1. One of the methods of evaluating a companys performance is to compare its profit amount per each outstanding common stock. What is this information called; and how is it calculated?

1) It is called the Earnings per Share (EPS). The formula is: Net Profit amount divided by the Number of outstanding Common Stock.

2) It is called Profit Margin. The formula is: Net Profit amount divided by the Total Sales amount

3) It is called Asset Turnover. The formula is : Total Sales amount divided by the Average Total Asset Amount

4) It is called Earnings per Share (EPS). The formula is: Retained Earnings amount divided by the Number of outstanding Common Stock

2. If you want to determine how well (or effectively) a company has used its resources to generate revenues, what would you do?

1) Compare the net profit amount against the revenues.

2) Compare the net profit amount against the Assets amount.

3) Compare the revenues amount against the Asset amount.

4) Compare the equity amount against the asset amount.

3. Which of the following statements is appropriate to investigate whether a business firm is improving its overall cost control over time?

1) Its revenues amount is growing each year.

2) Its net profit amount is growing each year.

3) Its total expense amount declines each year.

4) The proportion (%) of its net income declines each yaer.

4. Which of the following is considered an investing activities of a business?

1) Selling common stocks to obtain necessary capital (cash)

2) Taking loans to obtain necessary capital (cash)

3) Conducting a company-wide conference to consolidate employees' ideas about their operating conditions.

4) Buying a building to expand the size of the operation.