Eagle Enterprises Inc., has an asset turnover of 1.1, a financial leverage ratio of 1.67, a profit margin of 12% and a dividend payout ratio of 25%. What is the firm’s sustainable growth rate? A) 29.39% B) 14.07% C) 5.51% D) 16.53% ANSWER D Explanation: D) Sustainable Growth = ROE * b = […]
Date: September 19th, 2020
Which of the following statements about purchasing cyber liability insurance is true? I. The coverage can be obtained by adding the appropriate endorsement to the general liability coverage. II. The coverage can be obtained by purchasing stand-alone cyber liability coverage. A) I only B) II only C) both I and II D) neither I nor […]
Date: September 19th, 2020
Which of the following financial ratios is the best measure of the operating effectiveness of a firm’s management? A) times interest earned B) operating efficiency quotient C) net profit margin D) operating return on assets ANSWER D
Date: September 19th, 2020
Of the following, which differs in meaning from the other three? A) systematic risk B) asset-unique risk C) market risk D) undiversifiable risk ANSWER B
Date: September 19th, 2020
Craftsman Inc., has a profit margin of 8%, an asset turnover ratio of 2.3, a leverage ratio of 1.50 and a retention ratio of .60. What is the firm’s sustainable growth rate? A) 3.13% B) 8.70% C) 16.56% D) 46.00% ANSWER C Explanation: C) Sustainable Growth = ROE * b = (8% * […]
Date: September 19th, 2020
Which of the following factors enable a public corporation to grow to a greater extent, and perhaps at a faster rate, than a partnership or proprietorship? A) Access to the capital markets B) Unlimited liability of the shareholders C) Limited life D) Elimination of double taxation corporate income ANSWER A
Date: September 19th, 2020
Under the two-cycle average daily balance method for computing interest, A) there is a two-month grace period before any interest is owed on the unpaid balance. B) you will always pay more interest than under the one-cycle daily balance method. C) consumers who have a permanent unpaid balance will pay more interest than under the […]
Date: September 19th, 2020
Which of the following statements is (are) true with regard to the ISO commercial crime coverage forms? I. The discovery version only covers losses which occur during the policy period. II. The loss-sustained version covers losses which occur during the policy period and the loss is discovered during the policy period or within one year […]
Date: September 19th, 2020
Why doesn’t an income statement provide a measure of a firm’s cash flows? What will be an ideal response? ANSWER An income statement is not a measure of cash flows because it is calculated on an accrual basis rather than a cash basis. In accrual basis accounting, profits are recorded when earned–whether or […]
Date: September 19th, 2020
What was the average annual rate of return on long-term corporate bonds during the period 1926 to 2014? A) 7.00% B) 6.5% C) 6.10% D) 8.3% ANSWER C
Date: September 19th, 2020
