purchase price per unit

Jan. 2 2 $3

Feb. 15 3 $4

March 30 4 $5

July 29 6 $6

Oct. 30 5 $7

Assume XYZ Company sells 8 items on October 31 and uses the FIFO method of inventory valuation. What amount would appear as cost of goods sold on the income statement?

a. $33

b. $53

c. $76

d. $56

e. None of the above. The correct calculation is shown below

PROBLEM 2

Paul is a day trader. He is interested in the common stock of XYZ Limited. The following data are available for the company:

	2012	2013	2014
Dividends paid per share*	$4	$3	$2.50
Dividend yield ratio	5.5%	5.5%	5.5%
Dividend payout ratio	40%	40%	40%
Return on total assets	10%	12%	8%
Return on common stockholders' equity	8%	14.5%	9%

*There were no changes in common stock outstanding over the three-year period.

Paul would like answers to the following questions:

1. Is the market price of the company's stock going up or down?

2. Is the company employing financial leverage to the advantage of the common stockholders?

Reference no: EM13495279

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Is the market price of the company stock going up or down

Reference no: EM13495279

Reference no: EM13495279

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