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1.
Taxes are among the expenditures on an income statement.
True. Taxes are subtracted from income.
2.
If a company with a beta of 3.0 is expected to get a return of 15 percent, what can we expect the return of the overall market to be?
5 percent. A beta of three indicates three times the earnings possibility of the overall market. Thus, the overall market's return would be only one-third that of our company.
3.
Which source of company information includes the costs of producing the company's goods?
The income statement. This statement includes income and costs.
4.
If a stock's market price at the moment is $100 per share, and its net earnings for the past 12 months are $5 per share, what is the stock's price/earnings ratio?
$20. Divide market price ($100) by net earnings ($5) to get the price/earnings ratio (20).
5.
If Wilma's Widgets, Inc., earns $5 million after taxes and makes $10 million in sales, what is its net profit margin?
50 percent. Net profit margin is earnings after taxes divided by sales. In the case of Wilma's Widgets, Inc., that amounts to 0.5, or 50 percent.
6.
There are reasons why a low price-to-book ratio may not be a good thing for investors. Which of the following is not one of those reasons?
The company is earning a high return on its assets. This is actually a good thing for investors.
7.
Fixed asset turnover measures _______.
The amount of sales a company generates from its fixed assets. It is used as a measure of sales success.