Question Details

What was British Pub's return on owners' equity in 200X 


USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS

THE BRITISH PUB CORPORATION 
INCOME STATEMENT
FISCAL YEAR ENDING 12/31/200X
(DOLLARS IN THOUSANDS)
 --------------------------------------------------------------
		Net sales				$1025
		Cost of goods sold			682
						-----
		EBITDA				 343
		Depreciation			  31
		Operating expense			 103
		Administrative expense   		  127
						-----
		EBIT				   82
		Interest Expense			   27
						-----
		EBT				   55
		Taxes				   17
						-----
		Net income				   38			



THE BRITISH PUB CORPORATION 
BALANCE SHEET
FISCAL YEAR ENDING 12/31/200X
(DOLLARS IN THOUSANDS)
 -----------------------------ASSETS                 	           LIABILITIES

			Cash			 $ 61     Notes payable		  $223
			Accounts receivable  	  286     Accounts payable	152	
			Inventory           		   354     Accruals		 32
					  ----	                                          ----
			Total current assets   	701     Total current liab.	407	

			Net fixed assets  		     802     Long term debt	306
				 ----     
			Total Assets        		 $1503     Common stock	102
					
							Retained earnings	688	
									 ----
					       Total liabilities and	
					stockholders' equity   			  $1503	


			The company has 68,000 shares outstanding.


1.   What was British Pub's current ratio for 200X?

		a)	0.55
		b)	1.73  
		c)	1.02
		d)	1.37
			
			
		

2. What was British Pub's return on total assets for 200X?
			a)	2.53%   
			b)	3.47%
			c)	4.81%
			d)	6.73%
			
3. What was British Pub's return on owners' equity in 200X?

			a)	 4.81%   
			b)	 5.93%
			c)	 6.75%
			d)	 8.37%
			
4.  What was British Pub's book value per share at year-end 200X?

			a)	$ 7.74
			b)	$ 8.29
			c)	$11.62   
			d) 	 $11.90


5. Ames Motors and Culver Motors both have $50 million in total assets and a 10 percent return on assets (ROA).  Each company has a 40 percent tax rate.  Ames, however, has a higher debt ratio and higher interest expense.  Which of the following statements is most correct?

a.	Ames has a lower return on equity (ROE).  
b.	Culver has a lower return on equity (ROE).  
c.	Ames has a lower level of operating income (EBIT).
d.	Statements a and c are correct.

6. Considered alone, which of the following would increase a company- current ratio?

a.	An increase in net fixed assets.
b.	An increase in accrued liabilities.
c.	An increase in notes payable.
d.	An increase in accounts receivable.




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