【正文】 s basic Earnings Per Share? A. $. B. $. 32 C. $. D. $. C Interest is already deducted from earnings. (300000 – 100000)/100,000 Question ID: 22415 Last year, the AKB Company had ine equal to $5 million. Combined state and local taxes were 45 percent. The firm paid $1 million to its 1 million mon shareholders and $250,000 to 100,000 preferred shareholders. What was AKB39。s use of debt to finance its operations. C. pany having issued warrants, convertible securities, or options. D. pany39。A 4,063 Depreciation Expense 962 6,046 Ine from Operations 6,548 Other Ine/Expenses Interest Expense (896) Gain on Sale of Land 109 (787) Pretax Ine 5,761 Ine tax 1,613 Net Ine 4,148 24 Balance Sheet 12/31/00 12/31/99 Assets Current Assets Cash 1,212 410 Accounts receivable 5,486 4,900 Inventory 4,970 4,500 Prepaid SGA 832 908 Total 12,500 10,718 Land 0 4,000 Property, Plant amp。R39。s internal liquidity? 20 A. Current ratio. B. Total asset turnover. C. Interest coverage. D. Gross profit margin. A Total asset turnover measures operating efficiency, gross profit margin measures operating profitability and interest coverage measures a pany’s financial risk. Question ID: 18809 An analyst has gathered the following information about a pany: ? Net profit margin of 15% ? Asset turnover ratio of ? Equity multiplier of ? Dividend payout ratio of 30% ? What is the pany’s growth rate? A. % B. % C. % D. % A g = (retention rate)(ROE) ROE = ( profit margin)(asset turnover)(equity multiplier) = (.15)()() = 21 g = ()() = (.7)() = or % Question ID: 14688 Which of the following best explains a ratio of sales to average fixed assets that exceeds the industry average? The firm: A. uses straight line depreciation. B. expanded its plant and equipment in the past few years. C. makes less than efficient use of its assets than peting firms. D. has a substantial amount of old plant and equipment. D If a firm has a high fixed asset turnover = sales/ fixed assets, it can be implied that the firm has not built or purchased many new assets such as plant and equipment. If the firm had recently purchased a new plant and equipment the fixed asset number would be smaller. Question ID: 14670 The Ramp。s ratio of longterm debt to total capital and its ratio of ine before interest and taxes to debt interest charges are both lower than the industry average? The firm: A. pays lower interest on its longterm debt than average. B. has a high ratio of current assets to current liabilities. C. has a high ratio of total cash flow to total longterm debt. D. has more shortterm debt than average. D If the interest coverage = earnings before interest and taxes / interest expense is lower than the industry, the firm is taking on more debt. Question ID: 22407 Common size ine statements express all ine statement items as a percentage of: A. sales. B. assets. C. ine. D. industry averages. A Common size ine statements express all ine statement items as a percentage of sales. Note that mon size balance sheets express all balance sheet accounts as a percentage of total assets. Question ID: 22408 Common size balance sheets express all balance sheet items as a percentage of: A. assets. B. industry averages. 16 C. equity. D. sales. A Common size balance sheets express all balance sheet items as a percentage of assets. Note that mon size ine statements express all ine statement items as a percentage of sales. Question ID: 22406 Under which of the following circumstances would it be most appropriate to pare performance between two firms using mon size financial statements? When: A. there is a difference in the accounting procedures followed by the different firms. B. there is a large difference in the level of debt between the different firms. C. the firms are in different industries. D. there is a large difference in the level of sales between the different firms. D Common size financial statements express all ine statement items as a percentage of sales and all balance sheet accounts as a percentage of total assets. Commonsize statements normalize balance sheet and ine statements and make easier parisons of performance of different sized firms. Note that individual line items such as debt can be pared by using mon size ratios which divide individual ine statement line items by sales and individual balance sheet items by assets. Question ID: 22412 Consider two similar firms, A and B, within the same industry. Both firms have high inventory turnover ratios and follow the same accounting practices. Firm A, however, has low liquidity ratios relative to firm B. What limitation to the usefulness of financial ratio analysis may explain why this is not necessarily a negative indicator for Firm A? A. Liquidity ratios are typically volatile, often leading to temporary 17 discrepancies. B. Firm A may be significantly older than Firm B. C. It is often misleading to base broad conclusions on a single ratio. D. Firm A may be significantly larger than Firm B. C It is often necessary to consider more than one ratio simultaneously to get a true assessment of financial condition. In this case, the low liquidity ratio may be acpanied by high profitability ratios, which indicates that the liquidity position will improve. Question ID: 22411 For which of the following applications is the usefulness of financial ratio analysis most likely to be limited? Analysis of: A. different divisions within a conglomerated firm. B. firms with different fiscal years. C. different size firms within the same industry. D. firms with different base years for