Nadine Enterprises has total assets of $240,000, a debt-equity ratio of 0.60, and a return on assets of 9%. What is the return on equity?

Nadine Enterprises has total assets of $240,000, a debt-equity ratio of 0.60, and a return on assets of 9%. What is the return on equity?

A) 5.4%
B) 5.6%
C) 14.4%
D) 15.0%


Answer: C

Worcester Corporation has a P/E ratio of 15. Natick Corporation is in the same industry as Worcester, but has a P/E ratio of 20. Possible interpretations of this discrepancy include

Worcester Corporation has a P/E ratio of 15. Natick Corporation is in the same industry as Worcester, but has a P/E ratio of 20. Possible interpretations of this discrepancy include

A) Worcester Corporation is overpriced.
B) Natick Corporation has higher earnings per share.
C) Investors expect Natick to grow faster than Worcester.
D) Natick's stock price is higher than Worcester's.


Answer: C

Marco's just reported an EPS of $1.68 on revenues of $440 million. The company has 12 million shares outstanding. Total assets are $280 million, current liabilities equal $48 million, and long-term debt is $112 million. Net fixed assets are worth $230 million. Given this information, which one of the following statements is correct?

Marco's just reported an EPS of $1.68 on revenues of $440 million. The company has 12 million shares outstanding. Total assets are $280 million, current liabilities equal $48 million, and long-term debt is $112 million. Net fixed assets are worth $230 million. Given this information, which one of the following statements is correct?

A) Marco's debt-equity ratio is 0.75.
B) Marco's current ratio is 1.75.
C) Marco's total asset turnover is 3.67.
D) Marco's net working capital is $2 million.


Answer: C

A lending institution would prefer that a firm have a ________ debt-equity ratio and a ________ times interest earned ratio.

A lending institution would prefer that a firm have a ________ debt-equity ratio and a ________ times interest earned ratio.

A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower


Answer: C