17. An investor wanting large returns will be interested in companies that have A. high ROAs

B. high ROEs C. high current ratios

D. high times interest earned

E. high price-earnings ratio

18. What is a firm's value for times interest earned if it posts revenues of $200,000, taxes of $35,000, expenses of $100,000, and interest of $30,000?

A. 1.33 times

B. 3.33 times

C. 2.00 times

D. 2.20 times

E. 0.50 times

19. Which of the following statements is correct?

(x) The basic earnings power ratio measures the operating return on the firm's assets, irrespective of financial leverage and taxes.

(y) If a company has some debt, then the firm's return on assets will always be lower than the firm's return on equity.

(z) The sustainable growth rate is the maximum growth rate that can be achieved by financing asset growth with new debt and retained earnings.

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (x) only

20. What is the return on assets for the current period if net income is $214,350, total debt is $485,000, EBIT is $298,600, equity is $275,000 and EBT is 262,400?

A. 44.2%

B. 39.3%

C. 34.5%

D. 28.2%

E. 13.5%

BUS 225: