Suppose that chicken express inc has an roa of 7 and

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77. Suppose that Chicken Express, Inc.has an ROA of 7% and pays a 6% coupon on its debt. Chicken Express has a capitalstructure that is 70% equity and 30% debt. Relative to a firm that is 100% equity-financed, Chicken Express's net profit will be________, and its ROE will be ________.A. lower; lowerB. higher; higherC. higher; lowerD. lower; higherE. It is impossible to predict.
78. The P/E ratio that is based on a firm's financial statements and reported in the newspaper stock listings is different from the P/Eratio derived from the dividend discount model (DDM) because
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C. the prices reported are not accurate.D. the people who construct the ratio from financial statements have inside information.E. They are not different— this is a "trick" question.79. The dollar value of a firm's return in excess of its opportunity costs is called its
80. Economic value added (EVA) is also known as
81. Which of the following are issues when dealing with the financial statements of international firms?I) Many countries allow firms to set aside larger contingency reserves than the amounts allowed for U.S. firms. II) Many firmsoutside the U.S. use accelerated depreciation methods for reporting purposes, whereas most U.S. firms use straight-line depreciationfor reporting purposes.III) Intangibles, such as goodwill, may be amortized over different periods or may be expensed rather than capitalized.IV) There is no way to reconcile the financial statements of non-U.S. firms to GAAP.A. I and IIB. II and IVC. I, II, and IIID. I, III, and IVE. I, II, III, and IV
82. To create a common size income statement, ____________ all items on the income statement by____________.
83. To create a common size balance sheet, ____________ all items on the balance sheet by ____________.
84. Common size financial statements make it easier to compare firms
85. Common size income statements make it easier to compare firmsA. that use different inventory valuation methods (FIFO vs. LIFO).B. in different industries.C. with different degrees of leverage.D. of different sizes.

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Financial Markets and Institutions
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Financial Markets and Institutions
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