43

Assume a company provided the following information:

Net income	$	70,000
Interest expense	$	6,000
Tax rate		30	%
Average total assets	$	425,000

The return on assets is closest to:

Multiple Choice

• 15.0%.

• 15.7%.

• 17.5%.

• 14.0%.

42

Assume a company provided the following information:

Net income	$	45,000
Number of common shares outstanding, beginning of the year		45,000
Number of common shares outstanding, end of the year		55,000
Market price per share	$	15
Dividends per share	$	0.50
Total assets, end of the year	$	200,000
Total liabilities, end of the year	$	80,000

The earnings per share is closest to:

Multiple Choice

• $1.20.

• $1.10.

• $1.30.

• $0.90.

41

Assume a company provided the following information:

Net income	$	54,000
Number of common shares outstanding, beginning of the year		45,000
Number of common shares outstanding, end of the year		55,000
Market price per share	$	15
Dividends per share	$	0.50
Total assets, end of the year	$	200,000
Total liabilities, end of the year	$	80,000

The price-earnings ratio is closest to:

Multiple Choice

• 12.89.

• 13.89.

• 11.89.

• 10.89.

40

Assume a company provided the following information:

Net operating income	$	188,000
Net income before tax	$	170,000
Net income	$	119,000
Gross margin	$	680,000

The times interest earned ratio is closest to:

Multiple Choice

• 10.44.

• 7.10.

• 7.74.

• 6.10.