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109. A firm has an ROA of 12 percent and an ROE of 52 percent. What is the firm's equity
multiplier?
110. Which company has the most risk from an investor's standpoint? Firm A has a PE of 92
times and Firm B has a PE of 16 times. Assume both firms operate in the same industry. Firm A
has fewer shares outstanding than Firm B.
111. The maximum growth rate that can be achieved financing asset growth with new debt
and retained earnings is called the:
112. The maximum growth rate that can be achieved by financing asset growth with internal
financing or retained earnings is called the:
113. Which of the following is NOT one of the cautions in using ratios to evaluate firm
performance?
114. A firm that is efficient in inventory management will have:
115. Which of the following statements is correct?
116. Which ratio measures the overall return on the firm's assets inclusive of financial
leverage and taxes?
117. A firm has an ACP of 38 days and its annual sales are $5.3 million. What is its account
receivable balance?
118. The term "spreading the financial statements" refers to:
119. Which ratio measures the number of dollars of operating earnings available to meet each
dollar of interest obligations on the firm's debt?
120. Which ratio measures the number of dollars of operating earnings available to meet the
firm's interest dollars and other fixed charges?
121. Which of the following is unlikely to have a high capital intensity ratio?
122. All of the following are users of financial ratios EXCEPT:
123. A strong liquidity position means that:
124. An investor wanting large returns will be interested in companies that have:
125. What is the trade-off between using too much financial leverage and not using enough
leverage? Who is likely to complain the most in each case?
126. Describe the difference between the internal growth rate and the sustainable growth
rate.
127. Profitability Ratios Sue's Crops, Inc.'s 2013 income statement listed net sales =
$100,000, EBIT = $20,000, net income available to common stockholders = $8,000, and common
stock dividends = $2,000. The 2013 year-end balance sheet listed total assets = $400,000, and
common stockholders equity = $300,000 with 3,000 shares outstanding. Calculate the profit
margin, basic earnings power ratio, ROA, ROE, and dividend payout ratio.
128. Profitability Ratios In 2013, Colin's Guitars, Inc. announced an ROA of 10.01 percent,
ROE of 17.35 percent, and profit margin of 5.89 percent. The firm had total assets of $2 million at
year-end 2013. Calculate the 2013 values of net income available to common stockholders,
common stockholders' equity, and net sales for Colin's Guitars, Inc.
