Question Details

Fergie Inc, has a total asset turnover ratio 


1. Which of the following statements is CORRECT?
a.	One disadvantage of organizing a business as a corporation rather than a partnership is that the equity investors in a corporation are exposed to unlimited liability.
b.	Using restrictive covenants in debt agreements is an effective way to reduce conflicts between stockholders and managers.
c.	Managers generally welcome hostile takeovers since the "raider" generally offers a price for the stock that is higher than the price before the takeover action started.
d.	The managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers.
e.	The managers of established, stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers.
2. You observe that a firm- ROE is above the industry average, but its profit margin and equity multiplier are both below the industry average.  Which of the following statements is CORRECT?
a.	Its total assets turnover must be above the industry average.
b.	Its return on assets must equal the industry average.
c.	Its TIE ratio must be below the industry average.
d.	Its total assets turnover must be below the industry average.
e.	Its total assets turnover must equal the industry average.

3. Helmuth Inc's latest net income was $1,250,000, and it had 225,000 shares outstanding.  The company wants to pay out 45% of its income.  
What dividend per share should it declare?
a.  $2.14     b.$2.26     c.$2.38      d.$2.50     e.$2.63

4. Fergie Inc, has a total asset turnover ratio of 4.0x and net annual revenue of $48.5 million. It also has $4.85 million of total debt. Find out the firm- times-interest-earned if the firm- total operating costs including depreciation and amortization is $33.95 million and it pays 15% annual interest on its outstanding debt.
a.  20.33x        b.  16.67x        c.  43.00x        d.  10.33x        e.  20.00x

5. Wie Corp's sales last year were $315,000, and its year-end total assets were $355,000.  The average firm in the industry has a total assets
 turnover ratio (TAT) of 2.4.  The firm's new CFO believes the firm has excess assets that can be sold so as to bring the TAT up to the industry
 average without affecting sales.  By how much must the assets be reduced to bring the TAT to the industry average, holding sales constant?
a. $201,934     b. $212,563     c. $223,750     d. $234,938     e. $246,684



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