Question Details

Which of the following is a primary market transaction 



1.	Ajax 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?
a.	4.72
b.	4.97
c.	5.23
d.	5.51
e.	5.80
	
2.	Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000.  The firm's total-debt-to-total-assets ratio was 45.0%.  Based on the DuPont equation, what was the ROE?
a.	13.82%
b.	14.51%
c.	15.23%
d.	16.00%
e.	16.80%
	
3.	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 down 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
	
4.	Towson, Inc. currently has $1,600,000 in accounts receivables and its days sales outstanding (DSO) is 20 days. If accounts receivable comprise 50% of the company- current assets and Towson has $4,800,000 in net fixed assets, what is its total asset turnover ratio?
a.      2.651x        
b.      3.650x        
c.      3.520x        
d.      2.921x        
e.      3.920x

5.	Which of the following is a primary market transaction ?
a.	You sell 200 shares of IBM stock on the NYSE through your broker.
b.	You buy 200 shares of IBM stock from your brother.  The trade is not made through a broker--you just give him cash and he gives you the stock.
c.	IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
d.	One financial institution buys 200,000 shares of IBM stock from another institution.  An investment banker arranges the transaction.
e.	IBM sells 2,000,000 shares of treasury stock to its employees when they exercise options that were granted in prior years.




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