Which of the following statements is INCORRECT?

1. Unlimited liability makes it difficult for proprietorship to raise large amount of capital.

2. Chairman of the board often serves as a firms CEO. (this is incorrect)

3. Sarbanes-Oxley Act (SOX) emphasizes that CEO and CFO are not required to certify annual report because the firm has already hired the accounting firm to certify all of its financial statements, including annual reports.

4. The higher expected cash flows and the lower perceived risk, the higher stock price would be.

5. When a stocks price is equal to its intrinsic value, the stock in in equilibrium.

A firm only uses debt and common stock to finance its operation. Its capital structure is 40% debt and 60% Equity. It reports NI of $900,000 and interest expense of $200,000. A firm's tax rate is 25%. Given ROA of 10%, what is its BEP?

1. 11.45% (this is incorrect)

2. 15.56%

3. 25.55%

4. 17.78%

A firm has an ROA of 50%, profit margin of 3% and ROE of 30%. What total asset turnover ratio?

1. 10x

2. 2.4x

3. 3.8x

4. 5x (this is incorrect)