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Quiz 1 (Chapter 1-5) 1. The goal of the firm should be A) maximization of profits (net income per share). B) maximization of shareholder wealth. C)...

. Based on the information in Table 1, and assuming the company's stock price is $50 per share, the P/E ratio is

A) 10.89.
B) 14.33.
C) 24.44.
D) 27.50.
Quiz 1 (Chapter 1-5) 1. The goal of the firm should be A) maximization of profits (net income per share). B) maximization of shareholder wealth. C) maximization of market share. D) maximization of sales. 2. Investors generally don't like risk. Therefore, a typical investor A) will not be induced to take on any risk. B) will only take on the least risk possible. C) will only take on additional risk if he expects to be compensated in the form of additional return. D) will only accept a zero return if the risk is zero. 3. Which of the following represents an attempt to measure the net results of the firm's operations (revenues versus expenses) over a given time period? A) Balance Sheet B) Statement of Cash Flows C) Income Statement D) Sources and Uses of Funds Statement 4. Maju, Inc. has total current assets of $1,200,000; total current liabilities of $500,000; long- term assets of $800,000; and long-term debt of $600,000. How much is the firm's total equity? A) $1,200,000 B) $800,000 C) $900,000 D) $2,000,000 5. Yong Enterprise reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000; Yong’s operating profit margin is equal to A) 25.67% B) 35.67% C) 36.67% D) 50.00%
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Please refer to Table 1 for the following questions. Table 1 Drummond Company Balance Sheet and Income statement Assets: Cash and marketable securities $400,000 Accounts receivable 1,415,000 Inventories 1,847,500 Prepaid expenses 24,000 Total current assets 3,686,500 Fixed assets 2,800,000 Less: accum. depr. (1,087,500) Net fixed assets 1,712,500 Total assets $5,399,000 Liabilities: Accounts payable $600,000 Notes payable 875,000 Accrued taxes 92,000 Total current liabilities $1,567,000 Long-term debt 900,000 Common Stock (100,000 shares) 700,000 Retained Earnings 2,232,000 Total liabilities and owner's equity $5,399,000 Net sales (all credit) $6,375,000 Less: Cost of goods sold (4,375,000) Selling and administrative expense (1,000,000) Depreciation expense (135,000) Interest expense (100,000) Earnings before taxes $765,000 Income taxes (306,000) Net income $459,000 6.Based on the information in Table 1, the average collection period is A) 70 days. B) 81 days. C) 89 days. D) 127 days.
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