SOLVED

21) Which of the following pairs of ratios would reveal over trading best? A) Revenue to capital employed and return on equity B) Operating profit margin and average payment period for payables C) Acid test and revenue to capital employed D) Acid test and average payment period for payable E) Operating profit margin and acid test 22) There are 3 million common and one million preferred Kline Inc shares outstanding. Common shares closed on the TSX November 18 at $80.64 each, after an announcement that net income for the year was $22,500,000, and that a dividend of $2.25 would be paid on common shares and a dividend of $.90 would be paid on preferred shares. What was Kline’s P/E ratio on that date? A) 5.6 B) 7.2 C) 9.6 D) 10.8 E) 11.2 23) The company has 14 million common shares outstanding for market price of $18.90 each. It has 3 million preferred shares outstanding at market price of $12 on which a dividend of $1.50 was paid out. If the company has a Price/Earnings ratio of 12, what after-tax net income did the company earn? A) $2,646,000 B) $2,601,000 C) $17,550,000 D) $22,050,000 E) $26,550,000 24) CapiCal Industries declared a quarterly dividend of $.56 to its 250,000 common shares from quarterly earnings of $306,250. It has no preferred shares. Universal Hotels declared a quarterly dividend of $.35 to its one million shares on quarterly earnings of $1,225,000, net of preferred shares. Both companies are trading at a P/E ratio around 14. What is the dividend payout ratio for each company? A) Capical $0.20; Universal $0.46 B) Capical $0.46; Universal $0.20 C) Capical $1.83; Universal $0.82 D) Capical $0.82; Universal $1.83 E) Capical $0.82; Universal $0.11 25) Halveston Aeronautics, with 130,000 common shares outstanding, declared a dividend of $148,200. Share price is $54. The dividend yield is A) 45.7% B) 25% C) 19% D) 2.1% E) 1.1% 26) Tuscarora Transportation Limited currently trades for $70 with a P/E ratio of 16.4. Python Logistics trades for $54 with a P/E ratio of 38.6. A conclusion that could be drawn from these numbers, is that the market believes A) Tuscarora Transportation is less risky than Python Logistics B) Python Logistics earnings will overtake Tuscarora Transportation C) Tuscarora Transportation’s assets are undervalued relative to its share price D) Python Logistics is no longer a good investment E) Python Logistics has higher earnings than Tuscarora Transportation 27) The ________ is the highest price that potential buyers are willing to pay for a company’s share in the stock market. A) Bid B) Ask C) Offer D) Inter-Day E) Intra-Day 28) The ________ displays several years worth of key financial indicators for comparative companies plotted on a graph. A) Regression line B) Linear comparisons C) Ratio charts D) Longitudinal plots E) Trend line 29) For the previous five-year period, Galhadi Telecommunications Limited has had EBIT of $28.6 million, $28 million, $33.2 million, $34.1 million, $33.8 million, respectively, and a corresponding EBITDA of $15.5 million, $15.4 million, $15.5 million, $17.5 million, and $17 million. Which of the following statements is the best conclusion to draw about year 3? A) There are significant depreciation and amortization expenses B) Realized a capital gain on the sale of equipment C) Experienced a significant decrease in income taxes D) Invested in equipment that improved operational efficiency E) Improved earnings due to a significant decrease in interest rates charged on long-term debt 30) Bowden Building Supplies Ltd. year-end financial statements show working capital at $1,107,655, total assets of $3,971,090, total liabilities at $2,078,405, retained earnings at $192,685, sales revenue at $5,460,400, EBIT at $326,746, and the market value of common shares at $2,182,020. Using the value from Altman’s Z-score model, what can be concluded about the business? A) Will probably fail in two years. B) Will probably survive over the next two years. C) Difficult to classify with any degree of confidence. D) Will probably fail in three to five years. E) Will probably expand significantly in the next two years.