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Which one of these statements is true concerning the

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12. Which one of these statements is true concerning the price-earnings (PE) ratio?A.A high PE ratio may indicate that a firm is expected to grow significantly.B.A PE ratio of 16 indicates that investors are willing to pay $1 for every $16 of current earnings.C.PE ratios are unaffected by the accounting methods employed by a firm.D.The PE ratio is classified as a profitability ratio.E.The PE ratio is a constant value for each firm
13. Show working. Motor Works has total assets of $919,200, long-term debt of $264,500, total equity of$466,900, net fixed assets of $682,800, and sales of $1,021,500. The profit margin is 6.2 percent. What is thecurrent ratio?
14. Show working. SRC, Inc., sells its inventory in an average of 43 days and collects its receivables in 3.6days, on average. What is the inventory turnover rate? Assume a 365-day year.
15. Show working. Spring Falls Gifts has sales of $680,300, total assets of $589,100, and a profit margin of 4.3percent. What is the return on assets?
16. Show working. KBJ has total assets of $613,000. There are 21,000 shares of stock outstanding with amarket value of $13 a share. The firm has a profit margin of 6.2 percent and a total asset turnover of 1.08.What is the price-earnings ratio?A.6.38B.7.99C.6.65D.5.12
E.7.41Price-earnings ratio = $13/{[.062×($613,000×1.08)]/21,000} = 6.6517. Show working. A firm has a return on equity of 17.8 percent, a return on assets of 11.3 percent, and a 65percent dividend payout ratio. What is the sustainable growth rate?

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Term
Fall
Professor
Chen

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