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## Finance

 Basic Finance Corporate Finance Financial Management Financial Econometrics Portfolio Management Risk Management Public Finance Business Law & Ethics

problem 1: Humphrey Hotel’s operating income (EBIT) is \$40 million. The company's times interest earned (TIE) ratio is 8.0, its tax rate is 40%, and its BEP (basic earning power) ratio is 10%. Determine the company's return on assets (ROA)?

a) 6.45%
b) 5.97%
c) 4.33%
d) 8.56%
e) 5.25%

problem 2: Suppose Meyer Corporation is 100% equity financed. Compute the return on equity (ROE), given the information:

• Earnings before taxes \$1,500
• Sales \$5,000
• Dividend payout ratio 60%
• Total assets turnover 2.0
• Tax rate 30%

a) 25%
b) 30%
c) 35%
d) 42%
e) 50%

problem 3: Moss Motors has \$8 billion in assets, and its tax rate is 40%. The company's fundamental earning power (BEP) ratio is 12% and its return on assets (ROA) is 3%. Determine the Moss times interest earned (TIE) ratio?

a) 2.25
b) 1.71
c) 1.00
d) 1.33
e) 2.50

problem 4: Last year, Kansas Office Supply had \$400,000 of net income on \$24,000,000 of sales, its total assets turnover was 6.0, and the company's ROE was 15%. If the company just finances with debt and equity, determine the company's debt ratio?

a) 0.20
b) 0.30
c) 0.33
d) 0.60
e) 0.66

problem 5: Aaron Aviation recently reported the given information:

• Net income \$500,000
• ROA 10%
• Interest expense \$200,000

The company's average tax rate is 40%. Determine the company's basic earning power (BEP)?

a) 14.12%
b) 16.67%
c) 17.33%
d) 20.67%
e) 22.50%

Basic Finance, Finance

• Category:- Basic Finance
• Reference No.:- M97089

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