Question 1

Use the information for the question(s)below.
In November 2009,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's price-earnings ratio (P/E)is closest to:
A)15.96
B)21.85
C)29.77
D)35.64

Accepted Answer

B)price-earnings ratio (P/E)= (M V Equity)/(Net Income)= ($39.2 × 91.33)/$163.82 = 21.85408

Question 2

Luther's price - earnings ratio (P/E)for the year ending December 31,2009 is closest to:
A)7.9
B)10.1
C)15.4
D)16.0

Accepted Answer

C)P/E = Price/EPS or Market Cap/Earnings = (10.2 × $16)/$10.6 = 15.4

Question 3

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-assets (ROA)is closest to:
A)8.8%
B)9.5%
C)21.0%
D)22.8%

Accepted Answer

A)ROA = net profit margin × total asset turnover = 0.04 × 2.2 = 0.088 = 8.8%

Question 4

Luther's EBIT coverage ratio for the year ending December 31,2008 is closest to:
A)1.64
B)1.78
C)1.98
D)2.19

Accepted Answer

A)EBIT Coverage ratio = EBIT/(Interest Expense)= 41.2/25.1 = 1.6414

Question 5

If ECE's net profit margin is 8%,then ECE's return on equity (ROE)is:
A)10%
B)12%
C)24%
D)30%

Accepted Answer

C)net profit margin = (Net Income)/Sales = $X million/$300 million = 0.08;X = $24 million;
ROE = (Net Income)/(Shareholder Equity)= $24 million/$100 million = 0.24 = 24%

Question 6

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-If ECE's return on assets (ROA)is 12%,then ECE's net income is:
A)$6 million
B)$12 million
C)$22 million
D)$36 million

Accepted Answer

C)ROA = (Net Income + Interest Expense)/Assets = ($ X million + 2 million)/$200 million = 0.12;X = $22 million

Question 7

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-If ECE reported $15 million in net income,then ECE's Return on Equity (ROE)is:
A)5.0%
B)7.5%
C)10.0%
D)15.0%

Accepted Answer

D)ROE = (Net Income)/(Shareholder Equity)= $15 million /$100 million = 0.15 = 15%

Question 8

Use the table for the question(s)below.
Consider the following income statement and other information: 
-Luther's EBITDA coverage ratio for the year ending December 31,2009 is closest to:
A)1.64
B)1.78
C)1.98
D)2.19

Accepted Answer

B)EBITDA Coverage ratio = (EBIT + Dep & Amort)/(Interest Expense)=
(41.2 + 3.6)/25.1 = 1.7849

Question 9

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-IECE's Return on Assets (ROA)is:
A)5.0%
B)8.5%
C)7.5%
D)15.0%

Accepted Answer

B)ROA = (Net Income + Interest Expense)/Assets = ($15 million+2 million)/$200 million = 0.085 = 8.5%

Question 10

Luther's Net Profit Margin for the year ending December 31,2008 is closest to:
A)1.8%
B)2.7%
C)5.4%
D)16.7%

Accepted Answer

A)Net Profit Margin = Net Income/Total Sales = 10.2/578.3 = .018 or 1.8%

Question 11

Calculate Luther's return of equity (ROE),return of assets (ROA),and price-to-earnings ratio (P/E)for the year ending December 31,2008.

Accepted Answer

The answer of Calculate Luther's return of equity (ROE),return of...

Question 12

Luther's earnings before interest,taxes,depreciation,and amortization (EBITDA)for the year ending December 31,2009 is closest to:
A)19.7 million
B)37.6 million
C)41.2 million
D)44.8 million

Accepted Answer

D)EBITDA = EBIT + Depreciation & Amortization = 41.2 + 3.6 = $ 44.8 million

Question 13

Use the information for the question(s)below.
In November 2009,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's return on equity (ROE)is closest to:
A)4.6%
B)9.1%
C)17.2%
D)27%

Accepted Answer

C)ROE = (Net Income)/(B V Equity)= $163.82/(($39.20 × 91.33)/3.76)= 0.172 = 17.2%

Question 14

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE)is closest to:
A)8.8%
B)9.5%
C)21.0%
D)22.8%

Accepted Answer

C)ROE = net profit margin × total asset turnover × leverage
ROE = 0.04 × 2.2 × (525/220)= 0.21 = 21%

Question 15

Luther's EBIT coverage ratio for the year ending December 31,2009 is closest to:
A)1.64
B)1.78
C)1.98
D)2.19

Accepted Answer

C)EBIT Coverage ratio = EBIT/(Interest Expense)= 31.3/15.8 = 1.981

Question 16

Luther's return on equity (ROE)for the year ending December 31,2009 is closest to:
A)2.0%
B)6.5%
C)8.4%
D)12.7%

Accepted Answer

C)ROE = Net income/shareholders' equity = 10.6/126.6 = .084 or 8.4%

Question 17

Use the table for the question(s)below.
Consider the following income statement and other information: 
-Luther's Operating Margin for the year ending December 31,2008 is closest to:
A)0.5%
B)0.7%
C)5.4%
D)6.8%

Accepted Answer

C)Operating Margin = Operating Income/Sales
OM = 31.3/578.3 = .054 or 5.4%

Question 18

Use the table for the question(s)below.
Consider the following income statement and other information: 
-If Luther's accounts receivable were $55.5 million in 2009,then calculate Luther's accounts receivable days for 2009.

Accepted Answer

The answer of Use the table for the question(s)below.
Consider the...

Question 19

Luther's return on assets (ROA)for the year ending December 31,2009 is closest to:
A)1.6%
B)6.7%
C)2.3%
D)2.6%

Accepted Answer

B)ROA = (Net income + Interest Expense)/total assets.
This is a little tricky in that total assets aren't given in the problem.The student must remember the basic balance sheet equation A = L + SE.Total Liabilities and Shareholders' Equity is given and this is the same as total assets.So ROA = (10.6 + 25.1/533.1 = 0.067 or 6.7%

Question 20

If ECE's return on assets (ROA)is 12%,then ECE's return on equity (ROE)is:
A)10%
B)12%
C)18%
D)22%

Accepted Answer

D)ROA = (Net Income + Interest Expense)/Assets = ($X million + 2 million)/$200 million = 0.12;X = $22 million;
ROE = (Net Income)/(Shareholder Equity)= $22 million/$100 million = 0.22 = 24%

Quiz 2: Introduction to Financial Statement Analysis

Luther's price - earnings ratio (P/E) for the year ending December 31,2009 is closest to:

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-assets (ROA) is closest to:

Luther's EBIT coverage ratio for the year ending December 31,2008 is closest to:

If ECE's net profit margin is 8%,then ECE's return on equity (ROE) is:

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million Net Income $15 million Interest Expense $2 million -If ECE's return on assets (ROA) is 12%,then ECE's net income is:

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million Net Income $15 million Interest Expense $2 million -If ECE reported $15 million in net income,then ECE's Return on Equity (ROE) is:

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's EBITDA coverage ratio for the year ending December 31,2009 is closest to:

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million Net Income $15 million Interest Expense $2 million -IECE's Return on Assets (ROA) is:

Luther's Net Profit Margin for the year ending December 31,2008 is closest to:

Calculate Luther's return of equity (ROE),return of assets (ROA),and price-to-earnings ratio (P/E)for the year ending December 31,2008.

Luther's earnings before interest,taxes,depreciation,and amortization (EBITDA) for the year ending December 31,2009 is closest to:

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE) is closest to:

Luther's EBIT coverage ratio for the year ending December 31,2009 is closest to:

Luther's return on equity (ROE) for the year ending December 31,2009 is closest to:

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's Operating Margin for the year ending December 31,2008 is closest to:

Use the table for the question(s)below. Consider the following income statement and other information: -If Luther's accounts receivable were $55.5 million in 2009,then calculate Luther's accounts receivable days for 2009.

Luther's return on assets (ROA) for the year ending December 31,2009 is closest to:

If ECE's return on assets (ROA) is 12%,then ECE's return on equity (ROE) is: