# Question 3 Which one of the following relationships is correct?

1.Jones Hardware had common stock of \$9,500 and retained earnings of \$3,800 at the beginning of the year. At the end of the year, the common stock balance is \$9,600 and the retained earnings account balance is \$4,200. The net income for the year is \$840. What is the retention ratio?

40.48 percent 47.62 percent 59.52 percent 52.38percent

Question 2 A firm has a debt-equity ratio of 0.60. What is the equity multiplier if total equity is \$5,700?

0.40 0.48 1.40 1.60 .1 points

Question 3 Which one of the following relationships is correct?

Equity multiplier = 1 – Debt-equity ratio Total asset turnover = 1 + Capital intensity ratio Inventory turnover = Sales / Average inventory Return on equity = Return on assets × Equity multiplier .

1 points Question 4 The Lighting Store has sales of \$364,000, depreciation of \$28,000, and taxable income of \$58,000. The capital intensity ratio is 1.2, the debt-equity ratio is 0.45, and the tax rate is 34 percent. What is the return on assets?

6.53 percent 7.21 percent 7.79 percent 8.76 percent .

1 points Question 5 Puzzles Galore has net income of \$400, total assets of \$2,600, total equity of \$1,600, and dividends paid of \$35. What is the sustainable rate of growth?

29.55 percent 18.63 percent 11.98 percent 24.06 percent .

1 points Question 6 A firm has sales of \$211,000, depreciation of \$24,600, interest expense of \$560, cost of goods sold of \$148,900, other costs of \$6,500, and a tax rate of 35 percent. What is the firm’s profit margin?

9.38 percent 11.01 percent 6.48 percent 4.93 percent .

1 points Question 7 A firm has sales of \$131,000 and inventory of \$12,200. The common-size income statement lists cost of goods sold at 67 percent and depreciation at 5 percent. How long on average does it take the firm to sell its inventory? 7.19 days 8.24 days 50.73 days 44.30 days .

1 points Question 8 The Green Buffet has sales of \$428,000, depreciation of \$26,500, interest of \$1,800, net income of \$21,400, and a tax rate of 32 percent. What is the times interest earned ratio?

17.90 18.48 8.78 9.08 .

1 points Question 9 Which one of the following represents the maximum growth rate that can be achieved assuming a firm acquires no new external financing?

return on equity return on assets internal growth rate sustainable growth rate .

1 points Question 10 A firm has sales of \$428,000, costs of \$289,000, and net income of \$36,000. The total asset turnover is 1.2 and the debt-equity ratio is 0.4. What is the return on equity? (Hint: Use the Du Pont Identity)

10.50 percent 14.13 percent 9.81 percent 12.74 percent

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