Balance sheet:

	FYE 2050	FYE 2051
Current assets:
Cash	14,588	17,631
Accounts receivable	35,258	41,019
Inventory	65,567	71,505
Net plant and equipment	477,413	$498,421
Total assets	$592,826	$628,576
Current liabilities:
Accounts payable	$55,653	$63,073
Notes payable	21,895	25,324
Long-term debt	$58,000	$62,000
Common stock and paid-in surplus	$60,000	$60,000
Accumulated retained earnings	397,278	418,179
Total liabilities and owners' equity	$592,826	$628,576

Incomes statement:

	FY 2051
Sales revenues Cost of goods sold SG&A EBIT Interest expenses Net income	730,200 495,000 85,000 150,200 42,000 86,560

Share information at the end of fiscal year 2051:

The number of shares outstanding: 200,000 shares

Price per share: $10

Question 10 [5 pts]

Which of the following is correct? Choose only one.

1. The firms price to earnings (P/E) is 0.432810=0.04328 .
2. The DuPont analysis suggests that the firms ROE is lowered by its financial leverage.
3. Compared to market to book ratio, Tobins Q is more difficult to construct because it requires the estimate of the historical cost of the firms assets.
4. ALL of the above
5. NONE of the above

Answer: