Consider the following Balance Sheets of Companies A$,$ B and C and answer questions $7$ through

$10.$

The Financial Leverage ratio of company B is:

a$)0\mathrm{.}55$

b$)1\mathrm{.}22$

c$)2\mathrm{.}24$

$8)$ What is Company A$$s Total Debt ratio:

a$)80\%$

b$)20\%$

c$)45\%$

Assets in thousands USD Company A Company B Sector Average

Current Assets

Cash and cash equivalents $557$

Marketable securities $502$

Accounts receivable $51412$

Inventories $151916$

Prepaid Expenses $51411$

Total current assets $355248$

Property plant and equipment $403337$

Goodwill $2508$

Other assets $097$

Total Assets $10094100$

Liabilities & Shareholders$$

Equity

Current liabilities

Accounts payable $10910$

Short term debt $25915$

Accrued expenses $053$

Total current liabilities $352328$

Long$-$term debt $451928$

Other non$-$current liabilities $0107$

Total Liabilities $805263$

Total Shareholders$$ Equity $204237$

Total Liabilities and

Shareholders$$ Equity

$10094100$

$9)$ Provided with income statement data, which company appears to be more profitable with

respect to the operating profit margin?

Income Statement Company A Company B

Revenues, net $23,59853,680$

Cost of Sales $11,45636,340$

Operating expenses including depreciation $8,75213,110$

Interest expense $246360$

Other gains $205250$

Provision for income taxes $1,1391,400$

Net income $$2,210$ $$2,720$

a$)$ Company A$,$ since it has a higher operating profit margin than B

b$)$ Company B$,$ since it has a higher operating profit margin than A

c$)$ Cannot be determined

$10)$ By comparing Company A and B$$s Fixed Assets Turnover Ratios one can conclude:

a$)$ Company B has a FAT of $1\mathrm{.}03$ better than Company A$$s FAT of $0\mathrm{.}67$

b$)$ Company B has a FAT of $1\mathrm{.}28$ higher and better than Company A$$s FAT of $0\mathrm{.}36$

c$)$ Company A has a FAT of $0\mathrm{.}67$ lower and worse than that of Company B

$11)$ What are the respective Net Profit Margins of Companies A and B$?$

a$)14\mathrm{.}37\%$ and $7\mathrm{.}89\%$

b$)51\mathrm{.}45\%$ and $32\mathrm{.}30\%$

c$)9\mathrm{.}37\%$ and $5\mathrm{.}07\%$

$12)$ By how much does the ROA of Company A differ from that of Company B$?$

a$)$ Company B$$s ROA is higher than A by $0\mathrm{.}68\%$

b$)$ Company A$$s ROA is higher than B by $4\mathrm{.}30\%$

c$)$ Company A$$s ROA is higher than B by $4\mathrm{.}57\%$

$13)$ What is the Pretax Margin of Companies A and B$?$

a$)14\mathrm{.}19\%$ and $7\mathrm{.}68\%$

b$)9\mathrm{.}37\%$ and $5\mathrm{.}07\%$

c$)4\mathrm{.}83\%$ and $2\mathrm{.}61\%$