Chap_4 - price/earnings ratio remains at its current level...

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8.  If the CEO of a firm were filling out a fitness report on a division manager (i.e., "grading" the manager), which of the following situations would be likely to cause the manager to get a BETTER GRADE? In all cases, assume that other things are held constant. A)  The division's basic earning power ratio is above the average of other firms in the industry. 9.  Dean Brothers Inc. recently reported net income of $1,500,000. The company has 300,000 shares of common stock, which currently trade at $60 a share. The company continues to expand and anticipates that one year from now its net income will be $2,500,000. Over the next year the company also anticipates issuing an additional 100,000 shares of stock, so that one year from now the company will have 400,000 shares of common stock. Assuming the company's
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Unformatted text preview: price/earnings ratio remains at its current level, what will be the company's stock price one year from now? A) $75 10. Safeco's total current assets are $20 million versus $10 million of current liabilities, while Risco's current assets are $10 million versus $20 million of current liabilities. Both firms would like to "window dress" their end-of-year financial statements, and to do so they tentatively plan to borrow $10 million on a short-term basis and to then hold the borrowed funds in their cash accounts. Which of the statements below best describes the results of this transaction? A) The transactions would lower Safeco's financial strength as measured by its current ratio but raise Risco's current ratio....
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This note was uploaded on 11/05/2009 for the course BUS FIN 2100 taught by Professor Shmidl during the Spring '09 term at Laramie County Community College.

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