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Chapter 4
1
.
Ramala Corp's sales last year were $48,000, and its total assets were $25,500.
What was its total assets turnover ratio (TATO)?
a. 1.88
b. 1.99
c. 1.10
d. 1.21
e. 1.32
2
.
Ruby Corp's sales last year were $435,500, its operating costs were $350,000,
and its interest charges were $10,000.
What was the firm's times interest
earned (TIE) ratio?
a. 8.29
b. 8.42
c. 8.55
d. 8.68
e. 8.81
3
.
Roberts Corp's sales last year were $300,000, and its net income after taxes
was $25,000.
What was its profit margin on sales?
a. 7.65%
b. 7.82%
c. 7.99%
d. 8.16%
e. 8.33%
4
.
Reynolds Corp's total assets at the end of last year were $300,000 and its net
income after taxes was $25,000.
What was its return on total assets?
a. 8.15%
b. 8.33%
c. 8.51%
d. 8.69%
e. 8.87%
5
.
Rollins Corp's total assets at the end of last year
were $300,000 and its EBIT
was $75,000.
What was its basic earning power (BEP)?
a. 17.50%
b. 20.00%
c. 22.50%
d. 25.00%
e. 27.50%
6
.
Raleigh Corp's total common equity at the end of last year
was $300,000 and
its net income after taxes was $55,000.
What was its ROE?
a. 18.33%
b. 18.67%
c. 19.00%
d. 19.33%
e. 19.67%
7
.
Rutland Corp's stock price at the end of last year was $30.25 and its earnings
per share for the year were $2.45.
What was its P/E ratio?
a. 11.65
Chapter 4:
Analysis of Financial Statements Page
1
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c. 12.35
d. 12.70
e. 13.05
8
.
Rand Corp's stock price at the end of last year was $40.00, and its book value
per share was $24.50.
What was its Market/Book ratio?
a. 1.03
b. 1.18
c. 1.33
d. 1.48
e. 1.63
9
.
Midwest Lumber had a profit margin of 5.1%, a total assets turnover of 1.6, and
an equity multiplier of 1.8.
What was the firm's ROE?
a. 14.39%
b. 14.69%
c. 14.99%
d. 15.29%
e. 15.59%
10
.
An investor is considering starting a new business. The company would require
$500,000 of assets, and it would be financed entirely with common stock.
The
investor will go forward only if she thinks the firm can provide a 15.0% return
on the invested capital, which means that the firm must have an ROE of 15.0%.
How much net income must be expected to warrant starting the business?
a. $45,000
b. $55,000
c. $65,000
d. $75,000
e. $85,000
11
.
Rolle Corp has $500,000 of assets, and it uses no debtit is financed only
with common equity.
The new CFO wants to employ enough debt to bring the Debt/
Assets ratio to 45%, using the proceeds from the borrowing to buy back common
stock at its book value.
How much must the firm borrow to achieve the target
debt ratio?
a. $225,000
b. $240,000
c. $255,000
d. $270,000
e. $285,000
12
.
Rull Corp's assets are $500,000, and its total debt outstanding is $200,000.
The new CFO wants to employ a debt ratio of 60%.
How much debt must the
company add or subtract to achieve the target debt ratio?
a. $ 80,000
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 Fall '09
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