13. If a company earns net income of $38 million in Year 8, has 10 million shares of stock, pays a dividend of $1.50 per share, and has annual interest cost of $10 million, then

a. The companys earnings per share would be $1.30 (net income of $38 million less dividend payments of $15 million less interest payment of $10 million = $13 million divided by 10 million shares).

b. The companys earnings per share would be $2.30 (net income of $38 million less divided payments of $15 million = $23 million divided by 10 million shares).

c. the companys EPS for Year 8 would be $3.80 and its retained earnings for Year 8 would be $23 million (net income of $38 million less dividend payment of $15 million).

d. the companys retained earning fir Year 8 would be $13 million (net income of $38 million less dividend payments of $15 million less $10 million in interest payments)

e.the companys retained earnings for the year would be $28 million (net income of $38 million less interest payment of $10 million)

14. Which of the following is NOT an action company co-managers can take to boost a subpar ROE?

a. Decrease the dividend payment so as to boost the amount of earning retained in the business

b. None of these

c. Strive to boost the companys net income

d. Use available cash (or perhaps borrow against the companys line of credit) to repurchase shares of stock

e. Increase dividend payment so as to reduce the amount of net income retained in the business (retained earning act to increase equity investment and thus dampen ROE)

15. Which of the following is NOT action company co-managers should seriously consider in trying to improve the companys credit rating? You may wish to consult the discussion of the credit rating that appears on the Help screen for the Comparative Financial Performance page of the GSR in answering this question.

a. Strive to boost operating profits (higher operating profits boost the companys times interest earned ratio)

b. Strive to increase net income, which should help increase the companys free cash flow (bigger free cash flows lower the number of years it takes to pay back the loans outstanding on the companys line of credit)

c. Reduce dividends and use the cash saved from lower dividend payments to pay down the loans outstanding on the companys line of credit

d. Issue additional shares of stock and use the proceeds to pay down the loans on the companys line of credit

e. Repurchase shares of the companys stock

16. Assume a companys Income Statement for a given period has the following entries:

Based on the above income statement data, the companys operating profit margin and net profit margin are

a. 28.8% and 16.3%

b. 53.0% and 10.15%

c. 26.8% and 19.1%

d.24.8% and 16.3%

e.28.8% and 17.7%

17.According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 80 news workstations at a cost $75,000 each and also spend $20 million for an addition to its assembly plant to accommodate the new workstation, then its annual depreciation costs will rise by

a. 4% of $26 million or $1,040,000

b. $1,875,000

c. 4% of $20 million or $800,000

d. $2,400,000

e.1.25% of $20 million or $250,000

18.Assume a companys Income Statement for a given quarter is as follows:

Based on the above date, which of the following statements is false?

a. Delivery costs are 3.2% of revenues and are the companys smallest operating cost

b. Administrative expenses are 4.0% of revenues

c. Net interest costs are 1.5% of revenues

d. Production costs are 53% of revenues, thus resulting in a gross profit margin (sales revenues less costs of goods sold) of 47%

e. Marketing costs are 20.0% of revenues

19. According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a base wage of $18,000, a $60 quarterly bonus for perfect attendance, and annual fringe benefits of $2,500, if a PAT is paid a $1 incentive bonus per camera assembled, and if a PAT assembles 12,000 cameras per year (or 3000 cameras per quarter), then the annual compensation cost of a single PAT member and a fully-staffed PAT would be

a. $23,740 and $94,969

b. $24,740 and $ 74,220

c. $30,240 and $120,960

d. $18,000 and $54,000

e. $32,740 and $130,960

20.

Given the following Financial Statement data:

Based on the above figures, the companys capital structure (defined as the sum of total debt outstanding and total stockholders equity) consists of what percentages of debt and equity?

a. 15% debt and 85% equity or 15:85

b. 20% debt and 71& equity or 29:71

c. 32% debt and 68% equity or 32:68

d. 25% debt and 75% equity or 25:75

e. 47% debt and 53% equity or 47:53