Please highlight the correct option or answer

1. A firm earns net income of $25,000 in a given year and the firm's retained earnings increase $15,000 for that same year. The retention ratio is
   1. 25%
   2. 40%
   3. 60% yes
   4. 75%
   5. 100%

2. Below is the equity portion (in millions) of the year-end balance sheet that Glen Technology has reported for the last two years:

2000 1999

Preferred stock $ 80 $ 80

Common stock 2,000 1,000

Retained earnings 2,000 2,340

Total equity $4,080 $3,420

Glenn does not pay a dividend to its common stockholders. Which of the following statements is most correct?

a. Glenn issued preferred stock in both 1999 and 2000 yes

b. Glenn issued common stock in 2000

c. Glenn had positive net income in both 1999 and 2000, but the companys net income in 2000 was lower than it was in 1999.

d. Statements b and c are correct

e. None of the statements above is correct

3. During the year, Douglass Industries decreased the accounts receivable by $230, decreased the inventory by $150, and increased the accounts payable by $110. These three changes represent a _____ of cash. a. $270 use b. $490 use c. $190 source d. $270 source e. $490 source yes

4. Collins Co. began operations in 1997. The company lost money the first two years, but has been profitable over since. The companys taxable income (EBT) for its first four years are summarized below:

Year EBT

1997 -$3.0 million

1998 -5.2 million

1999 4.2 million

2000 8.3 million

The corporate tax rate has remained at 40 percent. Assume that the company has taken full advantage of the tax codes carry-back, carry-forward provisions and that the current provisions were applicable in 1997. What is Collins tax liability for 2000?

1. $3.32 million

2. $0.04 million

3. $2.84 million

4. $1.72 million yes

5. $1.24 million

5. Hayes Corporation has $300 million worth of common equity on its balance sheet and 6 million shares of stock outstanding. The companys Market Value Added (MVA) is $162 million. What is the companys stock price?

1. $ 23

2. $ 32

3. $ 50

4. $ 77 yes

5. $138

6. The Wilson Corporation has the following relationships

Sales/Total Assets 2.0

Return on assets (ROA) 4%

Return on Equity (ROE) 6%

What is Wilsons profit margin and debt ratio?

1. 2%; 0.33 yes

2. 4%; 0.33

3. 4%; 0.67

4. 2%; 0.67

5. 4%; 0.50

7. Scranton Shipyards has $20 million in total operating capital. The companys WACC (interest rate) is 10 percent. The company has the following income statement:

Sales $10.0 million

Operating costs 6.0 million

Operating inocome (EBIT) $ 4.0 million

Interest expense 2.0 million

Earnings before taxes (EBT) $ 2.0 million

Taxes (40%) 0.8 million

Net income $ 1.2 million

What is Scrantons EVA

1. $ 400,000 yes

2. -$ 800,000

3. $1,200,000

4. $2,000,000

5. $4,000,000

8. Assume Meyer Corporation is 100 percent equity financed. Calculate the return on equity, given the following information:

2. Earnings before taxes = $1,500

3. Sales = $5,000

4. Dividend payout ratio = 60%

5. Total Assets turnover = 2.0

6. Tax rate = 30%

a. 25%

b. 30%

c. 35%

d. 42% yes

e. 50%

9. Manufacturers Inc. estimates that its interest charges for this year will be $700 and its net income will be $3,000. Assuming its average tax rate is 30 percent, what is the companys estimated times interest earned ratio?

a. 2.40

b. 4.25

c. 5.33

d. 7.12 yes

e. 7.75

10. Last year, Quayle Energy had sales of $200 million and its inventory turnover ratio was 5.0. The companys current assets totaled $100 million and its current ratio was 1.2. What was the companys quick ratio?

a. 1.20

b. 1.39

c. 0.72 yes

d. 0.55

e. 2.49