1. Rappaport Corp.’s sales last year were $320,000, and its net income after taxes was $23,000. What was its profit margin on sales? (Points : 2) 
6.49%
6.83%
7.19%
7.55%

Question 2. 2. Vang Corp.’s stock price at the end of last year was $33.50 and its earnings per share for the year were $2.30. What was its P/E ratio? (Points : 2) 
13.84
14.57
15.29
16.06

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. Lindley Corp.’s stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio? (Points : 2) 
1.34
1.41
1.48
1.55

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’ equity.
The balance sheet gives us a picture of the firm’s financial position at a point in time.
The income statement gives us a picture of the firm’s financial position at a point in time.
The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits.

Question 7. 7. Which of the following statements is CORRECT? (Points : 2) 
A reduction in inventories held would have no effect on the current ratio.
An increase in inventories would have no effect on the current ratio.
If a firm increases its sales while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase.
A reduction in the inventory turnover ratio will generally lead to an increase in the ROE.

Question 8. 8. Which of the following items cannot be found on a firm’s balance sheet under current liabilities?
(Points : 2) 
Accounts payable.
Short-term notes payable to the bank.
Accrued wages.
Cost of goods sold.

Question 9. 9. Which of the following items is NOT included in current assets? (Points : 2) 
Accounts receivable.
Inventory.
Bonds.
Cash.

Question 10. 10. Other things held constant, which of the following actions would increase the amount of cash on a company’s balance sheet? (Points : 2) 
The company repurchases common stock.
The company pays a dividend.
The company issues new common stock.
The company gives customers more time to pay their bills.