Question 7: Kabutell, Inc. had net income of $750,000, cash flow from financing activities of $70,000, depreciation expenses of $80,000, and cash flow from operating activities of $650,000.

a.Calculate the quality of earnings ratio. What does this ratio tell you?

b.Kabutell, Inc. reported the following in its annual reports for

20112013:

($ million)	2011	2012	2013
Cash Flow from Operations	$478	$402	$472
Capital Expenditures (CAPEX)	$458	$446	$457

Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results?

Round answer to one decimal place.

Question 8: Sales for J. P. Hulett Inc. during the past year amounted to $3.8 million. Gross profits totaled $1.07 million, and operating and depreciation expenses were $505,000 and $358,000, respectively. Dividend income for the year was $10,000, which was paid by a firm in which Hulett owns 85 percent of the shares. Use the corporate tax rates shown in the popup window, to Comcute the corporation's tax liability. What are the firm's average and marginal tax rates?

Question 9: Meyer Inc. has taxable income (earnings before taxes) of $323,000. Calculate Meyer's federal income tax liability using the tax table shown in the popup window: What are the firm's average and marginal tax rates? round to the nearest dollar

Question 10:

Look up the statement of cash flows for both Home Depot and Lowes using Yahoo! Finance.

a.Compute the quality of earnings ratio for both firms and all three years of data provided in the popup window:

b.Compare the quality of earnings ratio for the two firms. For which firm do you feel most comfortable about the reported earnings quality? Explain.

c.Compute the capital acquisitions ratios for the latest three years for both firms.

d.Compare Home Depot's and Lowes' abilities of using operating cash flow to finance their capital expenditures. Which firm has relied more on the capital markets?

Compute the quality of earnings ratio for both firms and all three years of data provided.

What is Home Depot's quality of earnings ratio in 2011?