Mahoe Corporation has provided the following financial data:Balance SheetDecember 31, Year 2 and Year 1AssetsYear 2Year 1Current assets: Cash$105,000 $190,000 Accounts receivable, net 255,000 220,000 Inventory 206,000 200,000 Prepaid expenses 44,000 50,000 Total current assets 610,000 660,000 Plant and equipment, net 1,065,000 970,000 Total assets$ 1,675,000 $ 1,630,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$119,000 $110,000 Accrued liabilities 88,000 80,000 Notes payable, short term 53,000 50,000 Total current liabilities 260,000 240,000 Bonds payable 110,000 110,000 Total liabilities 370,000 350,000 Stockholders'

Question

equity:        Common stock, $5 par value 250,000  250,000   Additional paid-in capital 70,000  70,000   Retained earnings 985,000  960,000 Total stockholders' equity 1,305,000  1,280,000 Total liabilities & stockholders' equity$ 1,675,000 $ 1,630,000 Income StatementFor the Year Ended December 31, Year 2Sales (all on account)$1,330,000 Cost of goods sold 890,000 Gross margin 440,000 Operating expenses 393,571 Net operating income 46,429 Interest expense 10,000 Net income before taxes 36,429 Income taxes (30%) 10,929 Net income$  25,500 Dividends on common stock during Year 2 totaled $500. The market price of common stock at the end of Year 2 was $8.06 per share.The company's equity multiplier at the end of Year 2 is closest to:

A. 1.28
B. 0.78
C. 3.53
D. 0.28

Answer 1

Answer: A