Question 2. 2. Arshadi Corp.\'s sales last year were $52,000, and its total asse

Question

Question 2. 2.Arshadi Corp.'s sales last year were $52,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)? (Points : 2)

2.03
2.13
2.25
2.36

Question 3. 3.Branch Corp.'s total assets at the end of last year were $315,000 and its net income after taxes was $22,750. What was its return on total assets? (Points : 2)

7.22%
7.58%
7.96%
8.36%

Question 4. 4.Nikko Corp.'s total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its ROE?(Points : 2)

16.87%
17.75%
18.69%
19.67%

Question 5. 5.Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio? (Points : 2)

4.72
4.97
5.23
5.80

Question 6. 6.Which of the following statements is CORRECT? (Points : 2)

The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders

Question 3. 3.Branch Corp.'s total assets at the end of last year were $315,000 and its net income after taxes was $22,750. What was its return on total assets? (Points : 2)

7.22%
7.58%
7.96%
8.36%

Explanation / Answer

Total Asset Turnover Ratio = Sales / Total Assets

Sales = $52,000

Total Assets = $22,000

Total Assets Turnover Ratio= 52,000 / 22,000 = 2.36

Correct option is D 2.36

3. Return on Total Assets= Net income after Tax / Total Assets x 100

Return on Total Assets= 22750 / 315000 x 100 = 7.22%

Correct option is A 7.22%

4. ROE = Net Income / Equity x100

ROE = 60,000 / 305,000 x 100 = 19.67%

Correct option is D 19.67%

5. TIE ratio = Earning before Interest & Taxes / Interest paid

EBIT = Sales- operating costs = $435,000 - $362,500 = $72,500

EBIT / Interest = 72,500 / 12,500 = 5.80

Correct option is D 5.80

6. Correct option is B

Because Balance sheet shows Financial position of a firm at a given point of time.

7. Correct option is D

Net Cash flow = Net Income + Dep. and amortization charges.

8. True

Because it uses historical data to predict future changes.

9. Correct option is C

If a firm increses its sales while holding its inventory constant, than other things remaining same, the inventory turnover ratio will increase.

10. Correct optio is C Bonds

Bonds are not included in current assets.

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