11. Alumbat Corporation has $800,000 of debt outstanding, and it pays an interest rate of 10 percent annually on its bank loan. Alumbat's annual sales are $3,200,000, its average tax rate is 40 percent, and its net profit margin on sales is 6 percent. If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio a. 2.4 b. 3.4 c. 3.6 d. 5.0 12. OTW Corporation has current assets totaling P15 million and a current ratio of 2.5 to 1. What is OTW's current ratio immediately after it has paid P2 million of its accounts payable? a. 3.75 to 1 b. 2.75 to 1 C. 3.25 to 1 d. 4.75 to 1 13. What would be a company's "times interest earned ratio" if interest paid on loans amount to P9,000 and its net income after income tax is P99,000. (Assume a 25% income tax rate on first P100,000 of income and 35% income tax rate on income in excess of P100,000.) a. 10 times b. 12 times c. 13 times d. 16.21 times 14. The average stockholders equity for ABC Company for 2000 was P2,000,000. Included in this figure is P200,000 par value of 8% preferred stock, which remained unchanged during the year. The return on common shareholders' equity was 12.5% during the 2000. How much was the net income of the company in 2000? a. P234.000 b. P241,000 c. P250,000 d. P225,000 15. Planners have determined that sales will increase by 25% next year, and that the profit margin will remain at 15% of sales. Which of the following statements is correct? A. Profit will grow by 25%. B. The profit margin will grow by 15%. C. Profit will grow proportionately faster than sales. D. Ten percent of the increase in sales will become net income. 16. Given the following information, calculate the market price per share of WAM Inc. Net income = $200,000 Earnings per share = $2.00 Stockholders' equity = $2,000,000 Market/Book ratio = 0.20 a. $20.00 b. $ 8.00 c. $ 4.00 d. $2.00 17. Associated Co. paid out one-half of its 1994 earnings by dividends. Its earnings increased by 20% and the amounts of its dividends increased by 15% in 1995. Associated's dividend payout ratio for 1995 was a. 51.5% b. 52.3% c. 75.0% d. 47.9%