A firm has total assets of $100, total debt of $50, and retained earnings of $5. The firm has no preferred stock. Its total common equity amounts to:

A. $5

B. $45

C. $50

D. $100

Compostela Ltd. paid $250,000 in dividends this quarter. Its retained earnings last quarter were $5 million, while its retained earnings this quarter are $5.1 million. What is Compostelas net income this quarter?

A. $100,000

B. $250,000

C. $350,000

D. $5 million

Which of the following ratios is more stringent as far as assessing the ability of a firm to meet its current expenses?

A. the liquidity ratio

B. the quick ratio

C. the TIE ratio

D. the firms profit margin

Suppose analysts believe that a debt ratio greater than 55% is risky for sustaining a companys viability in the market. Compostela Ltd. is contemplating a new bond issue (new debt) of $1 million. Its assets are currently $5 million, and debt represents 40% of assets. Should Compostela incur this new debt?

A. Yes, as its debt ratio will be 40%

B. Yes, as its debt ratio will be 50%

C. No, as its debt ratio will be 60%

D. No, as its debt ratio will be 66.67%