Dawn Alive reported the following for 2010 1. A summarized income statement for Leveraged Inc. is presented below. Sales $1,000,000 Cost of Sales 600,000 Gross Profit $ 400,000 Operating Expenses 250,000 Operating Income $ 150,000 Interest Expense 30,000 Earnings Before Tax $ 120,000 Income Tax 40,000 Net Income $ 80,000 The degree of financial leverage is: a. $150,000/$30,000 b. $150,000/$120,000 c. $1,000,000/$400,000 d. $150,000/$80,000 e. $400,000/$120,000 2. Dawn Alive reported the following for 2010. Ending market price $40.75 Earnings per share: Basic 2.50 Diluted 2.08 Dividends per share 1.10 The price/earnings ratio and dividend payout were: a. 19.59 and 52.88% b. 16.30 and 52.88% c. 16.30 and 44.00% d. 19.59 and 44.00% e. 37.04 and 52.88% 3. The best dividend payout ratio: a. approximates 50% b. continues at the same level as was historically paid c. is similar to the industry average d. is higher than that of competitors e. does not follow any rule of thumb for dividend payout 4. The following data were gathered from the annual report of Desk Products. Market price per share $30.00 Number of common shares 10,000 Preferred stock, 5% $100 par $10,000 Common equity $140,000 The book value per share is: a. $30.00 b. $15.00 c. $14.00 d. $13.75 e. none of the answers are correct 5. Which of the following is not a reason to interpret book value with caution? a. Land may be worth more than it cost. b. Depreciable assets may be held. c. Investments may be worth more than their purchase price. d. Patents may have a high market value. e. All of the answers are correct. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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